One of the latest creations of Los Angeles-based billionaire entrepreneur Dr. Patrick Soon-Shiong is making a big bet on an Orange County cancer drug developer.
Soon-Shiong’s NantPharma acquired the rights to drug candidate Cynviloq through its purchase last year of IgDraSol Inc., which was based in Fountain Valley and now is in Irvine. NantPharma paid $90 million in upfront cash for the company, which had been a wholly owned subsidiary of San Diego-based Sorrento Therapeutics Inc.
The deal also calls for the potential of more than $600 million in payments to Sorrento based on regulatory milestones, and an additional $600 million tied to sales. Achieving both milestones would bring the deal’s worth to about $1.3 billion (see list of top M&A deals in Special Report, page 19).
Investors could realize a quadruple-digit gain if milestones are met—Sorrento bought IgDraSol in 2013 for $28.2 million.
Sorrento also has the option to co-develop and co-market Cynviloq on terms to be negotiated, according to the deal terms.
NantPharma, which is headquartered in Lincolnshire, Ill., is a member of the Culver City-based NantWorks LLC umbrella company. Other units include NantHealth, NantMobile, NantOmics, NantBioScience, NantCell, NantCapital and NantCloud.
Cynviloq, IgDraSol’s lead drug candidate, is now in a bioequivalence trial against Abraxane, a cancer drug approved for treating breast, lung and pancreatic cancer.
Abraxane was developed by previous Soon-Shiong company Abraxis BioScience Inc. The drug now belongs to Summit, N.J.-based Celgene Corp., which bought Abraxis BioScience in 2010 for about $2.9 billion.
Cynviloq is being looked at for treating metastatic breast cancer and non-small-cell lung cancer.
Soon-Shiong said in a news release at the time of the deal last May that IgDraSol and Cynviloc both fit into NantWorks’ pursuit of what he called “precision cancer medicine.”
“We are committing significant resources to the development of novel cancer therapies, including combination therapies, an area of significant market need,” Soon-Shiong said. “Chemotherapy is an important pillar to the combination with immunotherapy and natural killer cells.”
Selling IgDraSol to NantPharma “puts our lead program into the hands of a team that has the experience, commitment and resources to develop and launch a major cancer drug,” said Dr. Henry Ji, Sorrento’s chief executive, at the time of the deal’s announcement.
Some on Wall Street are excited about Cynviloq’s potential future.
“In our view … Cynviloq could be filed for approval in the coming months and could receive regulatory approval by mid-2016,” said Raghuram Selvaraju, an analyst with New York-based investment bank Rodman & Renshaw, in a December research report initiating coverage on Sorrento.
Cynviloq “could achieve peak annual sales of $1.3 [billion] in the U.S. alone, in our view,” Selvaraju wrote.
Abraxane had sales of $967 million in 2015.
Cynviloq’s potential “to be a competitive threat to Abraxane, one of the fastest-growing product franchises at Celgene Corporation, may catalyze Celgene’s interest in acquiring Sorrento and its privately held partner NantPharma,” Selvaraju said.
Celgene executives didn’t respond to a request for comment.
NantWorks founder Soon-Shiong—who is the wealthiest person in Los Angeles, with a net worth estimated by the Los Angeles Business Journal at $15.3 billion—is familiar with Orange County.
Abraxis BioScience moved its research and development operations from Marina del Rey to Costa Mesa in 2010. Abraxis moved 100 workers into a building with laboratories fronting the San Diego (I-405) Freeway.
The Costa Mesa building was rumored to become the headquarters of what was to be known as Abraxis Health, an expected spinoff of the parent company’s drug development unit.
The building, at 1588 S. Coast Drive, then Hyland Avenue, seemed a likely candidate, as Abraxis BioScience had bought it for $30.9 million in 2009.
Celgene eventually bought out Abraxis BioScience, ending talk of the spin off.
The Costa Mesa office has changed hands several times since then and now is owned by skate shoe and apparel manufacturer Vans Corp.
