Developers of the breakthrough oncology cancer drug

Technology

Ibrutinib (IMBRUVICA®) is a breakthrough oncology drug developed by Pharmacyclics and approved for the treatment of four types of blood cancer, including the most common form of adult leukemia. It has continued into trials aimed at proving efficacy on other types of cancer as well as solid tumors.

The drug owes its existence to Robert Duggan’s brave and sustained investment and management strategy, which he continued at considerable risk long past the point when others would have walked away.

Ibrutinib is a drug that works by binding to a protein called Bruton’s tyrosine kinase, which is important in B cells. It is used in the treatment of B cell cancers like mantle cell lymphoma, chronic lymphocytic leukemia, and Waldenström’s macroglobulinemia. The drug received its first approval from the Food and Drug Administration in late 2013, 22 years after Pharmacyclics was founded. Mr. Duggan’s involvement in the company led to massive revenue increases and concluded in its $21 billion sale to AbbVie.

Forbes magazine summed up the courageous investment approach taken by Bob Duggan:

“…Duggan began buying Pharmacyclics shares in the fall of 2004 when the company’s stock was trading around $10 a share. By late 2005, Duggan amassed a 10% stake as the company’s shares plunged below $4 apiece. Then he sat tight as Pharmacyclics shares continued to tumble… First to $3 by early 2007… then to $2 a share within a few months.

“In July 2007, instead of bailing from the drug maker, Duggan doubled down, building his stake in Pharmacyclics to 17%. But the stock continued to drop, falling below $1 by early 2008. In May of that year, Duggan launched a tender offer to buy as much as 4 million Pharmacyclics shares at $1.05, to take control of the struggling company. When the tender expired, he’d purchased nearly 2 million shares from participating sellers, building his stake to 24.2% of the company.

“‘It was on a collision course to disaster’ Duggan said of the company at a June 2009 commencement address at the University of California Santa Barbara. ‘That’s why it was available for me to take over’ he added.

“As Pharmacyclics limped on, this time with Duggan at the helm, he just kept buying. In 2009, Duggan bought 4.75 million shares at a price of $1.28, and in 2010 he bought another 1 million shares at a price of $6.51 apiece, putting his total holding in excess of 13 million shares. Then the buying stopped.

“What paid off, as Forbes’s Matt Herper reported last April, was Imbruvica, a drug acquired by the management team he replaced, which treats chronic lymphomatic leukemia and caught the eye of drug powerhouses such as Johnson & Johnson.

“After a series of positive trials, J&J cut a deal in 2011 to co‐promote Imbruvica for $975 million, and as the drug [went] mainstream, Pharmacyclics caught the attention of large pharmaceutical firms looking for the next big treatment to put in their portfolios.

“Ultimately, AbbVie beat out J&J late on Wednesday night in a bidding war for Pharmacyclics. AbbVie believes the takeover will dramatically bolster its drug pipeline, paying off over the long‐term. The move also comes as AbbVie was in search for acquisitions as its blockbuster drug Humira goes generic.

“‘Team Pharmacyclics is honored and enthusiastic to join the AbbVie organization. We share a common purpose. Together and as one, our focus remains to create a remarkable difference for patient betterment around the world,’ Duggan said of the deal.

“In total, he stands to make over $3 billion from his investment in Pharmacyclics, an over seventy‐fold return. It’s the kind of profit that compares favorably to the other well‐celebrated investment returns to come out of the market downturn.”