At the Crossroads of Medicine and Money

After graduating with stellar grades from medical school in apartheid South Africa, Patrick Soon-Shiong put in for an internship at a top Johannesburg hospital.

The son of Chinese immigrants got the job -- but only by accepting half the pay his white colleagues received.

That was the first struggle in a quest that transformed the plucky doctor into a billionaire at the vanguard of drug research and commerce. Three decades later, he is poised to launch a biotech company in his adopted home of Los Angeles.

His father, a practitioner of traditional medicine who fled China during World War II, had treated Patrick with herbal remedies and endowed him with a belief in the healing power of nature. Now 53, Soon-Shiong has spent more than half of his life trying to exploit nature’s medicine chest.

Along the way, adversaries -- including his own brother -- have accused him of defrauding investors and hyping his science. But always, despite the controversies, he found a way to stay in the hunt. The pursuit took him to slaughterhouses to salvage pig stomachs for research and to NASA, where he talked scientists into putting one of his experiments on a space shuttle. And it led him, with early financial help from his TV-actress wife and from former auto mogul Lee Iacocca, to develop Abraxane, the first anti-cancer agent on the market engineered through nanotechnology.

Abraxane is not so much a new drug as it is the repackaging of an old one. It wraps one of the best-known cancer fighters -- paclitaxel, a compound derived from the Pacific yew -- inside particles of a blood protein thousands of times smaller than a speck of dust. This submicroscopic Trojan horse gallops into the vulnerable interior of a tumor cell, where it unloads its poison.

The novel drug might never have made it to market had it not been for Soon-Shiong’s aggressive business style and his insistence on staying in charge of his idea -- a rare feat in the pharmaceutical world.

“This is where people make such a difference at the end of the day,” said Richard Sykes, former chairman of GlaxoSmithKline. Sykes agreed last year to join the board of Abraxis BioScience, Soon-Shiong’s new company.

Soon-Shiong, a father of two who lives with his family in West Los Angeles, boogie boards and plays basketball in his spare time. He wears hair that hangs over his collar and brushes the top of his metal-rimmed glasses and speaks confidently with a soft South African lilt.

His name is on more than 50 patents and 130 scholarly articles. It also is No. 116 on the latest Forbes list of America’s richest people. The magazine listed his net worth as $2.2 billion in September.

He could be worth twice that much, according to financial details of his proposal to create Abraxis BioScience in the next few months by combining two firms he founded in the early 1990s.

One is American BioScience Inc., a privately held research firm based in Santa Monica that developed Abraxane. It would be acquired by the other company, publicly held American Pharmaceutical Partners Inc., a generic injectable drug maker based in Schaumburg, Ill., that makes and markets the cancer fighter.

Soon-Shiong would own 80% of the new company, which would debut with an estimated market capitalization of about $5 billion. Analysts and other observers have questioned whether the deal would unfairly enrich Soon-Shiong -- the majority owner, chairman and chief executive of both firms -- at the expense of minority shareholders.

Soon-Shiong says the price for American BioScience is fair based on the projected future sales of Abraxane alone -- leaving out any potential income from other drugs in the firm’s pipeline.

Not all investors share his view. American Pharmaceutical’s stock has lost about a third of its value since news of the deal in November. Shares closed Friday at $30.98.

CIBC World Markets analyst Elliot Wilbur said he remained a “true believer” in the potential of Abraxane to become a blockbuster. But, he said in a a recent note to investors, the more details that emerge about the merger, the more it looks as if public shareholders are getting the short end of it.

If Soon-Shiong the boardroom mogul irks investors, Soon-Shiong the scientist -- he keeps a white coat handy in his office for visits to the lab -- is a darling of cancer research. Abraxane has sent a quiver of excitement through oncology circles, where submicroscopic delivery systems are seen as a way to make drugs more deadly to cancer cells and easier on patients.

“We think it’s a hot drug, frankly,” said Larry Norton, deputy chief physician for breast cancer programs at Memorial Sloan-Kettering Cancer Center in New York. Norton, a board member at the National Cancer Institute, has no financial interest in Abraxane.

In the trial that led to its approval for advanced breast cancer in January 2005, Abraxane shrank more tumors and extended patients’ lives longer than Taxol, Bristol-Myers Squibb Co.’s brand of paclitaxel.

With first-year sales of $144 million, the company expects Abraxane to grow into a blockbuster, eventually winning more than half of the $2-billion paclitaxel market. That assumes it gets approval outside the U.S. and for the treatment of other tumors -- including those of the lung, head and neck, prostate and ovaries -- and for melanoma.

With Abraxane, Soon-Shiong is a pioneer in nanomedicine, a field that exploits special properties of compounds that emerge when they are manipulated at the atomic or molecular level.

“The hope is that this opens the doors for other applications and other types of nanomaterials,” said Greg Downing, director of the office of technology at the National Cancer Institute, which is awarding grants to spur nanomedical research.

Soon-Shiong got the first nanodrug into the cancer arsenal just in time for Helen Gelhot, a St. Louis mother and physician-in-training who was diagnosed with breast cancer last March.

She underwent a standard course of chemotherapy, but it had little effect on the walnut-size lump in her left breast. The next step is usually paclitaxel, but Gelhot’s medical history suggested she was at risk for a serious complication. That’s when she zeroed in on Abraxane.

