Scripps hopes for royalty windfall from potential blockbuster drug


If the new drug ozanimod achieves blockbuster status, it could generate tens of millions of dollars a year in royalties for the Scripps Research Institute — and provide relief from the ongoing financial challenges facing the nonprofit lab.

Scripps won’t say how much it stands to receive from sales of ozanimod, a drug that slows brain atrophy in patients with multiple sclerosis. Scripps discovered the drug, then partnered with Celgene to shepherd the medicine through clinical trials. The biopharmaceutical company expects to begin marketing the drug to MS patients in late 2018.

RELATED: Scripps Research Institute’s revenues, assets still dwindling

Celgene (Nasdaq: CELG) also is testing ozanimod as a treatment for ulcerative colitis, which is more common than MS. If ozanimod wins approval as a medicine for the intestinal disorder, sales could reach $4 billion to $6 billion a year.

Scripps says its royalty arrangement with Celgene is confidential. Brian Skorney, an analyst who follows Celgene for Robert W. Baird & Co., said the typical deal pays a drug’s inventor “in the low single-digit percentage.”

So, if ozanimod’s sales reach $4 billion and Scripps gets a 2 percent cut, that would amount to $80 million a year. It would be a welcome windfall for Scripps, which has seen its revenue decline steadily in recent years.

The nonprofit lab’s revenue fell to $347.5 million for the year ended Sept. 30, 2016, according to a financial statement, down from $362.5 million the previous year.

It was the fifth consecutive year of declining revenue for San Diego-based Scripps, the scientific juggernaut that’s the anchor of Florida’s billion-dollar bet on biotech. Scripps in 2016 reported its lowest annual revenue since 2004.

Scripps’ net assets dipped to $637 million, down from $647 million in 2015 and the lowest level since 2007.

Dr. Hugh Rosen, a Scripps researcher who’s the co-inventor of ozanimod, said the institute’s agreement with Celgene calls for royalty payments through 2033 or 2034.

“It could be a significant contributor to the health of the institution,” Rosen said.

Patient studies proved that ozanimod is safe and effective, but it’s still no sure thing. Skorney said ozanimod faces competition from other MS drugs.

“It’s a very crowded space in terms of the number of effective treatments, so we’ll see how Celgene ends up pricing it,” Skorney said.

Rosen said ozanimod’s journey from the lab to the doctor’s office underscores the long-term nature of scientific research. In 2002, he started the work that led to ozanimod, and a flurry of tests from 2006 to 2008 ultimately yielded the new drug.

“It will be literally 10 years from discovery to launch for patients, and that’s about as fast as you could hope for,” Rosen said.



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