UC's biggest drug bonanza - ever?

On Friday, UCLA announced it had sold rights to the prostate drug Xtandi (enzalutamide). The sale could make the drug University of California’s most valuable biomedical patent family — ever.

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.

The importance of teamwork

One of the major reasons for the existence of KGI is to span the gap between the academic and corporate views of life science research. We all tend to focus on the nature of the output, i.e. basic vs. applied science. However, as our students discover during their yearlong projects with companies, the way work gets done is also very different.

One area of potential culture clash is the real world importance of teamwork, as highlighted by an article earlier this month in Nature Bioentrepreneur. A few excerpts:

From academic solos to industrial symphonies
Gwen Acton, Alicia Gómez-Yafal & Emily Walsh

Published online: 17 May 2012

Academic researchers often need to stand out to advance, but the corporate world calls for team players. Moving from one world to the other can be a culture shock.
...
Individual project ownership is often encouraged and rewarded in academia, yet this approach in industry downplays the contributions of the team and inhibits key communication required for the success of highly multidisciplinary drug development projects. ... Over the years, we have seen many scientists undermine their careers by trying to do too much on their own.
...
Individual project ownership, and the recognition that follows, is the pillar on which careers are made or lost in the academic arena. ... Competition is indeed the name of the game in academia, and it is arguably not a bad thing. In industry, on the other hand, rapid, nonlinear career evolution is business as usual. Competition is reserved for external parties and has no place within your team. Development of the product, which will bring benefit to the patient, is central. Individual contributions routinely take a peripheral place, and any meritocracy is team based, because drug discovery projects are among the most multidisciplinary projects of all scientific endeavors.

Going solo in this atmosphere is at best a kamikaze approach and definitely career limiting, in our experience. ... Scientists who are not team players are often passed over for roles in startup biopharmaceutical companies. This is because industrial R&D is as much a team- and people-oriented effort as one that relies on an individual with particular expertise. As one venture capitalist (VC) puts it, when selecting startup management, “choose attitude over aptitude”. These views are likely shocking for scientists in academia, but they are widely held in industry.

I am going to recommend this reading for our entering students, particularly those in our PPM program (the world’s first post-PhD master’s program) who have chosen to leave the world of academic science in hopes of finding a corporate position. A graduate professional education is as much about developing norms and expectations as it is imparting specific technical or business knowledge.

KGI's related diversification: PharmD in pharmacogenomics

Like corporations, universities (and other nonprofits) often pursue related diversification to leverage existing assets and achieve economies of scope. Today the Keck Graduate Institute of Applied Life Sciences announced its planned partnership with another LA-area private college, Chapman University, to launch a new graduate pharmacy school in Fall 2014.

I don’t know as much about Chapman, but at KGI it’s a chance to leverage our understanding of human healthcare, business, our labs, our researcher and our industry connections (among other things). It’s an exciting opportunity for KGI to do more to fulfill our mission to translate into practice the power and potential of the life sciences for the benefit of society.

Here is the official announcement:

KGI Partners with Chapman University for New School of BioPharmacy
Innovative School of BioPharmacy, set to open in 2014 in collaboration with Chapman University, rethinks the role of the 21st century pharmacist.

February 28, 2012

The presidents of Chapman University and Keck Graduate Institute (KGI) have announced plans to establish a joint School of BioPharmacy, initially launching at the KGI campus in Claremont, California. The school will focus on preparing graduate pharmacists for professions in biotechnology and the pharmaceutical industry as well as for modern pharmacy practice. The school will open in fall 2014, pending national accreditation.

"This collaboration is a remarkable opportunity," said James L. Doti, president of Chapman University. "It builds on KGI's innovative professional master's and postdoctoral programs and close biotechnology and pharmaceutical industry ties, and takes advantage of Chapman's strengths in computational sciences and entrepreneurship."

The new Chapman-KGI School of Biopharmacy will reorient the Doctor of Pharmacy degree toward crucial developments in pharmacogenomics. The program will reflect rapidly developing changes in the field, including the growth of personalized medicine, the delivery of biomolecules, changes in drug and device development, and progress in clinical trials and team-based operating environments. The curriculum is planned to equip graduates to become licensed pharmacists with sophisticated knowledge of the applied life sciences for modern health care practice, and experience with therapeutics, therapy management, and regulatory affairs to shape discovery in biotechnology and pharmaceutical companies. The school's vision reflects the ways in which pharmacists are increasingly asked to shoulder a primary role in matching drugs and therapies to a particular patient or strain of illness, as well as translating their clinical expertise into drug discovery in industry.

"The Chapman-KGI School of BioPharmacy will embrace this change in the profession," said Sheldon Schuster, president and professor of biochemistry at Keck Graduate Institute. "Current advances in genomics and the growing convergence of therapeutics, diagnostics and medical devices are creating new opportunities for pharmacists in the life-sciences industry and modern clinical practice. This new school will help prepare highly qualified individuals to take advantage of those opportunities."

The two universities have begun a national search for an entrepreneurial founding dean with experience in pharmacy education and industry. The first classes for the Chapman-KGI School of BioPharmacy will be held on the KGI campus in Claremont, while Chapman pursues construction of a 120,000-square-foot Science Center in the City of Orange. The new Science Center will house Chapman's portion of the School of BioPharmacy and the university's Schmid College of Science and Technology. KGI is planning a major capital campaign that will expand facilities for ongoing teaching, research programs and the Chapman-KGI School of BioPharmacy, which is expected to grow to a full enrollment of 320 students in the four-year PharmD program.

Keck Graduate Institute of Applied Life Sciences is a member of The Claremont Colleges. Along with other highly regarded graduate programs, KGI offers an innovative professional master's program that integrates rigorous science with business, clinical trial management and regulatory affairs. KGI represents The Claremont Colleges' first entry into graduate-level, application-based scientific research and education. It remains the only graduate institute in the country with this sole focus.

Tracing its history to 1861, Chapman University is one of California's oldest and most respected private institutions. The university is known for its commitment to deeply engaged learning, providing its 7,000 students with a remarkable educational environment from the moment they step onto campus. Chapman offers bachelor degrees in 47 majors, and graduate or terminal degrees in law, education, film, business, economics, the humanities and science.

Too many PhDs?

IT and other engineering companies talk about a shortage of skilled technical talent. However, Derek Lowe and his “In The Pipeline” blog this week talks about the converse case — too many PhDs in the life sciences, tied to a recent article in Nature News called “The PhD Factory.”

Of course the incentives are all wrong: many science professors want postdocs to help them with their research and teaching, without regard to their abilities to find career jobs after graduation. The problem is particularly bad in Japan and China, where the government has intervened to increase the supply in excess of market demand.

But the US and Europe are not much better. Compared to 30 years ago, half (if I understand their statistics) as many US PhDs are getting real academic jobs. In contrast, Germany is working to find PhDs jobs in industry.

Other solutions are being tried. The accompanying article, “Rehinking PhDs”, talks about an alternative developed at the Keck Graduate Institute. One of the Claremont Colleges, KGI is offering a business-oriented masters (the Postdoctoral Professional Masters) for life science PhDs who’ve given up on bench science and want to go into senior management or creating a startup. The careers blog of Science published interviews on Feb. 4 and Feb. 11 with PPM alumni who were very satisfied.

If any of these efforts cause American PhD programs to become more practical in their orientation, it’s money well spent. With government funding of pure research declining in relative importance, even the most research-oriented scientist must increasingly consider practical applications or at least science that might have such applications.