With just $3M upfront, Sierra buys an unwanted Gilead late-stage cancer drug

Gilead will get just $3 million for a cancer drug that saw trial flops back in 2016. (Gilead China)

Gilead paid billions to get into the CAR-T game with its purchase of Kite Pharma, and now it's looking to offload some unwanted cancer assets.

Today, one of those was the sidelined momelotinib, a JAK 1/2 and activin receptor type 1 inhibitor for myelofibrosis, a drug that’s already been through several phase 3 tests and has been used, the biotech says, in about 1,200 patients.

But of course, that belies its issues: Gilead spent half a billion dollars on this drug back in 2012 and hoped it could be a rival to Incyte’s Jakafi, which works in a similar way. But trial flops two years ago, including safety questions and an inability to rival Jakafi in the clinic, saw the drug pushed to the back of Gilead's shelf.

RELATED: Gilead’s rival to Incyte’s Jakafi stumbles in PhIII

This means Sierra Oncology is getting it for bargain-basement prices, paying a tiny upfront of just $3 million, with $195 million on the table in biobucks if all goes to plan. Most of that backloaded amount is, however, weighted in how well it may do in sales terms, should it gain approval.

Although small fry for Gilead, this is a lot for Sierra, which has a market cap of just $135 million as of this morning.

That’s why it’s gone cap in hand to the Silicon Valley Bank, borrowing up to $15 million in three $5 million tranches to help pay for and push on with testing for its new pipeline asset.

The small biotech will hope to have better luck than its Big Biotech seller, and that could be a struggle looking at its history; the company, however, remains upbeat: "Opportunistically adding this compelling phase 3 asset to our existing pipeline of next generation oncology drug candidates, SRA737 and SRA141, helps establish Sierra as a diversified late-stage drug development company with a commercial orientation," says Nick Glover, M.D., president and CEO of Sierra.

“The company is uniquely positioned to advance momelotinib towards potential registration with several members of the Sierra senior management team having played key roles in the development of momelotinib from its discovery through to phase 3 clinical trials. The body of clinical data generated from more than 1,200 patients dosed to date will guide and support our momelotinib development strategy. We believe an additional clinical study likely will be required to consolidate these clinical data, and over the coming months we plan to engage with key opinion leaders and regulators to further define an expeditious regulatory path for momelotinib."

The Canadian-based biotech was trading up 3.2% premarket on the news, although its shares are under $2.