Biotech bil­lion­aire faces ac­cu­sa­tions of fraud for $1.3B 'catch-and-kil­l' can­cer drug deal

When biotech bil­lion­aire Patrick Soon-Sh­iong arranged a $90 mil­lion up­front pay­ment to Sor­ren­to from Nant­Phar­ma 4 years ago to ac­quire Cynvil­oq — promis­ing $1.2 bil­lion more in mile­stones — he her­ald­ed the deal, say­ing an “op­por­tu­ni­ty to de­vel­op com­bi­na­tion reg­i­mens of low-dose metro­nom­ic use of this ac­tive drug is an im­por­tant step in trans­form­ing can­cer care as we know it to­day.”

For his part, Sor­ren­to CEO Hen­ry Ji said he was “ex­cit­ed” that Soon-Sh­iong had stepped in to speed these new com­bos along.

To­day, he calls it the first act in a years-long swin­dle. And he’s su­ing Soon-Sh­iong.

As spelled out in the law­suit, which was wide­ly dis­trib­uted to the press, Ji al­leges that Soon-Sh­iong not on­ly played out a “catch-and-kill” plan to elim­i­nate a com­peti­tor to Soon-Sh­iong’s Abrax­ane, which he sold to Cel­gene in a deal that left him with more than a bil­lion dol­lars in Cel­gene stock, he used a big chunk of the mon­ey Sor­ren­to got in the up­front to help cov­er his costs for do­ing it.

Late Wednes­day evening, though, Soon-Sh­iong blast­ed back with a de­tailed re­sponse:

The law­suit is a cyn­i­cal at­tempt to de­flect from Sor­ren­to’s own breach of con­tract. The al­le­ga­tion that we have not de­vel­oped Cynvil­oq to pro­tect the sales of Abrax­ane is false and it ig­nores the facts. Be­cause it is to­tal­ly with­out mer­it, we shall de­fend our­selves vig­or­ous­ly against this base­less al­le­ga­tion.

There’s lots more, in­clud­ing breach of con­tract and a woe­ful lack of fol­low through, which I’ve in­clud­ed in its en­tire­ty be­low the al­le­ga­tions.

Ini­tial­ly, Ji says, Soon-Sh­iong was in­ter­est­ed in hav­ing Cel­gene buy it to pro­tect the Abrax­ane fran­chise, us­ing the sales from the new drug to pay off any loss­es from the bioe­quiv­a­lent Abrax­ane. Cel­gene, though, passed on an­titrust grounds, leav­ing Soon-Sh­iong to han­dle it when San­doz came call­ing with a deal in hand for the drug.

Hen­ry Ji, Sor­ren­to

“When Soon-Sh­iong heard about the po­ten­tial San­doz deal, he pan­icked,” says the law­suit, which was writ­ten as some­thing of a pot­boil­er. “He re­al­ized that if Cynvil­oq were sold to San­doz — a di­rect com­peti­tor to Cel­gene that had deep ex­pe­ri­ence bring­ing biosim­i­lars or gener­ics like Cynvil­oq suc­cess­ful­ly to mar­ket — it could dev­as­tate the sales of Abrax­ane, sig­nif­i­cant­ly dam­age Cel­gene’s share price, and there­fore per­son­al­ly cost Soon-Sh­iong hun­dreds of mil­lions of dol­lars.”

At the same time the sale went through in 2015, the suit con­tin­ues, Ji and Soon-Sh­iong cre­at­ed a joint ven­ture ded­i­cat­ed to im­munother­a­peu­tic an­ti­body can­cer drug R&D. Ji put up $40 mil­lion from his up­front for it. Then he al­leges that Soon-Sh­iong and his chief le­gal ad­vis­er Charles Kim se­cret­ly con­spired to pay Nant­Phar­ma its $90 mil­lion, drain­ing the JV’s ac­count of the cash it had, in­clud­ing Sor­ren­to’s $40 mil­lion.

As for Cynvil­oq, the suit says Soon-Sh­iong put it on a shelf, let­ting patents ex­pire and any val­ue in it leak away. Dur­ing that time, Cel­gene has been a reg­u­lar in­vestor in Soon-Sh­iong’s com­pa­nies, giv­ing them a role to play as the big Bris­tol-My­ers Squibb deal faces a share­hold­er vote in com­ing days. And Ji wants to have the $90 mil­lion re­turned to the JV so it can do its work, among oth­er things.

This isn’t the first time Soon-Sh­iong has been ac­cused of shady ac­tiv­i­ty. STAT pub­lished a se­ries of ar­ti­cles claim­ing that the bil­lion­aire had re­cap­tured a large do­na­tion to the Uni­ver­si­ty of Utah, while Politi­co fo­cused on an ap­par­ent scheme in which one of his com­pa­nies ob­tained a prop­er­ty from a non­prof­it at an un­der­val­ued price.

Through­out it all, Soon-Sh­iong, who’s cast him­self in the role of an R&D war­rior out to cure can­cer, has de­nied any wrong­do­ing and gone on to buy the Los An­ge­les Times. I asked Soon-Sh­iong and Cel­gene rep­re­sen­ta­tives if they had any com­ment.

