Forty Seven has received $15 million directly from the California stem cell agency. One of Forty Seven's co-founders, Irv Weissman of Stanford University, has received an additional $30 million for research, much of which underpins the company's approach.
Gilead Sciences, Inc., of Foster City, Ca., is purchasing Forty Seven for $95.50 a share. Just last October, Forty Seven's stock was cratering at $5.53 a share.
California will not benefit directly from the huge jump in the stock price. The state Constitution bars state agencies from holding stock in companies. However, if CIRM funded-research helps to create a profitable therapy, the state could receive royalties. See here for a look at the agency's intellectual property regulations.
The purchase is good news for supporters of a proposed ballot initiative to give the agency an additional $5.5 billion, which would save CIRM from financial extinction. The backers of the proposal are currently gathering 600,000-plus signatures to place it on the Nov. 3 ballot.
The agency was created in 2004 in a ballot campaign that provided $3 billion in state bond funding to help stimulate creation of stem cell therapies. So far the agency has not backed a stem cell therapy that is approved for use by the general public. But the Gilead purchase is a strong indicator that such a treatment is getting much closer.
In its news release, Gilead highlighted Forty Seven's lead product candidate, magrolimab, and said,
"The acquisition will strengthen Gilead’s immuno-oncology research and development portfolio. Magrolimab is a monoclonal antibody in clinical development for the treatment of several cancers for which new, transformative medicines are urgently needed, including myelodysplastic syndrome (MDS), acute myeloid leukemia (AML) and diffuse large B-cell lymphoma (DLBCL).The stem cell agency, known formally as the California Institute for Regenerative Medicine(CIRM), has backed part of the work on magrolimab. Last fall, Mark Chao, vice president of clinical development at Forty Seven, said,
“CIRM’s support has been instrumental to our early successes and our ability to rapidly progress Forty Seven’s CD47 antibody targeting approach with magrolimab. CIRM was an early collaborator in our clinical programs, and will continue to be a valued partner as we move forward with our MDS/AML clinical trials.”At the time, CIRM said the awards to Forty Seven and several other companies amounted to important deal-flow funding. CIRM quoted a USC study of the agency as saying,
“Deal-flow funding usually involves several waves or rounds of capital infusion over many years, and thus is it expected that CIRM’s past and current funding will attract increasing amounts of industry investment and lead to additional spending injections into the California economy in the years to come.”Forty Seven's "eat me" expression involves enabling a person's immune system to overcome and devour cancer stem cells. The company's web site says,
"Blocking CD47 'don’t eat me' signals while releasing and boosting 'eat me' signals is the core focus of our research to enable the patient’s own immune system to attack and destroy their cancer."
The officers of Forty Seven who are now rich from this windfall should give back, donate, a percentage, say 10%, to the board to reinvest. Would this be legally possible? If so, please run a list of who did and who didn't share this windfall.
ReplyDeleteThe executives certainly could give 10 percent of what they are making off the purchase. CIRM can and has legally received donations. It can also set up a nonprofit to collect the cash. Creation of a nonprofit has not been the subject of detailed public discussions. It might come up again if voters reject the $5.5 billion refinancing proposal now being circulated for qualification for the ballot this fall. I would assume that Forty Seven execs and other execs of companies tied to CIRM will or are being asked by the ballot campaign to donate to that effort, which will cost tens of millions of dollars.
DeleteI assume that CIRM's regulations required that the company pay them when they turned a profit (which start-up companies pretty much never do), but is Gilead required to honor this agreement as part of the acquisition? If so, how does that work?
ReplyDeleteGood question. It is my understanding from the past that the stem cell agency is legally protected in such deals. However, I have asked CIRM to provide more details to help inform our readers. I will carry an item on this topic when the information is forthcoming. For the record, I should note that CIRM is quite cooperative in providing information, which is not always the case with state agencies even though state law says public records must disclosed when asked.
ReplyDeleteThanks for asking. All our readers should feel free to ask pointed questions and offer comments. It ultimately helps all of the public to understand what is going on with the stem cell agency.
Regarding this string of comments, please see the item headlined "Inside California Stem Cell IP" on March 8, 2020. And credit to CIRM for a quick, clear response to questions about how it works. It is much appreciated, I think, by all our readers.
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