This past December the American Society of Hematology held its annual meeting in New Orleans. More than 30,000 attendees listened to presentations of the most recent research on blood and its disorders. As you might expect, the audience was primarily composed of people working in the field—clinicians, laboratory scientists, and trainees in fellowship programs—who focused on advances in hematology that would guide the optimal care of patients and the direction of future research. But also present were Wall Street analysts and biotech investors, who focused on garnering information that would help them make money.

Among the highlights of the meeting was a study assessing which of two drugs was superior in the therapy of chronic lymphocytic leukemia (CLL), which affects some 200,000 Americans and about one million people globally. A drug called ibrutinib, sold under the brand name Imbruvica, has been the treatment of choice for CLL since 2014, replacing toxic chemotherapy and significantly extending the lives of patients. The drug targets a protein in leukemic cells called BTK, which is central in their growth; blocking BTK causes these cancerous cells to die.* The BTK blocker was brought to market by the biotech company Pharmacyclics, which was bought by the pharmaceutical giant AbbVie in 2015. Ibrutinib has brought a windfall for its makers, generating $5.4 billion in revenue in 2021 alone.

In the study presented in December, groups of equal sizes were assigned either ibrutinib or zanubrutinib, a second-generation BTK-blocking drug made by a company called BeiGene. After twenty-nine months of treatment, a greater number of patients receiving zanubrutinib were alive without evidence of advancing leukemia, demonstrating the superiority of the new drug. Zanubrutinib was also found to be much safer than ibrutinib, which had more severe toxic effects on the heart that forced physicians to stop treatment. Concurrent with the presentation at the New Orleans meeting was the publication of the results in The New England Journal of Medicine. Dr. Catherine Diefenbach, a hematologist at New York University who was not involved in the comparative study, declared that ibrutinib had been dethroned as “the king on the block” for the treatment of CLL. She concluded, “This is sort of the end of ibrutinib.”

The beginning of ibrutinib and its ascension as a treatment are recounted in For Blood and Money by Nathan Vardi, a managing editor at MarketWatch. The book is much more than a tale of the birth of a potent new cancer drug, as it reveals the split personality of biotech: an altruistic enterprise that creates breakthrough treatments for patients in need, and a bare-knuckle business that seeks to generate astronomic profits and crush competitors developing even better treatments. While at times overdramatized, Vardi’s book nonetheless succeeds through deep reportage and expert knowledge in portraying the clash between these two mindsets.

How are breakthrough therapies like ibrutinib developed? Often by a circuitous path. Typically, scientists at universities or government facilities conduct fundamental research that yields discoveries of novel molecules, sometimes on the quest to decipher the causes of a patient’s disease. Drug companies draw on such findings and produce compounds that are potentially therapeutic. The problem is that these commercial entities often don’t have sufficient information to know which compounds may be valuable. This was the story with a BTK blocker that was first developed by Celera Genomics, a high-flying company founded on the promise that deciphering the human genome would accelerate the discovery of useful treatments. It collapsed after failing to deliver on that promise, and in 2006 it disposed of several of its compounds, including the BTK blocker, in a “fire sale” to Pharmacyclics. Vardi writes that Celera’s BTK blocker “had been completely neglected and forgotten at the bottom of a test tube.” He continues:

There were many great drugs trapped in the pipelines of pharmaceutical companies, waiting for someone to discover them like buried treasure…. These drugs could be fished out for pennies on the dollar and developed…. That’s how Pharmacyclics, almost by accident, had ended up with its BTK inhibitor.

Why was the Celera compound initially neglected? Because it was only years later that researchers at the US government’s National Institutes of Health (NIH) showed that overactive BTK drove the growth of CLL and certain lymphomas, so blocking it would inhibit these cancers. When Celera sold it to Pharmacyclics, it didn’t have any apparent application.

As a hematologist at a university-affiliated hospital, I have been a close observer of how drugs are developed and have collaborated with several companies on treatments for blood disorders and AIDS. (I have not worked on drugs targeting BTK in my lab or with commercial labs.) In addition, from 1990 to 1994 I served as the chair of the advisory committee to the FDA on certain candidate therapeutics for which approval was being sought by companies. Vardi lucidly describes the approval process:


To be approved by the FDA, a drug [has] to travel through a regulatory thicket of preclinical tests in the lab and in animals. Then, clinical studies [have] to be conducted in human beings: phase 1 trials that test the drug in a small number of patients, maybe as few as twenty individuals; phase 2 trials that gauge the drug’s safety and effectiveness in a larger group of patients; and big phase 3 trials that often compare the drug against other treatments to gain regulatory approval. For a single drug, the cost of all these trials could exceed $1 billion.

The experts on the FDA advisory committee, none of whom have financial ties to the company requesting approval of its treatment, vote yes or no based on the trial data. Stock analysts closely watch their deliberations, and the prices of the company’s shares rise or fall with their votes.

Efforts to develop FDA-approved therapeutics typically fall short. “Developing cancer drugs was like buying a lottery ticket,” Vardi writes.

Most cancer drug researchers were stumbling around in the dark. Occasionally, a variety of factors—including luck—came together to produce a winning treatment…. The vast majority of novel cancer drugs tested in patients failed.

