This article was written on February 26th and was never posted. Pharmacyclics was bought out a few months later. No edits were made to the current article, besides this editor’s note.
In a classic rags to riches tale, a cancer drug bought for $6.6 million looks to be worth $18 billion
A tiny California pharmaceutical firm named Pharmacyclics has hit the jackpot. The compound the company purchased for just $6.6 million almost 10 years ago has a good shot at becoming a blockbuster cancer treatment. These high expectations for Imbruvica have led to Pharmacyclics looking to sell itself for as much as $18 billion.
Warren Buffett’s 2018 Activist Investment
Analysts note that cancer is one of the most profitable sectors of drug development, and Imbruvica offers the advantage of an easy-to-use pill costing close to $100,000 a year with less serious side effects of chemotherapy, and patients can stay on the drug for an extended period.
“Gleevec-like” revenue for Imbruvica
Given its advantages, Imbruvica is expected to become a best-selling oncology drug, with estimated sales of over $4 billion by 2019, according to consensus analyst estimates.
Imbruvica “certainly has the potential of Gleevec-like revenue,” noted Brian Druker, director of the Knight Cancer Institute at Oregon Health & Science University, highlighting Novartis’s $4.75 billion leukemia drug. “It’s a big deal and the responses have been impressive” in chronic lymphocytic leukemia.
The drug has now been approved for both mantle cell lymphoma and chronic lymphocytic leukemia, but the value of the drug was not obvious before the trials, Druker pointed out. “There was no slam dunk there. It was risk taking and vision and believing in something and getting into patients and seeing what happens.”
Imbruvica turned Pharmacyclics CEO Duggan into a billionaire
The new drug has made a billionaire out of CEO Robert W. Duggan. Duggan owns 18% of Pharmacyclics shares, which represents the bulk of his $3.2 billion net worth, according to the Bloomberg Billionaires Index. He amassed most of the shares at a cost of $42 million between 2004 and 2011, when he used his holdings to take a board seat and eventually control of the company.