Professor Zelig Eshhar is the man who registered the patent on the cancer treatment drug developed by Kite Pharma, recently acquired by Gilead for $11.9 billion.
"Globes": Do you believe that any party in Israel could have financed the product and brought it where it is today?
Eshhar: "On the one hand, yes. The level of investment in the product before it reached Nasdaq was something that an Israeli concern could certainly have financed. On the other hand, Kite Pharma founder Professor Arie Belldegrun, with his energy and connections, brought it to a completely different place (Eshhar previously tried to interest various concerns in Israel in financing the drug, but all of them told him that it was too early, or that the product was not effective enough, E.T.).
Was the development already in its final form in the 1980s?
"Almost. I went to the National Institutes of Health (NIH), where I met for the first time Professor Steven Rosenberg, who later became the first doctor to conduct clinical trials with the technology. Rosenberg heard about my technology, and offered me exceptional conditions. We set up a team there, and had the best of everything. I only wish I had it now."
They say that Belldegrun didn't want the product at first. Today, he's devoting all his efforts to it.
"When Arie founded Cougar Biotechnology, which developed a drug for prostate cancer, and was eventually sold to Johnson & Johnson for $1 billion, I contacted him and offered him the technology, but he was busy with Cougar's product, and maybe didn't think that he had enough capital for such a production. Only after he sold Cougar did he get back to me with an offer to buy the rights to my patent. At that time (2009-2010), the technology was already arousing great interest, and there were negotiations with several large companies." (from an April 2015 "Globes" interview with Eshhar, who was awarded the Israel Prize).
Israelis can be very provincial. In at least some of the media headlines, Kite Pharma was portrayed as a "huge Israeli exit," and the impression was given that it was an Israeli company. The truth is very different. Kite Pharma is not an Israeli company; it is a 100% US company. It does no business in Israel; its nearly $12 billion exit has no significance whatsoever for the Israeli economy, and will contribute nothing to it: no jobs, and the tax contribution will be marginal, and certainly not on the scale of Mobileye, for example. Let me say it again: Kite Pharma does not have even one employee in Israel (and has no reason to employ anyone here), and certainly does not pay taxes in Israel. There are no Israelis on the company's management team or board of directors. This is a US company for all intents and purposes. The word "Israel" appears exactly once in the company's full documents - where registration of the company's patents is concerned. The fact that every story about the company mentions the small holdings of several Israeli financial institutions in it is a bad joke. Everyone should remember that Israeli financial institutions are of course entitled to invest in any foreign share, such as Google, Amazon, Facebook, Apple Computers, and so forth. Kite Pharma is one of those foreign shares, and nothing more.
Of course, there is cause for pride in the fact that Eshhar, owner of the patent for Kite Pharma's drug is "one of ours," i.e. an Israeli researcher at the Weizmann Institute of Science. Another source of pride is Kite Pharma founder and CEO Arie Belldegrun, a graduate of the Hebrew University Medical School who did his post-doctorate at the Weizmann Institute, where he met Eshhar, and Kite Pharma later bought his patent for the cancer drug. Belldegrun was also a director at Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) until recently, resigning at the peak of that company's crisis. Beyond this Israeli connection, however, the Kite Pharma exit has no great significance for Israel. All it means is that one more invention, or parts of an invention, came from an Israeli laboratory (at the Weizmann Institute in this case) and fell into foreign hands. It is another enormous missed opportunity in the field of biomedicine and ethical drugs.
It is necessary to realize that while Belldegrun is indeed a big biomedical brain with many achievements in the field, he is a brain that has left Israel, and we all have to ask ourselves why he left, why Kite Pharma is not an Israeli company, and why its (as yet non-existent) product was not developed in Israel and will not be manufactured there. The headline in Israel for the Kite Pharma exit should ask why Israel lost out on it, even though the patent came from Israeli laboratories, albeit with US cooperation.
Belldegrun is likely to keep his experiences on the Teva board of directors to himself. Of all the directors in the company, what he has to say is the most interesting, but he is unlikely to divulge what happened there with the inflated deal with Allergan, and exactly what he said at the board of directors meeting that approved the deal that led Teva into its current major crisis. The Kite Pharma exit and his other exits only highlight the lost opportunity. Kite Pharma, still without a product and without approval for a product, was sold for $11.9 billion in cash. Teva yesterday hit another low point, with a market cap of $16 billion. It is simply inconceivable: a company with an enormous potential, but no product, is worth three quarters of a huge veteran company with at least dozens of products, including products in the ethical drug sector. Kite Pharma is actually one of the indirect reasons for Teva's decline - for the fact that Teva, which could have been a hothouse for developments like Copaxone, chose a huge inflated gamble on the generics market - a gamble that is now jeopardizing Teva's future and very existence.
It is true that developing drugs is a very long process, requires huge amounts of capital, and involves many failures, but Teva decided to neglect it, and when a major company like Teva neglects Israeli developments, there are enough competitors in the pharma industry ready to turn Israeli research into gold. Kite Pharma is one example of this research.
The Weizmann Institute is a fruitful source of biomedical research. According to previous estimates published in "Globes," the Weizmann Institute gets NIS 1 billion each year in royalties on medical and other developments, amounting to half of its budget. Directly and indirectly, the Weizmann Institute, together with other universities in Israel, is responsible for tens of billions of pharmaceutical sales. Only a few billions of this, however, results from drugs developed in Israel, like Copaxone, and far less than that is also made in Israel. The reports by Yeda R&D Company Ltd., the technology transfer arm of the Weizmann Institute of Science, are top secret, and there is a good reason for that. Exposing them will only highlight the scale of the missed opportunities. Instead of these inventions providing a base for a major pharmaceutical industry here, the commercialization companies are benefiting only the inventors and the Weizmann Institute itself (that is certainly natural and legitimate, and they are entitled to it), even though the research infrastructure from which they sprung is Israeli know-how, as in the case of Eshhar.
Barriers in the pharmaceutical industry are especially high. Developing ethical drugs is a process requiring huge amounts of time, patience, money, and failures. When it succeeds, however, the profit is enormous - for the industry, the employees, and the state (provided that some tax is paid). For example, Pfizer's peak sales of Lipitor, a very popular drug for reducing cholesterol and fat in the bloodstream, reached $11 billion, and its profit on the drug was $9 billion, before competition from a generic version began. In addition to money, a great deal of experience and marketing power is required, and that is the reason why most developments wind up in the hands of major companies like Pfizer, Merck, and others at some stage. After all these qualifying statements, everyone who celebrated Kite Pharma's exit should weep over it - it is another part of the sale of Israeli know-how overseas for a mess of pottage. Instead of consolidating a splendid pharma industry here, Israel is selling the brains with their know-how to foreigners. More than anything else, Teva's decline and the Kite Pharma exit epitomize this sad and dangerous trend.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 30, 2017
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