From a headline-generating $14 billion deal with Pfizer for his startup Medivation to his new company’s more recent acquisition of AnHeart Therapeutics, Dr. David Hung knows a thing or two about dealmaking.
Through a series of strategic moves, the CEO and founder of Nuvation Bio said his oncology-focused company is now in an enviable financial position.
“At this stage we're incredibly well capitalized,” he said.
The company’s first quarter revenue exceeded analyst expectations by nearly 26%, which is not always the norm in biotech where companies often find themselves teetering on the financial edge.
“The name of the game is to No. 1, not die, and two, to get to where you want to go,” he said. “And to get where you want to go, you have to have a cash runway of some sort.”
A combination of scientific and financial strategies is the cornerstone of dealmaking, Hung said.
Although Hung is trained as a physician-scientist, his early exposure to business and financial thinking as the child of a Harvard economics professor has helped guide him in his biotech leadership roles.
When it comes to creating biotech companies, Hung relies on simple principles such as finding the right team. But because Nuvation is built on a foundation of in-licensed drugs, finding the right assets is also key.
“We're extremely objective about data,” Hung said. “I'm passionate about my business, but very dispassionate about my data. We just try not to drink our own Kool-Aid. We try to make sure the science is really compelling, makes sense and is rigorously done.”
Like many biotechs, the company also strongly considers intellectual property rights and lengths, regulatory pathways, manufacturing and unmet need.
“We won't work on anything that we don't think is either first-in-class or best-in-class,” Hung said.
The goal is to discover that proverbial diamond in the rough with vast potential for patients that is on solid footing with intellectual property rights and makes financial sense.
“We’re very disciplined. We’re patient,” he said. And they’re willing to pass on drugs that don’t check the right boxes.
The strategy has paid off. The Medivation drugs that were part of the Pfizer deal have more than proven their worth. Xtandi is a global blockbuster in prostate cancer, and a second drug, Talzenna, approved for breast cancer, is now seeing strong phase 3 results combined with Xtandi in prostate cancer. The combination boosted progression-free survival by 50% compared with placebo.
Nuvation, too, has promising assets. The AnHeart Therapeutics deal included Ibtrozi, a kinase inhibitor approved last June for non-small-cell lung cancer.
“It's clearly the best-in-class asset that's going to be a big drug,” Hung said.
He’s even more optimistic about a second drug, safusidenib, which inhibits a target called mutant IDH1 that drives multiple types of brain tumors. The drug showed strong results in a phase 2 study of patients with a common and currently incurable type of brain tumor. At 24 months, 87.9% of patients with IDH1-mutant grade 2 glioma brain tumors treated with the drug were progression free.
“That could very well be one of the most impactful oncology drugs of all time,” Hung said.
The company is now in the midst of several pivotal studies for safusidenib.
But amid the hits have been some misses. An experimental Alzheimer’s drug with high expectations being developed by Medivation failed completely in a key study, triggering a $1 billion loss in value for the company. The setback preceded a successful pivot into oncology.
A multi-pronged approach to financing
Through it all, Hung has learned that many biotechs, even those with strong assets, can fail when their cash flow can’t keep pace, so choosing the right financial pathway is critical.
“Once we find [drug assets], then we have to figure out a way to acquire them in a way that minimizes the dilution, and we also need to find ways to finance the development of those assets,” Hung said. “The name of the game here is trying to extract the most value with the least expense.”
While many small biotechs have limited funding options, Nuvation was able to pursue a non-dilutive strategy deal with AnHeart that included multiple components, Hung said.
“We decided at the time that one of the most attractive options was to do a royalty finance,” he said.
This included purchasing AnHeart in an all-stock transaction that gave AnHeart shareholders 33% of the company and the other 67% to Nuvation stockholders. That option was more appealing than cash because the AnHeart chairman saw appeal in Nuvation’s pipeline, Hung said.
“Now, two years later … we have a market cap of over $2 billion. So, it ended up being a good financial deal,” he said.
Nuvation also opted to use a royalty finance to fund the launch of Ibtrozi and development of safusidenib.
“One of the most attractive options was to do a royalty finance,” he said.
The company sold 5% of Ibtrozi U.S. sales, which were valued at $3 billion, to secure $150 million, he said. The deal also included an additional $100 million loan. This has given them the flexibility to move their development programs forward.
“I'm extremely bullish on our future,” Hung said.
