Microsoft co-founder builds biotech legacy with $500M neuroscience odyssey
www.fiercebiotech.com/story/microsoft-co-founder-builds-biotech-legacy-500m-neuroscience-odyssey/2012-09-18Allen lieutenant David Capobianco, who took a seat on Plains’ board, touted the buyout as a “new direction” for Vulcan, which is known for investments in technology, real estate development, life sciences and financial services. Its current portfolio includes companies like online realty Redfin, biotech Juno Therapeutics and DreamWorks, the movie company.
www.seattletimes.com/seattle-news/environment/paul-allen-was-key-investor-in-pipeline-company-behind-calif-spill/New Cancer Technology Gives Investors a Shot in the Arm
Bristol-Myers Squibb Co.'s Yervoy melanoma treatment is among those immunotherapy drugs fueling red-hot interest in the sector and giving new hope in the fight against cancer. ENLARGE
Bristol-Myers Squibb Co.'s Yervoy melanoma treatment is among those immunotherapy drugs fueling red-hot interest in the sector and giving new hope in the fight against cancer. Photo: Bristol-Myers Squibb/Bloomberg News
By
Gregory Zuckerman and
Ron Winslow
Feb. 22, 2015 2:03 p.m. ET
George Soros, Michael Milken and David Bonderman are among marquee investors benefiting from early bets on a red-hot sector: young companies developing drugs that fight cancer by using the body’s immune system.
Interest in the nascent approach, known as immunotherapy, has taken off following the success of Yervoy and Opdivo, a pair of drugs developed by giant Bristol-Myers Squibb Co. The treatments could generate $8.5 billion in annual revenue by 2020, Credit Suisse predicts, or more than half the New York company’s 2014 revenue of $15.9 billion.
Hopes that fledgling companies will repeat and extend upon those advances are behind the recent share-price gains in Juno Therapeutics Inc., Kite Pharma Inc. and bluebird bio Inc. Their treatments, which take a different approach than Bristol-Myers’s, haven’t yet reached the market.
“It’s clearly something new and it won’t be smooth sailing,” said Arie Belldegrun, Kite’s chairman and chief executive. “But if we can deliver what we promise, for the first time you won’t talk about remission, you can even talk about cure of cancer.”
Earlier this month, Standard & Poor’s released a report naming five cancer immunotherapy agents among its top 10 drug prospects for 2015, underscoring growing enthusiasm for the strategy. Drugs made the list for their likely blockbuster sales potential as well as their probable impact on individual companies. No such drugs were included on its previous list in 2009.
More companies are gaining “insights into underlying biology plus an understanding of biological systems that should transform the treatment of many extremely serious diseases,” said James E. Flynn, managing partner at Deerfield Management Co., an investment firm betting on the area.
Among companies fueling current interest, only Bristol-Myers and Merck & Co. have had immunotherapy drugs approved by the U.S. Food and Drug Administration. For many of the smaller-cap companies, it will be a year or more before studies help clarify the benefits, risks and market potential of their treatments.
Shares of Juno, which is developing therapies for leukemias and lymphomas, ended Friday’s trading at $45.52, following a December initial public offering at $24. Kite Pharma has soared to $62.80 from $28 since the beginning of October. Bluebird bio, driven more by advances by gene-therapy drugs than in immunotherapy, has climbed to $93.32 from $39 since early December.
The three companies’ treatments are complex, likely to be expensive and cause severe side effects for some patients; none has yet been approved. But the strategy has shown dramatic results in leukemia and other blood cancers in early trials and researchers are racing to find ways to extend their use to other cancers.
Indeed, researchers world-wide are working on various types of immunotherapy treatments, as well as strategies to combine them with existing treatments to tackle all kinds of cancer and extend their benefits to more patients.
Mr. Bonderman, a founder of TPG Capital, is Kite’s fourth-largest shareholder and a board member, with over 6% of the company’s stock from an early, personal investment, according to FactSet. He has seen his holdings soar to about $145 million in value.
Another early investor, hedge-fund veteran Donald Sussman, founder of Paloma Partners Management, holds a Kite stake worth about $100 million, according to regulatory filings. Representatives of Messrs. Bonderman and Sussman declined to comment.
George Soros’s Soros Fund Management owns about 1.7% of Kite Pharma Inc.’s shares. ENLARGE
George Soros’s Soros Fund Management owns about 1.7% of Kite Pharma Inc.’s shares. Photo: European Pressphoto Agency
The firm that manages George’s Soros’s wealth, Soros Fund Management, is Kite’s 11th-largest holder. It owns about 1.7% of the company’s stock after purchasing the shares at less than $30 each last summer, according to filings. A spokesman declined to comment.
Michael Milken also was an early investor in the company, said Mr. Belldegrun. A spokesman for Mr. Milken, who declined to confirm the investment, said the former junk-bond king’s “more than four decades of philanthropic work in medical research and public health has given him a deep understanding of the potential for lifesaving advances.”
Deerfield Management owns about 4% of the shares of bluebird, according to the most recent filings, while Steve Cohen’s Point72 Asset Management LP owns nearly 2% of the shares. A spokesman for Point72 didn’t comment.
Amazon.com Inc. founder Jeff Bezos and Microsoft Corp. co-founder Paul Allen are investors in Juno, says Robert Nelsen, co-founder of Seattle-based venture-capital firm Arch Venture Partners, which controls stakes worth about $1 billion in nearly a half dozen companies pursuing immunotherapy and other cancer treatments. Arch owns about $470 million in shares of Juno, a company Arch co-founded, as well as $78 million of bluebird.
“I have been creating biotech companies for 28 years and this is the first one where the jaded doctors who have seen everything and have lost hope are shaking their heads in amazement,” said Mr. Nelsen, a managing director at Arch, which manages more than $2 billion.
A spokesman for Mr. Allen confirmed his investment in Juno. A spokesman for Amazon.com declined to comment.
Pension funds and venture-capital funds also are among those riding immunotherapy investments higher. The Alaska Permanent Fund Corp. was an early investor in Juno and controls a nearly 30% stake in the company worth about $1.1 billion. The state investment fund has yet to cash out any shares.
Bristol and others working on immunotherapy drugs, including Merck, Roche Holding AG , AstraZeneca PLC and Novartis AG , are so large the financial impact of their immunotherapy drugs could be diluted by other businesses. That is why investors are bidding up smaller companies.
Not all the immunotherapy news has been upbeat, though: Dendreon Corp., whose prostate cancer vaccine Provenge was hailed as the first immunotherapy at its approval in 2010, foundered amid limited efficacy, marketing gaffes, and better rival medicines. Dendreon is expected to be sold this month under bankruptcy court supervision to Valeant Pharmaceuticals International Inc. for $495 million.
The intense interest in immunotherapy, an idea that dates back to the 19th century, has emerged from a key discovery researcher James Allison made in the mid-1990s.
Dr. Allison, now the head of immunology at MD Anderson Cancer Center in Houston, discovered a way of releasing a natural brake on the immune system. Dr. Allison’s work paved the way for the development of Bristol-Myers’s Yervoy drug, which was approved in 2011 and was the first drug ever shown to improve survival in patients with advanced melanoma.
“Our understanding of the immune system, and how it interacts with cancer, has grown dramatically,” says Dr. Jill O’Donnell-Tormey, chief executive and director of scientific affairs at the Cancer Research Institute, which funds immunotherapy research.
Write to Gregory Zuckerman at gregory.zuckerman@wsj.com and Ron Winslow at ron.winslow@wsj.com
www.wsj.com/articles/new-cancer-technology-gives-investors-a-shot-in-the-arm-1424631798