Cel­gene’s me­dia shop has been dead silent for months. But they did re­spond here, with a spokesper­son say­ing “we don’t have a com­ment” about the suit.

Here’s the more de­tailed re­but­tal from Soon-Sh­iong.

Here are the facts:

When we ac­quired Cynvil­oq from Sor­ren­to, it was part of a larg­er trans­ac­tion in which we al­so ac­quired the ex­clu­sive rights to over 75 an­ti­bod­ies. Sor­ren­to has on­ly pro­vid­ed 15 an­ti­bod­ies to date, in breach of its con­trac­tu­al com­mit­ments, and has re­fused to oth­er­wise hon­or its ex­clu­siv­i­ty and oth­er oblig­a­tions. As one ex­am­ple, de­spite hav­ing ex­clu­sive­ly li­censed a PD-L1 an­ti­body to us, Sor­ren­to has since li­censed the same PD-L1 an­ti­body to a Ko­re­an com­pa­ny and an­nounced a Phase 1 study, in breach of our agree­ment.

Nant­Phar­ma ac­quired the Pa­cli­tax­el drug with the pub­lic rep­re­sen­ta­tion from Sor­ren­to that the mol­e­cule was found to be bioe­quiv­a­lent to Abrax­ane and that the FDA had agreed with Sor­ren­to’s find­ing of bioe­quiv­a­lence based on a meet­ing with the FDA. Fol­low­ing the ac­qui­si­tion, we dis­cov­ered that Sor­ren­to had mis­rep­re­sent­ed this in­for­ma­tion. Up­on dig­ging in­to the raw da­ta from the Sor­ren­to clin­i­cal tri­al, our sta­tis­ti­cians in fact dis­cov­ered that the drug was in­deed not bioe­quiv­a­lent and re­port­ed this find­ing to the com­pa­ny. We shared these find­ings with Sor­ren­to and in­formed them that it would not be pos­si­ble for us to file un­der the bioe­quiv­lance ap­proval path­way be­cause the da­ta did not sup­port that ap­proach.

Fur­ther­more, when we re­quest­ed a new sup­ply of the drug from the Ko­re­an man­u­fac­tur­er, we al­so dis­cov­ered that the for­mu­la­tion con­tained an im­pu­ri­ty and this re­quired the sup­pli­er to iden­ti­fy the cause of the im­pu­ri­ty and to mod­i­fy the man­u­fac­tur­er’s process to re­move the im­pu­ri­ty. This process was at­tempt­ed by the sup­pli­er who pre­sent­ed their re­sults to us re­cent­ly, but un­for­tu­nate­ly the process im­prove­ment fur­ther in­creased the in­sta­bil­i­ty of the drug. The need for fur­ther de­vel­op­ment to im­prove the sta­bil­i­ty by the man­u­fac­tur­er is cur­rent­ly un­der re­view while we pur­sue the safe­ty analy­sis of the orig­i­nal for­mu­la­tion in a Phase 1 study.

Be­cause the drug re­quired a new process, fur­ther sta­bil­i­ty test­ing, and a com­plete new Phase 1 clin­i­cal study, we sold the drug to our JV with Sor­ren­to, which had both reg­u­la­to­ry and for­mu­la­tion ex­per­tise. We ini­ti­at­ed  a Phase 1 study and this study is cur­rent­ly open and we are ac­tive­ly try­ing to re­cruit pa­tients as of this date. The state­ments and claims made by Sor­ren­to are thus puz­zling in light of our  dili­gent and re­spon­si­ble ac­tiv­i­ty ever since we ac­quired the drug, and can on­ly be viewed as a cyn­i­cal at­tempt to de­flect from their breach of con­tract.”

Steven Feld­man, an at­tor­ney with Hue­ston Hen­ni­gan rep­re­sent­ing Sor­ren­to, was ea­ger to re­ply.

It de­fies cred­i­bil­i­ty that a sci­en­tist and busi­ness­man as so­phis­ti­cat­ed and suc­cess­ful as Dr. Patrick Soon-Sh­iong en­tered in­to a $1.3 bil­lion trans­ac­tion with­out ex­am­in­ing the da­ta or con­duct­ing due dili­gence. Dis­cov­ery in this case will re­veal the nu­mer­ous false as­ser­tions in Dr. Soon-Sh­iong’s re­sponse.  We look for­ward to lit­i­gat­ing this case.

