Billion-Dollar Drugs with Misallocated Rewards

Abstract

GEN BiotechnologyVol. 2, No. 2 Book ReviewFree AccessBillion-Dollar Drugs with Misallocated RewardsFay LinFay LinE-mail Address: flin@liebertpub.comSenior Editor, GEN Biotechnology.Search for more papers by this authorPublished Online:18 Apr 2023https://doi.org/10.1089/genbio.2023.29095.fliAboutSectionsPDF/EPUB Permissions & CitationsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail Nathan Vardi unveils the financial, scientific, and ethical intricacies involved in bringing the blockbuster blood cancer drugs, Imbruvica and Calquence, to the market.For Blood and Money: Billionaires, Biotech, and the Quest for a Blockbuster Drugby Nathan Vardi (W. W. Norton & Company, 2023)Life is 10 percent what happens to you and 90 percent how you react to it. Being fired for doing some of the best work of my career was the catalyst that made me start my own biotech company.” Raquel Izumi said these words to the 2017 graduating class as the commencement speaker for the mathematical, life, and physical sciences division at the University of California, Santa Barbara (her alma mater).“Imagine being incredibly passionate about what you do so you work tirelessly and devotedly and make many personal sacrifices. One day the CEO personally acknowledges your hard work and effort… and gives you the biggest raise of your career,” Izumi continued. But a few weeks later, she was fired by that same CEO. She had been senior director of clinical development at Pharmacyclics, a company later acquired by AbbVie, working to develop what would become the billion-dollar cancer drug, Imbruvica, a Bruton's tyrosine kinase (BTK) inhibitor regulating the B cell receptor pathway, which is often aberrantly active in B cell cancers.The CEO in question was Robert Duggan, a wildcard entrepreneur in the biotech space with no scientific training or experience in the highly regulated biopharma industry. Duggan is also one of the largest donors to the Church of Scientology and was known to drop Scientology teachings in the office.In 1997, Duggan's son, Demian, passed away from glioblastoma—a brain cancer with a median survival time of 15 months if treated with surgery and chemotherapy. Duggan had initially been drawn to Pharmacyclics during a time when the company was developing a brain cancer drug called Xcytrin. Over several years, Duggan invested nearly $32 million to acquire Pharmacyclics and unexpectedly lead the charge to bring their BTK inhibitor to market as one of the most lucrative cancer drugs in U.S. history.After leaving Pharmacyclics, Izumi regrouped with a handful of former Pharmacyclics colleagues to found Acerta Pharma, which pursued a more selective BTK inhibitor. This drug, Calquence, would go head-to-head with Imbruvica, emphasizing how its higher selectivity led to fewer side effects and generating a competing billion-dollar therapy.From FDA approval hoops, clinical trial ethics, exponential losses associated with key financial decisions, cutthroat personnel turnover, and the heat of competition, Nathan Vardi covers this engaging Imbruvica/Calquence saga in his first book, For Blood and Money: Billionaires, Biotech, and the Quest for a Blockbuster Drug. Vardi is managing editor, Enterprise at MarketWatch and former senior editor at Forbes covering big money investors.Vardi follows the path of legendary biotech trader, Wayne Rothbaum, who Vardi says, “trained himself to never remain anchored to any investment thesis and to always take into account new information that challenged it.” Differences in philosophy with Duggan and early BTK inhibitor trial results that showed potentially concerning elevated white blood counts in patients led Rothbaum to sell his Pharmacyclics shares too early, a move that cost him a gut-wrenching millions of dollars. This loss ultimately led Rothbaum to heavily invest in Acerta and put Calquence on the market, further driving the treatment outlook for countless cancer patients.Vardi also explores themes of financial incentives and accessibility, noting how Imbruvica's November 2013 FDA approval for mantle cell lymphoma patients had generated newspaper headlines due to the drug's $131,000 annual price tag per patient, making it (at the time) one of the most expensive cancer medicines in the United States. “Soon, Americans would have the same low opinion of pharmaceutical companies as they did of tobacco companies,” Vardi writes.According to Vardi, Imbruvica headed the BTK inhibitor space in 2020, with a revenue of $6.6 billion compared with Calquence's $511 million. The Acerta drug leaped ahead in 2021, after