“I just knew it would be my salvation,” said Gelhot, 47.

After the course of Abraxane, “I got a complete pathological remission,” she said. “I was really just so thrilled.”

Helping patients is why Soon-Shiong got out of medical practice to pursue research.

“The problem with medicine,” he said, “is you have a limited armamentarium with which to work. And yet, within science, you see beyond this limitation.”

Graduating from high school at 16, Soon-Shiong went into a seven-year combined bachelor of arts and medical program at South Africa’s University of the Witwatersrand, becoming a doctor at 23. From the Johannesburg hospital, he went to the University of British Columbia in Vancouver, Canada, for surgical residency and simultaneously earned a master of science degree in surgery there in 1979.

He completed his surgical training at UCLA and joined its medical school faculty in 1983 at 31. Three years later, he performed the first pancreas transplant on the West Coast on a patient with diabetes and began looking for a safer approach to getting diabetics off insulin.

That started a scientific odyssey that would lead to Abraxane. Soon-Shiong wanted to find a way to inject the insulin-producing “islet” cells from a healthy pancreas into diabetics, an idea that had eluded researchers for two decades. The problem was the islet cells were damaged during their harvest and attacked after implantation by the patient’s immune system.

Soon-Shiong’s approach shows how he operates. A voracious reader of biology, chemistry and physics journals, he talks about borrowing an idea from one area and applying it to another with the excitement of a grade-school boy at a science fair.

Learning of a new technology from rocket physicists, Soon-Shiong found a way to use the tiny magnets they had developed to tease islet cells out of a pancreas without harming them. But the junior medical professor was unable to convince major diabetes organizations that the idea warranted funding.

His quest might have ended there had he not met Lee Iacocca, who had founded a research foundation after his wife died of diabetes a couple of years earlier. Soon-Shiong persuaded the former Chrysler Corp. chairman to give him $1 million to develop a seaweed-derived gel that protected the islet cells inside a patient’s body. He stretched the money by forgoing a salary and spending it all to keep a dozen other scientists at work in his lab.

Soon-Shiong relied on the income of his wife, Michele, an actress who appeared under the stage name Michele Chan on TV’s “Hotel” and “MacGyver.” She also had a regular part as a doctor for a season on “Danger Bay.”

To try to move his research forward more quickly, Soon-Shiong left UCLA and formed his first biotech company with the backing of a venture group that included Iacocca. Within two years, however, he had his first clash with business partners. The financiers merged the company with another over his objections.

Soon-Shiong left and returned to his UCLA lab in 1991-- again forgoing a salary to pursue his research. A year later, he implanted islet cells in dogs, reversing their dependence on insulin without the need for anti-rejection drugs. Then, in 1993, he performed the first human islet cell transplant, keeping the patient off insulin for a month.

The islet-cell transplants thrust Soon-Shiong into the national spotlight -- and into controversy. Other researchers accused him of encouraging press accounts that he was onto a cure for diabetes. Soon-Shiong denies that charge and blames an overly enthusiastic article in a British newspaper.

A few years later, Soon-Shiong found himself in another dispute at VivoRx Diabetes, a research firm he founded after he lost his first one. He said safety concerns led him to refuse to carry out planned pig-to-human islet cell transplants -- over the objections of an investor and fellow board member.

Six months later, the investor sued, accusing Soon-Shiong of misappropriating money and the ideas behind the drug that would become Abraxane. Soon-Shiong’s older brother Terrence, who owned a piece of the company, sided with the investor. Terrence Soon-Shiong did not return calls for comment.

Though Patrick Soon-Shiong said he won an arbitrator’s award, in the end he settled the dispute by paying investors $37 million, including $32 million to his brother, and walking away from the diabetes company.

But he left with clear title to the intellectual property rights to Abraxane and control of a sister company, which became American BioScience.

Abraxane was born in Soon-Shiong’s frustrated diabetes research. While he was searching for a supply of islet cells, he grew a few batches from stem cells. But they kept dying.

In exploring how to sustain them, he came across research showing that nutrients are carried to cells by albumin, the most common blood protein. He also learned that cancer cells grow rapidly by sending receptors out to attract nourishing albumin from the blood.

With this new understanding of the relationship between cancer cells and albumin, Soon-Shiong saw an opportunity to help anti-cancer drugs target tumor cells by cloaking them inside tiny particles of albumin.

This would eliminate a major problem with anti-cancer agents that don’t dissolve in water and must be delivered in toxic solvents, often causing serious side effects. Paclitaxel, for instance, is delivered in Cremophor, a solvent so strong it dissolves medical tubing and can cause fatal allergic reactions. To avoid that, patients must first take antihistamines and steroids, which cause problems of their own.

Many scientists are trying to solve the problem by manipulating compounds on the molecular level to bind them with benign delivery agents. Soon-Shiong and his team found a way to deliver paclitaxel inside nanoparticles of albumin, much in the way a fisherman wraps bait around a hook. Without the solvent, Abraxane can be delivered more quickly and in higher doses.

Oncologists are anxious for Soon-Shiong’s team to see whether albumin nanoparticles can give a boost to other drugs.

Because it got rid of the solvent, “everyone would have been pleased if it was at least as good” as Taxol, said Mark Pegram, director of a women’s cancer program at the UCLA Jonsson Comprehensive Cancer Center.

“It turned out to be even better.”