Im­age: Patrick Soon-Sh­iong (NHS Con­fed­er­a­tion)

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UP­DAT­ED: The FDA sets a reg­u­la­to­ry speed record, pro­vid­ing a snap OK for Ver­tex's break­through triplet for cys­tic fi­bro­sis

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IM­brave150: Roche’s reg­u­la­to­ry crew plans a glob­al roll­out of Tecen­triq com­bo for liv­er can­cer as PhI­II scores a hit

Just weeks after Bristol-Myers Squibb defended its failed pivotal study pitting Opdivo against Nexavar in liver cancer, Roche says it’s beat the frontline challenge with a combination of their PD-L1 Tecentriq with Avastin. And now they’re rolling their regulatory teams in the US, Europe and China in search of a new approval — badly needed to boost a trailing franchise effort.
Given their breakthrough and Big Pharma status as well as the use of two approved drugs, FDA approval may well prove to be something of a formality. And the Chinese have been clear that they want new drugs for liver cancer, where lethal disease rates are particularly high.
Researchers at their big biotech sub, Genentech, say that the combo beat Bayer’s Nexavar on both progression-free survival as well as overall survival — the first advance in this field in more than a decade. We won’t get the breakdown in months of life gained, but it’s a big win for Roche, which has lagged far, far behind Keytruda and Opdivo, the dominant PD-1s that have captured the bulk of the checkpoint market so far.
Researchers recruited hepatocellular carcinoma — the most common form of liver cancer — patients for the IMbrave150 study who weren’t eligible for surgery ahead of any systemic treatment of the disease.
Roche has a fairly low bar to beat, with modest survival benefit for Nexavar, approved for this indication 12 years ago. But they also plan to offer a combo therapy that could have significantly less toxicity, offering patients a much easier treatment regimen.
Cowen’s Steven Scala recently sized up the importance of IMbrave150, noting:

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That $335M JV Bay­er set up on CRISPR/Cas9? They’re let­ting the biotech part­ner car­ry on

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Bayer $BAY made much of the fact that they were going all-in on gene editing when they did their deal 3 years ago with CRISPR Therapeutics, which pitched $35 million in on their end. This was the cornerstone of their plan to set up new JVs that could make some serious leap forwards in hot new R&D spaces. Now CRISPR will have full management control of Casebia as they pursue programs in hemophilia, ophthalmology and autoimmune diseases.
Samarth Kulkarni, the CEO at CRISPR, made it sound like a natural progression.

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J&J’s Stelara, which is set to be in the top ten list of blockbusters come 2025, is now cleared by the FDA for use in ulcerative colitis (UC), an inflammatory disease of the large intestine.

The biologic targets interleukin (IL)-12 and IL-23 cytokines, which are known to play a key role in inflammatory and immune responses. Stelara, which generated about $4.7 billion in the first nine months of 2019, is a key player in the crowded marketplace of drugs to treat autoimmune disorders such as psoriasis, rheumatoid arthritis and Crohn’s disease. AbbVie’s star therapy, Humira, continues to dominate, despite its looming patent cliff in the United States, while others including J&J’s $JNJ own anti-IL23 Tremfya, Lilly’s $LLY anti-IL-17 Taltz and AbbVie’s $ABBV recently approved anti-IL-23 antibody Skyrizi carve out a slice of market share.

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GlaxoSmithKline is leaving the deep dark woods and its viruses behind.

GSK has agreed to divest its vaccines for rabies, RabAvert, and tick-born encephalitis vaccine, Encepur, to Bavarian Nordic, part of the company’s broader efforts to narrow its pipeline and focus on oncology and immunology.

The deal is worth up to nearly $1.1 billion, with a $336 million upfront payment. GSK acquired the vaccines from Novartis as part of an exchange for their late-stage oncology programs in 2015 under former chief Sir Andrew Witty.

Pfiz­er gets some en­cour­ag­ing PhI­II news on a fran­chise sav­ior, but is a dos­ing ad­van­tage worth the $295M up­front?

Close to 3 years after Opko tried to defend itself as shares tumbled on the news that its long-acting growth hormone had failed to outperform a placebo, the Pfizer partner $PFE is back. And this time they’re pitching Phase III data that demonstrate their drug is non-inferior — or maybe a tad better — than their well-known but fading standard in the field.
The comparator drug here is Genotropin, which earned a marginal $142 million for Pfizer last year — down 9% from the year before. Approved 24 years ago, biosimilars are now in development that Pfizer would like to stay out in front of. The market leader here is Norditropin, a growth hormone from Novo Nordisk that uses the same basic ingredient as Genotropin, which the Danish company sells with a kid-friendly self-injectable pen. That would also present some big competition if the new therapy from Opko/Pfizer makes it to the market.
The new data, says researchers, underscore that a weekly injection of somatrogon performed as well or slightly better than Genotropin (somatropin) in young children with growth hormone deficiency. Investigators tracked height velocity at 10.12 cm/year, edging out the older drug’s 9.78 cm/year. That 0.33 difference may not prove compelling to payers, though, who have been known to overlook dosing advantages in favor of lower costs.
That message may have weighed on the stock reaction this morning, with a 30%-plus hike $OPK giving way to more marginal gains.
Back in late 2016, Opko had to defend itself against a devastating Phase III setback as their initial late-stage trial failed against a sugar pill. Opko later blamed that setback on outliers in the study, though it wasn’t able to expunge the failure.

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As­traZeneca's Farx­i­ga scores FDA nod to cut risk of hos­pi­tal­iza­tion for heart fail­ure in di­a­bet­ics

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