UCLA, the inventors and its partners will receive $1.14 billion cash (plus future payments) for the drug from Royalty Pharma. This IP investment company owns stakes in various blockbuster drugs, including Humira, Remicade and Lyrica. It is Royalty’s biggest deal since the $3.3 billion it agreed to pay in November 2014 for royalties on Kalydeco.
In August 2005, San Francisco-based Medivation licensed Xtandi from UCLA and received US regulatory approval in September 2012. Medivation relies on Japanese pharmaceutical giant Astellas Pharma to distribute the drug worldwide. Its 2015 10-K states
Under our collaboration agreement with Astellas, we share equally with Astellas all profits (losses) related to U.S. net sales of XTANDI. We also receive royalties ranging from the low teens to the low twenties as a percentage of ex-U.S. XTANDI net sales.The drug has generated more than $3.4 billion in sales through December 2015. According to the 10-K statements, the global sales totaled $1.9 billion in 2015 and $1.06 billion in 2014. Its US sales were $392.4 million in 2013, and its US (i.e. only) sales in 2012 were $71.5 million.
Medivation’s 10-K states
We are required to pay UCLA (a) an annual maintenance fee, (b) $2.8 million in aggregate milestone payments upon achievement of certain development and regulatory milestone events with respect to XTANDI (all of which has been paid as of December 31, 2015), (c) ten percent of all Sublicensing Income, as defined in the agreement, which we earn under the Astellas Collaboration Agreement, and (d) a four percent royalty on global net sales of XTANDI, as defined. Under the terms of the Astellas Collaboration Agreement, we share this royalty obligation equally with Astellas with respect to sales in the United States, and Astellas is responsible for this entire royalty obligation with respect to sales outside of the United States.UCLA and Medivation have had at least two lawsuits over the terms of this agreement. According to the 10-K, UCLA has accused it of not paying the 10% sublicensing royalty. Earlier, Medivation sued (unsuccessfully) to block UCLA’s licensing of a related compound to Aragon Pharmaceuticals.
UCLA received $33 million for multiple prostate cancer patents in FY 2013-2014 — the highest in the University of California that year. But 4% of $3.4 billion thus far should be worth about $136 million beyond the $1.14 billion for a total of $1.275m. This would not include “potential additional payments” from Royal Pharma, or revenues from the Aragon license.
As best I can tell, the most lucrative patent in University of California history. Many of us assumed that the previous winner was the family of three Cohen-Boyer patents, which created the biotechnology revolution through recombinant DNA, and allowed Herb Boyer to co-found Genentech. These patents expired in 1997; the best estimate I’ve seen (Feldman et al 2007) places the total licensing revenues from those patents at $255 million, split between Stanford (Cohen) and UCSF (Boyer). This total does not include the $300 million that Genentech paid (after years of litigation) to City of Hope — a LA-area cancer research hospital — for related discoveries.
Finally, what is often not remarked is that at most US universities, royalties are shared with the inventors. The inventors in this case Michael Jung of UCLA, Charles Sawyers (then a Howard Hughes Medical Institute researcher at UCLA, now at Sloan Kettering). The USPTO lists 8 granted patents jointly authored by the two men, including two (8,445,507 and 8,802,689) explicitly about prostate cancer therapy.
According to the UCLA patent policies, UCLA keeps 50% of patent royalties, 35% goes to the inventor and 15% goes to the inventor’s lab (which for Jung is the chemistry department). The Royalty Pharma press release says:
By virtue of patent and licensing agreements administered by UCLA, the campus, the researchers and Howard Hughes Medical Institute shared a royalty interest in worldwide net sales of Xtandi. UCLA owns 43.875 percent of the royalty interest.Using the math, 43.875% of $1.14 billion is $500 million, but UCLA says it will receive $520 million. (I contacted UCLA PR reps to clarify but so far haven't heard back). It may be that the $520 million includes both the $500 million and about $17 million (15% of $1.14 billion) for its chemistry department.
Still, this implies that Howard Hughes will receive about $70 million but the institute has not posted any mention on its media web page. And this leaves over $500 million to be split by the two lead inventors, other named inventors and possibly (as provided by UCLA policies) non-inventors who contributed towards development of the invention.