San Francisco: In April 2016, John Hood went and told his wife that he had put down a quarter million dollars of their money to try and buy back a drug he’d helped invent, after it had failed in the hands of French drugmaker Sanofi.
There was a catch: Hood had 120 days to find $5 million more to close the deal. If he didn’t, his down payment would be forfeit. “Are you mad at me?" he asked.
Hood got the money from venture capital firm Medicxi Ventures Inc., his wife wasn’t angry, and on Sunday, nearly two years later, Celgene Corp. announced a deal to buy Hood’s company Impact Biomedicines Inc. and the drug for $1.1 billion in cash. Future incentive payments could make the deal worth as much as $7 billion.
While Hood recouped his initial investment when Medicxi stepped in, he kept a “big stake" in the company, he said. He declined to share specifics, saying the amount is “enough where I wouldn’t want to answer the question".
The deal with Celgene came together over 18 sleepless days, Hood said, after an initial contact in October. Among the hardest decisions was whether Impact should have held onto the drug, called fedratinib, and marketed the treatment itself. The company was ready to hire a commercial team this month, Hood said. The drug is being developed for the treatment of myelofibrosis, a bone marrow cancer.
“You have no idea how many times we debated that question," Hood said in an interview at the J.P. Morgan Healthcare Conference in San Francisco. “We could have launched it."
A long history
It was a particularly personal decision for Hood, who co-invented fedratinib while working at a company called TargeGen Inc. TargeGen sold to Sanofi for a $75 million up-front payment in 2010, only to see the drug shelved after patients in trials developed a neurological condition known as Wernicke’s encephalopathy.
Hood says Impact has shown that the Wernicke’s encephalopathy cases were not associated with the drug and that fedratinib’s profile should make it competitive with Incyte Corp.’s treatment Jakafi, which also treats myelofibrosis.
Analysts see mixed prospects for fedratinib: if it is able to compete with Jakafi as a first option for patients, it could become a blockbuster. If it’s limited to a second-line therapy for patients for whom Jakafi doesn’t work, it’s unlikely to break the $1 billion-a-year sales mark.
Hood and his team are adamant that the drug will work, and that they’ll get paid. Celgene will pay as much as $4.5 billion if global sales of fedratinib reach $5 billion.
“We’re going to get a lot of that earn-out—it’s not just biobucks," said chief business officer Charles McDermott.
The Impact team will work closely with Celgene to see fedratinib to approval, Hood said. The drug has also been in development for polycythemia vera, another form of blood cancer.
“The founding of Impact was motivated by getting the drug to patients—and we decided that Celgene was the best vehicle to do that," says Hood. “If they don’t get it to the finish line, we’ll hunt them down." Bloomberg