Soon-Shiong’s NantCell in $356M deal for underperforming CytRx cancer drug

Controversial billionaire biotech entrepreneur Patrick Soon-Shiong and one of his I-O outfits NantCell has paid $13 million up front, with $356 million in biobucks on the table, to license CytRx’s orphan cancer drug aldoxorubicin.

The drug has not however had an illustrious past: A year ago, microcap CytRx saw its shares plunge 63% when news hit that its late-stage candidate aldoxorubicin underperformed in helping 433 patients with second-line soft tissue sarcoma (STS).

Things had long been precarious given that the FDA had slapped clinical hold on the trial in late 2014 after a patient using aldoxorubicin died, although this was lifted several months later.

The biotech has maintained a positive stance, saying that this “interruption” messed with its data, as it couldn’t show a follow-up on progression-free survival (PFS) for around half of the patients in its study as a result.

With the data it did have, the company said last July that it missed its primary endpoint at month 24, as the study failed to show a significant difference between aldoxorubicin and investigator’s choice of therapy (4.17 months versus 4.04 months).

There was a small bright spot, however, as objective response rate (ORR) and disease control rate (ORR + stable disease of around four months) showed a near doubling in the aldoxorubicin arm compared to investigator’s choice, including in patients who previously received treatment with doxorubicin.

The med is an adapted form of the chemotherapy agent doxorubicin, and the biotech has put all of its eggs into this one drug basket.

Now, under its NantCell deal, a subsidiary of the better-known NantWorks (and one that has been on a small deal spree of late), CytRx has penned a global strategic for the exclusive rights to develop and sell aldoxorubicin “for all indications,” as well as potential combos.

Last month, the biotech set out plans to submit a rolling NDA to the FDA for aldoxorubicin as a treatment for STS, using a mixture of data as “scientific bridges” between its candidate and the reference med doxorubicin, in the hopes this can boost its chances of approval.

In what is becoming a common deal structure for Soon-Shiong and his constellation of companies, he has paid $13 million in the form of CytRx common stock priced at $1.10 per share, which NantCell says is a 92% premium to CytRx’s most recent market price (it was in early trading at 57 cents this morning on the Nasdaq, with a market cap of less than $90 million).

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Under the pact, CytRx will also gain increasing double-digit royalties for sales of aldoxorubicin, should it gain approval, for STS, and mid- to high-single-digit royalties for any and all other indications. The biobucks deal could be worth over $350 million, but a lot needs to go right for that to be realized. 

NantCell will be responsible for all future development, manufacturing and commercialization expenses, it said in a brief update. CytRx has also issued NantCell a warrant to purchase up to 3 million shares of common stock, also at $1.10, over the next year and a half.

“We are excited to forge this new relationship with NantCell. They are committed not just to bringing aldoxorubicin to the market for patients with soft tissue sarcomas, but to expand aldoxorubicin’s potential use in combination with both immuno-oncology and cell based therapies to better serve patients suffering from cancer,” said Steven Kriegsman, CytRx’s chairman and CEO

“Aldoxorubicin’s distinct profile makes it the first anthracycline to allow for continuous dosing without increasing cardiac toxicity which would be beneficial for the 17 indications for which doxorubicin is currently approved and other indications where it could provide benefit,” added Soon-Shiong, NantCell's chairman and CEO.

“We aim to rapidly incorporate aldoxorubicin into multiple treatment protocols for major tumor types like breast and brain cancers as well as sarcomas.”

But some on Bio-Twitter did not see the plus-side for the deal: Senior STAT biotech writer Adam Feuerstein said: “It's a puddly [sic] $13M licensing deal w/ Nantworks. Rest is hope and prayer. Kriegsman and Soon-Shiong deserve each other […] Piddly. Small. Inconsequential. Meaningless. Laughable. Hilarious. I guess this is Kriegsman stab at keeping his job.”

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