The stakes of drug development have dramatically increased with the advent of Gene Therapy and Car-T, and the cost of development increasing exponentially every year. Drugs with Billion Dollar potential going bust, and at the same time, a single successful molecule spewing gushers of cash. The case in point is of a small but clever oncology outfit that opportunistically paid just $3 million in cash for an FDA reject and turned that into a $2 Billion Blockbuster! 

Hunt for The Next Blockbuster! 

Gilead was hunting for the next blockbuster when their researchers spotted a small biotech working on a JAK Inhibitor and going toe to toe with another - both were  in 3rd phase – and the FDA was evaluating both and the clock was ticking – so Gilead's scientists analyzed reams of data of their target company and concluded that – they shouldn’t wait for the formal approval from the FDA and risk losing the drug to their competition – so the bean counters and marketers ran their forecasts and they loved what they saw - billions of dollars pouring in year after year, and the management to close the deal quickly offered to pay cold cash. A huge pile of Benjamins landed on the desk of the tiny Startup CEO who was betting his entire life on a single drug! The pile of cash so huge ($510 million) he immediately grabbed a pen from the guy sitting next to him and signed instantly on the dotted lines! Then he put all that cash in duffel bags and disappeared.  

On their way home the Gilead guys watched the Excel Magic performed by their bean counters, the numbers looked better than the drug itself, it was magical! The next couple weeks went by quickly, the Gilead scientists harvested and shared fresh data with the FDA, complied with additional requests and waited anxiously, losing some hair and a lot of sleep over the next couple of months then one day the JAK inhibitor turned into a Jackass!  

Just like that! 

Dreams vanished, egos deflated and the CEO was ready to get this thing off his mind and off his hand for lunch money! And that’s exactly what he did – a small time hustler – Sierra Oncology picked up the failed drug for just $3 million cash and a bunch of promises with a lot of caveats, they signed a piece of paper, Sierra CEO dropped the lunch money and disappeared from Gilead’s headquarters as quickly as he can! 

No one has heard from Sierra until now!  

Last week Sierra emerged from their long hiatus and dropped a huge bomb that astonished everyone, especially, the Gilead’s top brass wandering in the mountains caught by surprise and tried to hide under the rocks– but the news was huge so they changed their tactics to save their face- the drug that Sierra paid just $3 million and incubated for only 3 years sold successfully to Gilead’s, GILD, biggest rival Glaxo, GSK, for a cool $2 Billion Dollars.  

The Birth of a Redemption Legend 

Glaxo essentially paid Sierra $2 Billion for just looking under the hood a little more carefully – not bad for holding the hood up a little longer – and with that the legend of the greatest redemption of a billion-dollar drug was born!  A Trash to Treasure Drug Story that will make you put on your white coat and stay in your lab a little longer! 

Editor, Daily Stock Deals 

Sources: The Company, OxBridge Research, WSJ, Daily Stock Deals