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Hedge fund manager stands to profit on ‘flip’ of taxpayer-funded coronavirus drug

Emory University’s coronavirus pill EIDD-2801 highlights financial speculation on drugs developed with public investment

https://www.washingtonpost.com/business/2020/06/11/coronavirus-drug-ridgeback-biotherapeutics/

June 25, 2020 at 11:26 a.m. EDT

Ridgeback Biotherapeutics had no laboratories, no manufacturing facility of its own and a minimal track record when it struck a deal in March with Emory University to license an experimental coronavirus pill invented by university researchers with $16 million in grants from U.S. taxpayers.

But what the tiny Miami company did have was a growing team with experience in pharmaceutical development and research and a willingness from its wealthy owners — chief executive Wendy Holman and her husband, hedge fund manager Wayne Holman — to place a bet on the treatment in the midst of the coronavirus pandemic. That wager paid off with extraordinary speed in May when, just two months after acquiring the antiviral therapy called EIDD-2801 from Emory, Ridgeback sold exclusive worldwide rights to drug giant Merck.

Ridgeback, which has one other drug in development for Ebola, was a relatively obscure entity when it snapped up EIDD-2801 from Emory in a deal signed March 19. The university, without disclosing terms, said in a news release that Ridgeback “will be responsible for conducting the necessary trials to bring EIDD-2801 to licensure.”

Within days of securing Emory’s licensing deal, the company mounted a campaign to win hundreds of millions in government funding to develop the drug, according to a whistleblower complaint by Rick Bright, former director of the Biomedical Advanced Research and Development Authority, as well as emails obtained by The Washington Post. After failing to secure the government contracts, Ridgeback launched a human safety trial of the drug in the United Kingdom and transferred rights to Merck in late May.

“I would think that universities … would not normally transfer products to basically a house-flipper,” said Aaron S. Kesselheim, a physician at Brigham and Women’s Hospital in Boston and professor at Harvard Medical School. “I wouldn’t think they would have to engage with speculators, like it appears that Ridgeback Biotherapeutics is.”

Wayne Holman, who holds a medical degree from New York University, is a hedge-fund manager with a long track record of investing in pharmaceutical stocks. He founded his fund Ridgeback Capital Management in 2006. Wendy Holman, chief executive of Ridgeback Biotherapeutics, is a former investment manager who was named to President Trump’s advisory council on HIV/AIDS in 2019.

Emory had secured pledges of $30 million in government contracts from science and defense agencies in the past five years to develop EIDD-2801 but tapped just more than half of the available funds, an Emory spokeswoman said. The university did not respond to questions about how it picked Ridgeback.

“Emory is proud that we invented EIDD-2801, and we appreciate the partnerships and government support that makes it possible to provide therapies that will benefit society,” Nancy Seideman, Emory’s vice president for academic communications, said in an email. “Any royalties that we receive — if anything — are channeled directly back to serving our educational and scientific mission.”

In instances where taxpayer-financed drugs make it to market via exclusive licensing deals — which typically have undisclosed terms — debates have sprouted around monopoly pricing.