UCLA has sold its royalty interest connected with a leading prostate cancer medication, Xtandi, the development of which was based on discoveries by campus researchers, for just over $1 billion, UCLA announced.
Royalty Pharma has acquired rights to a portion of the future Xtandi royalties co-owned by UCLA, researchers working at the university at the time of the discoveries, and a research organization. The transaction includes a cash payment of $1.14 billion and potential additional payments based on future Xtandi sales.
UCLA will use its share of the proceeds -- about $520 million -- to support research programs aimed at generating additional discoveries leading to medications and other products that, according to a release, "serve the public good." UCLA also will support undergraduate scholarships and graduate student fellowships, which the institution has cited as a priority.
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"By selling future royalty rights to Royalty Pharma, we are strategically supporting one of our essential missions -- funding and generating research with practical applications," said UCLA Chancellor Gene Block in a statement. "Facilitating equal access to education also is a campus priority."
Royalty Pharma founder and CEO Pablo Legorreta said that, through UCLA's discovery of Xtandi," they have improved the lives of hundreds of thousands of prostate cancer patients who suffer from this deadly disease," adding that the move will "accelerate research" on that and other drugs.
By selling the royalty interest and investing the proceeds, UCLA is hoping to provide stability and minimize the risk associated with the volatility of the pharmaceutical industry.
UCLA will hold its share of the proceeds in a broadly diversified portfolio managed by the University of California's office of the chief investment officer. Based on the pool's average annual returns, UCLA anticipates it will receive approximately $60 million annually until 2027.
Campus officials said they anticipated proceeds of the sale will contribute a small percent incrementally to UCLA's total budget.
"Given ongoing funding pressures, we are pleased to have these much-needed additional resources," said Steve Olsen, UCLA's vice chancellor and chief financial officer.
Xtandi is based on a chemical compound that was developed at UCLA. The oral medication inhibits the androgen receptor, the engine of prostate cancer progression. Where other treatments have failed, Xtandi has extended the lives of men with metastatic castration-resistant prostate cancer.
In one phase 3 clinical study of patients previously treated with chemotherapy, Xtandi reduced the risk of death by 37 percent and increased median survival by 4.8 months, compared to those who took a placebo. In a separate phase 3 clinical study of patients not previously treated with chemotherapy, Xtandi reduced the risk of death by 23 percent and increased median survival by four months.
The research that began in the early 2000s, culminating in the creation of Xtandi, was conducted by teams led by Michael Jung, a UCLA professor of chemistry and biochemistry, and Dr. Charles Sawyers, a former UCLA professor of medicine, urology and pharmacology and researcher at UCLA's Jonsson Comprehensive Cancer Center; Sawyers is now at Memorial Sloan Kettering Cancer Center in New York.
Sawyers, who was an investigator for the Howard Hughes Medical Institute while at UCLA, initially identified the fundamental basis underlying why prostate cancer doesn't respond to first-generation anti-cancer drugs. This provided a new means of discovering next-generation therapies for the treatment of late-stage prostate cancer. He and his research colleagues set up a collaboration with Jung, a member of both the cancer center and the California NanoSystems Institute at UCLA -- who, along with his team, designed and synthesized Xtandi. The drug functioned as an effective and safe anti-cancer therapy in preclinical models of early- and late-stage prostate cancer.
In 2005, UCLA licensed the chemical compound's patent to pharmaceutical company Medivation of San Francisco. Medivation received FDA approval in 2012 to market Xtandi as a prostate cancer medication. Medivation and its sub-licensee, Astellas Pharma of Tokyo, are now selling Xtandi worldwide; UCLA has no role in the drug's marketing or sale.
By virtue of patent and licensing agreements administered by UCLA, the campus, the researchers and Howard Hughes Medical Institute shared a royalty interest in worldwide net sales of Xtandi. UCLA owns nearly 44 percent of the royalty interest.
The American Cancer Society estimates that 180,890 new cases of prostate cancer will be diagnosed in 2016, and that 26,120 men will die from the disease in 2016. The organization said about one in seven men are likely to be diagnosed with prostate cancer.