initial analysis from a head-to-head trial against Imbruvica suggested that Calquence was indeed safer than Imbruvica and led to fewer incidents of atrial fibrillation in high-risk previously treated patients. By the second half of 2021, Calquence was winning over Imbruvica in new chronic lymphocytic leukemia (CLL) patients and became a blockbuster drug, generating $1.2 billion in revenue. Imbruvica produced $6.9 billion in revenue in 2021.Originally worth nothingAs a scientist and former academic, I found one of the most intriguing layers of the story to be the modest origins of the BTK research, which began in the hands of two chemists at Celera Genomics, Zhengying Pan and Paul Sprengeler, in the early 2000s. (Originally led by Craig Venter and best known as the company that competed with the human genome project consortium to produce a first draft of the human genome sequence in 2000, Celera pivoted into proteomics and drug discovery. Venter exited the company a couple of years later.)Vardi writes how Celera was investigating ways to block BTK to stop the proliferation of overactive B cells that cause inflammation as an approach to pursue the lucrative drug development market in rheumatoid arthritis (RA). Pan and Sprengeler designed several compounds, with one successfully blocking BTK and reducing RA symptoms in a mouse model. However, those results failed to convince Celera's top executives. In fact, the project was such a low priority that Celera did not even file patents for the compounds.When Celera decided to end its efforts mining the human genome map for new drugs and close down its facility in San Francisco, the BTK inhibitor found its way into the hands of Richard Miller, who was CEO of Pharmacyclics at the time and would later be forced out by Duggan's growing financial seizure of the company. In an unusual deal, Pharmacyclics owned the compound wholly as there was no patented intellectual property to license. Celera did not secure future milestone payments from Pharmacyclics's development of the BTK inhibitor program—essentially giving away the future billion-dollar drug for nothing. Upon AbbVie's acquisition of Pharmacyclics in 2015, Vardi noted that Pan did not make any money on the multimillion-dollar deal.Notably, the theme of misallocated rewards persisted throughout the drug development process. After Acerta's sale to AstraZeneca in 2016, Vardi notes the tensions within the company as “the structure of the payout could not have more clearly highlighted the divide between the operators and the financial investors.” Rothbaum alone would make $2.8 billion (35 times his investment), whereas Acerta employees were left unhappy with demanding employee retention plans proposed by AstraZeneca and smaller pay outs than expected.How can researchers ensure that their work receives the recognition and compensation that it deserves in the biopharma world, where financial incentives and luck are just as crucial as scientific skill and rigor? Within Vardi's candid narrative lies a guide for current and future researchers on the highs, lows, ethical dilemmas, and injustices of the biopharma industry and motivates researchers to educate themselves on the financial dynamics.“While the financial investors spent their time manufacturing equity instruments that allowed them to be paid first and most, those in the trenches spent their time manufacturing medicines and had no idea about potential payouts or how to protect themselves,” Vardi writes. In this fast-paced industry with no guarantees and a notoriously high failure rate, perhaps a quote from Izumi's commencement speech remains the grounding remark: “Life is 10 percent what happens to you and 90 percent how you react to it.”For Blood and Money contributes a modern narrative to the classics of the biotech genre, such as Barry Werth's The Billion-Dollar Molecule (published in 1994) and John Carreyrou's brilliant Bad Blood. Vardi has produced an enlightening read that offers transparent and humanizing anecdotes of talented researchers who were caught up in financial whirlwinds and cutthroat executive decisions. It may not come as a huge surprise, but Vardi reminds biopharma researchers to expect an unpredictable turbulent trajectory, with potential for both crippling lows and the next billion-dollar drug.FiguresReferencesRelatedDetails Volume 2Issue 2Apr 2023 InformationCopyright 2023, Mary Ann Liebert, Inc., publishersTo cite this article:Fay Lin.Billion-Dollar Drugs with Misallocated Rewards.GEN Biotechnology.Apr 2023.98-99.http://doi.org/10.1089/genbio.2023.29095.fliPublished in Volume: 2 Issue 2: April 18, 2023PDF download