Behind the huge Wall Street gamble on cancer drugs

IN 2011 Ahmed Hamdy, a clinical researcher, sat in a parking lot in Sunnyvale, Calif. On his mind: a new anti-cancer drug that, judging by the jargon of Silicon Valley, seems poised to change the world. Only Hamdy had just been fired as chief medical officer earlier that day from a startup called Pharmacyclics.

The scene of a sad doctor, his head in his hands, opens Nathan Vardy For Blood and Money: Billionaires, Biotechnology, and the Search for a Blockbuster Drug And it’s the first sign that Vardi won’t just spin the story of a massively successful company to remake an entire industry as a sensational victory. Nor is it a morality tale featuring grossly exaggerated action. Instead, Hamdi emerges as an earnest diplomat whose relapse reflects on the grim realities of the biotech revolution and how secret investors can make–and un-make–life-saving medicines.

Book review“For Blood and Money: Billionaires, Biotechnology, and the Hunt for a Hit Drug,” by Nathan Vardy (W.W. Norton & Company, 288p.).

Eventually, Hamdy went on to co-found another company, Acerta Pharma, and the story is at its most propulsive high as the two biotech startups race to develop two competing drugs now known as Imbruvica and Calquence. Both drugs inhibit the activity of an enzyme called Bruton tyrosine kinase, and these so-called BTK inhibitors have indisputably revolutionized the treatment of mantle cell lymphoma and chronic lymphocytic leukemia.

The origin story of these blood cancer drugs won’t be familiar to most readers, but as Vardi said, it’s part of the “hot new field of tyrosine kinase inhibitors.” In fact, it was so hot, AbbVie eventually bought Pharmacyclics for $21 billion, and AstraZeneca bought a majority stake in Acerta Pharma in another multibillion-dollar sale. Vardy argues that these two deals represented a climax Biotechnology and produced some of the “greatest deals ever on Wall Street — in any industry.”

At first, though, the compound that would later become Imbruvica was nothing more than a worthless raw material, developed by a chemist at another company. It was then sold, as part of a larger deal, for an “extremely low price”. In 2004, Robert Duggan, a former cookie seller, Scientologist, and serial entrepreneur, began investing in PharmaceleX, prompted by the death of his son from brain cancer. And eventually he threatened to fire the company’s board of directors, which led to the resignation of Pharmacyclics’ co-founder, a renowned Stanford scientist — all a precursor to Hamdy’s departure and all kinds of drama. The conflict reached unexpected places, such as a Chicago Oncology Society dinner, which, by Vardy’s account, degenerated into a literal arm-twisting and at least one F-bomb in a dispute over the drug’s therapeutic window.

Vardy takes us inside—to poster sessions, boardrooms—and eventually to the east, where Wayne Rothbaum, the New York stock trader turned jilted Pharmacelex investor, has bankrolled a rival upstart company, Acerta Pharma, where Hamdy and a former key employee work. Pharmacelex in California. It’s literally the quintessential Silicon Valley startup that ran out of a garage.

Along the way, Vardy explains what was so unusual: For the first time, stock traders were directly financing private biotechnology, opening up a “money spigot.” Like Duggan, Rothbaum writes, Rothbaum had no science background, yet the financier was well versed in the sciences and inserted himself aggressively into day-to-day operations—strictly enforcing stealth mode, keeping a close eye on patient data, and even securing a coveted byline on the Internet. study Published in the New England Journal of Medicine.

Underlying the anecdote is a wider conflict Between Business and Science: A desire to make money while making a serious effort to improve people’s lives. Vardy delves into several personal conflicts, which causes Rothbaum to open up to a journalist for the first time; Duggan hasn’t cooperated, aside from denying some juicy details.

Vardi does his best to guide readers through this isolated world in all its excruciating technical details, translating BTK inhibitors and “sharing preferred stock” into generic terms and elucidating the regulatory steps needed to gain approval for a new drug. However, Vardi, a former Forbes reporter and editor, does a better job of explaining the science than unpacking the financial nuances (such as Series A funding and annual net return). It’s a small detail and evidence that it identifies the Food and Drug Administration but not the SEC.

Perhaps in a painstaking attempt to bring to life the complex financial, legal, and scientific vicissitudes, Vardy packs his narrative with metaphors. Many of them include baseball. Many are familiar to the point of clichés. For example, Pharmacyclics initially failed to get one of its drugs approved three times, and then “refused to leave the plate.” Later, when a clinical trial pitted the two drugs directly against each other for the first time, and Acerta Pharma’s BTK inhibitor seemed to be better, Vardy wrote that AstraZeneca (which at the time had acquired Acerta) had hit the grand slam.

“For Blood and Money” is superficially similar to those classic airport books where some heroic outsider massively wins a previously unknown game. Duggan, after all, is a father grieving his son’s death, plucking through pluck and perseverance. “People were pushed aside in the process, dreams were shattered, strategies were co-opted, and companies bypassed,” Vardy writes. “But there is no denying that Duggan did the unthinkable and produced something that was saving lives.”

Lymph nodes shrink. Cancer patients get their lives back. And in the end, two drugs that may never become a household name are churning out a lot of money for investors. But Vardi goes further, reviewing a series of “forgotten scientists” (including the chemist who created the compound that became the first successful BTK inhibitor) and listing the people who revolutionized the treatment of chronic lymphocytic leukemia with BTK inhibitors. ”

Underlying the tale is a broader conflict between business and science: the desire to make money while making a serious effort to improve people’s lives.

A high-resolution view of the many details involved in such a specific subclass of drugs can make a comprehensive analysis a very subtle shadow. If nothing else, Vardy’s account puts some sting into the old opinion about drug development: “The first disaster is if you kill people,” Alex Heitel, biotechnology analyst, he told the journalist Almost 20 years ago. “The second disaster is if you handle it.” It treats, after all, clients, which is a particular problem in a niche market already constrained by the relative rarity of disease, and chronic medications that can cost More than $10,000 per month and can be taken for the life of the patient. (Vardi quotes Dogan as saying, “What it doesn’t have in terms of patient numbers, it makes up for in terms of years of treatment.” Up close and personal, how the game is played. This is how capitalism works.

In the years since, financial appetite for biotech stocks has waned, suggesting that these two exceptional companies were for once at the height of a bull market. But Vardi implicitly raises other questions: Are they also representative of the role that small start-ups play in the global pharmaceutical industry? And do startups like this really help medical progress?

Vardy describes, in one of his most powerful takeaways, how the doctors and scientists who worked in the trenches, filling out paperwork, recruiting patients, and administering these once experimental drugs felt emasculated by the companies’ outsized deals. As for the team at Acerta Pharma, he writes, “They felt cheated, that they deserved more and that they did more and that the fat cats were taking home a large chunk of their gains as a result of what they did.” These sentiments were baffling but connected to the harsh reality of the biotechnology revolution. Even in cancer drug development, most of the financial gain has often gone to capital rather than labor.”

Peter Andre Smith is a freelance reporter. His stories have appeared in Science, STAT, The New York Times, and WNYC Radiolab.

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