A little over a year after Gilead Sciences acquired startup Kite Pharma for the dizzying sum of $12 billion and six months after the company's first product for treatment of blood cancer was approved for marketing (initially in a controlled form), it appears that the product is off to a good start in the market. It generated $40 million in revenue in the first quarter of 2018, despite its limited and cautious launching and high price - $1 million per patient.
It is too early to tell whether Gilead Sciences made a good deal, but the pricing was one of the highest we have ever seen for the acquisition of a pharma company with a single technology, and the highest ever for a company whose product had not yet been approved by the acquisition date. Prof. Arie Belldegrun, however, an Israeli residing in the US who founded Kite Pharma and managed it almost as a one-man show, has every reason to be satisfied. Not only did he make a giant deal (his giant pharma deal), but he also made sure that the product would reach the market and be used to treat patients. Now he is going on to something else.
"Kite Pharma is now a separate organization within Gilead Sciences. It's retaining the advantage of independence and gaining the advantage of access to enormous resources," Belldegrun told "Globes" ahead of the MIXiii Biomed 2018 conference that begins tomorrow in Tel Aviv. "The best example of this advantage is the acquisition of Cell Design Labs in late 2017, a company that will support the next generation of Kite Pharma's products, and technological cooperation with Sangamo, which engages in genome editing and will enable Kite Pharma to develop the next generation of cancer treatment utilizing CAR-T technology."
These partnerships are much simpler when you sign with a company like Gilead Sciences. They create a technological envelope around Kite Pharma's products designed to gradually improve patients' access to the product, simplify the production process, and lower the product's cost. Gilead Sciences faces all of these challenges for the current product.
"Globes": What is your job in Kite Pharma now, and how long do you plan to stay with the company?
My current position in Kite Pharma is strategic advisor. Whatever official job I may or may not have in the company, I'll always value the team's innovative work and support as much as I can augmenting the public's access to CAR-T treatments for people whose prognosis without these treatments is unfortunate."
Investment in a potential competitor
In recent months, Belldegrun report two more directions in which he is active. One is venture capital fund Vida Ventures, while the other is a new company he founded named Allogene Therapeutics, in which Vida Ventures has also invested. This is on top of his job as chairperson of Israeli company Urogen Pharma (Nasdaq: URGN), which treats bladder cancer and upper tract urothelial cancer. Urogen's current market cap of $900 million is to a large extent a result of Belldegrun's association with the company.
"Vida Ventures is a natural extension of what we have done up until now in order to create innovative companies. All of Vida Ventures' founders share my view that you have to take a chance in order to achieve a medical breakthrough," Belldegrun says. "This is a fund that will spread its investments among companies that will push innovation ahead.
"Kite Pharma made the first revolution in cell treatment by developing autologous CAR-T (the use of the patient's own cells in treatment - a process that requires complicated, lengthy, and expensive production). Vida Ventures, which invested in it, wants to bring the next revolution, allogene CAR-T treatment, i.e. as a shelf product, for blood cancer and solid tumors (all cancer that is not blood cancer). We acquired Pfizer's products in this area in order to create a powerful company that also has leading technology in the development of CAR-T products. Dr. David Chang, head of R&D and medical manager at Kite Pharma, who founded Allogene together with me, will manage it. I'll be the company's chairperson. When Allogene was founded, we held one of the largest initial financing rounds ever for a pharma company. We raised $300 million from TPG, the University of California, BellCo, Pfizer, and even Gilead Sciences itself." It appears that despite possible competition, Gilead Sciences wants to hedge its CAR-T risks, and also believes a lot in Belldegrun and wants to closely follow any company in which he is involved.
Belldegrun, who sold two pharma companies for a total of $1.8 billion before the Kite Pharma deal, is now arousing interest among pharma investors worldwide. This is one of the reasons for Urogen's $900 million market cap.
Where is Urogen headed?
Last year was a turning point for Urogen, not only because of its IPO, but also because its leading product entered clinical trials for treatment of upper tract urothelial cancer, a condition for which there is no approved drug. Treatment for it frequently requires removal of a kidney together with the urinary tract. If and when our treatment is approved, it will be a real breakthrough. An analysis of the interim data from this trial will be presented next week at an American Urological Association conference in San Francisco. It is already known that the results indicate complete remission in 57% of the cases, which is a very promising result."
Urinary tract cancer, however, is only the beginning for Urogen, Belldegrun says. The company has developed technology for delivering drugs using a gel that is injectable in liquid form and solidifies in the desired area, before decomposing and releasing its drug gradually, including in places where drugs are currently washed too easily out of a patient's body. "The product is suitable for treatment of a range of urological cancers, overactive bladder (the company has an interesting partnership in this aspect with botox giant Allergan, G.W.), and digestive tract diseases, gynecological medicine, and even treatment for obesity."
Are you more available now for involvement in Israeli companies?
"I want to be involved in promoting innovative inventions that achieve medical progress, and Israel has such technologies in both higher education institutions and local industry. So I definitely see many opportunities to be involved in Israeli companies in the future.
"The key to success in the biotech and pharma sector in Israel is cooperation between different sectors, between different areas of knowledge, and also with companies from other countries. Learn from someone who already has experience. Find the right people to take your torch ahead to success and the patients waiting for your products."
Published by Globes [online], Israel business news - www.globes-online.com - on May 14, 2018
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