Gilead paid $510 million for drug and just sold it for $3 million

Health, Fitness & Food

A drug at the center of a $510 million deal five years ago by Gilead Sciences Inc. was sold by the Foster City-based drug developer for $3 million.

The buyer, Sierra Oncology Inc. (NASDAQ: SRRA) of Vancouver, B.C., is led by Nick Glover, who was CEO of YM BioSciences. That is the one-drug company that Gilead (NASDAQ: GILD) bought in 2013 as it tried to diversify from HIV drugs into cancer and other conditions.

The drug, called momelotinib, was designed to treat myelofibrosis, a bone marrow condition where the body doesn’t produce enough blood cells. But while the 2016 results of a late-stage clinical trial in humans indicated momelotinib could be just as good Incyte Corp.’s Jakafi, other data were mixed, and Gilead shelved the drug.

Sierra has other plans for the drug, focusing it primarily on anemia as well as enlarged spleens in myelofibrosis patients. Anemia is an area in which patients treated in the Phase II and Phase III studies of momelotinib showed improvement, Sierra said.

“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,” Glover said in a statement.

Gilead, led by CEO John Milligan, ultimately could get more than Sierra’s $3 million upfront payment — if Sierra is successful in developing, winning regulatory approval of momelotinib and selling it successfully, the company would make milestone payments of $195 million, largely based on commercial sales.

Sierra, which has an experimental cancer drug in early-stage clinical trials and a preclinical cancer drug, said adding momelotinib would help it to diversify. It also said Wednesday that it has obtained a $15 million debt facility from Silicon Valley Bank to advance its drugs and buy momelotinib.

Sierra had about $125 million in cash and equivalents as of June 30.

—By Ron Leuty, reporter, San Francisco Business Times

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