This was originally the case with Pharmacyclics. Its CEO, Dr. Richard Miller, was intent on developing Xcytrin, a treatment for brain tumors. Unfortunately, clinical trials did not show it to be beneficial. (Nonetheless, Miller did battle in the form of opinion articles in The Wall Street Journal, attacking the FDA for not approving it.) Despite this failure, the brain tumor program attracted an investor, Robert Duggan, who had made money marketing knitting materials and chocolate chip cookies, among other products. Duggan’s son had died of a brain tumor, and he was determined to honor his memory by financing cures for his fatal cancer. He also had no experience in drug development and was an ardent Scientologist who held that the philosophy of L. Ron Hubbard could guide success in any business.

Ultimately, Duggan accumulated enough stock to take over the board of Pharmacyclics. Portrayed by Vardi as a hard-driving and prickly character, Duggan feuded with Miller, who resigned as CEO in 2008; Duggan then named himself CEO, but shortly thereafter he accepted that the company’s drug had failed as a brain tumor therapy. With little else in the pipeline, almost by default, he latched on to developing the BTK blocker and began phase 1 trials in the hope that they would establish some use for it. Then, in 2009, a scientist from the NIH reported findings linking BTK to the growth of lymphoma cells, and Pharmacyclics immediately realized the potential of ibrutinib.

Duggan wanted the drug to be seen, even before it reached the marketplace, as a groundbreaking product. “The generic name for Pharmacyclics’ drug,” Vardi explains, “would need to include the label ‘tinib’ to designate it as a tyrosine kinase inhibitor and ‘bru’ to identify the kinase it blocked… How could [Duggan] make a mouthful like ‘brutinib’ attractive?” He admired Steve Jobs and how he marketed technology like the iPhone and the iPad. So, Vardi writes, Duggan borrowed Jobs’s lowercase “i” and “put it in front of his cancer medicine’s required components: ibrutinib.”

The early phase trials showed possible benefits from the BTK blocker, but some physicians were skeptical without evidence of enduring shrinkage of the cancer. By contrast, John Byrd at Ohio State and Susan O’Brien of MD Anderson, hematologists expert in CLL who worked with Pharmacyclics on the trials, believed in the drug’s effectiveness. Vardi describes how Byrd convinced patients to enter Pharmacyclics’s clinical trials:

John Byrd had an elegant way of explaining to patients how the [BTK blocker] might work for them…. He would walk over to the light switch and turn it off. His finger, he said, was like a…drug. When the light was on, the cancer was spreading. When he turned the light off, the cancer halted. Then Byrd would tape the light switch off…. That’s how this experimental new drug worked. Then Byrd told patients that chemotherapy could also turn off the light, but instead of a finger or tape, it was like using a sledgehammer.

To gain FDA approval, in 2012 the Pharmacyclics team began a phase 3 clinical trial wherein only half the patients would receive ibrutinib, and the other half chemotherapy as “controls.” This posed an ethical dilemma for Byrd, since Pharmacyclics was following FDA protocols that discouraged control patients from receiving an experimental drug if the traditional treatment failed them: Byrd

thought the trial would hopefully give half the patients he enrolled access to ibrutinib when he had no other worthwhile treatment options to offer them. For Byrd, it was excruciating to see “control patients” die.

Dr. Susan O’Brien, who also was involved in the phase 3 trial, wrote an editorial in a cancer publication decrying the fact that control patients were unable to receive ibrutinib if chemotherapy failed. Her protest worked. Richard Pazdur, the FDA’s oncology chief, responded to O’Brien and clarified that FDA policy had changed and the agency now didn’t oppose the crossover: “With the FDA on board, Pharmacyclics amended its trial plan and allowed patients…to cross over and get ibrutinib.”


As researchers at the NIH came closer to validating BTK as a driver of the growth of CLL and certain lymphomas, and as word spread of encouraging preliminary results from the ongoing clinical trials, Pharmacyclics became an attractive takeover target for large pharmaceutical companies. What made a BTK blocker so financially attractive?

For financial investors, the beauty of the drug…was that even though the drug worked, it didn’t work too well. Ibrutinib was not a magic bullet cure. The cancer was never fully cleared from the blood and rarely went away completely…. Patients would need to take a pill once a day, every day, for a long time—years….

The analysts [at banks and hedge funds] took the relatively large number of CLL patients and multiplied it by the sky-high price that similar cancer drugs commanded in the market. Then they tried to estimate how long those patients would continue taking the drug. The analysts figured the drug could generate billions of dollars.

Why were there “sky-high” prices for cancer drugs? Because there have been no regulations on cancer drug pricing (although the recent Inflation Reduction Act may ultimately change that for some on Medicare). In general, companies price them as high as possible to maximize profits. Knowing this, in 2011 Johnson and Johnson (J&J) struck a deal with Pharmacyclics for more than $1 billion, with J&J handling overseas regulatory approval and marketing of ibrutinib, as well as covering 60 percent of the cost of drug development, in exchange for some of the overseas revenue from it.

After FDA approval in 2014, ibrutinib was priced at $91 per capsule, which added up to $10,900 per month and $131,000 annually, making it one of the most expensive cancer medicines in the United States at the time. Even when “Medicare and private insurance covered most of [ibrutinib’s] immense price tag,” Vardi writes, “patients often had to cough up some $7,000 annually out of pocket for the treatment.” Financial support from the drug company was available to both the uninsured and those with high insurance deductibles, but some desperate patients who did not qualify for it were forced to receive suboptimal care in the form of toxic chemotherapy.

Ibrutinib initially was approved by the FDA only for some lymphoma patients. Before the clinical trial in CLL headed by Drs. Byrd and O’Brien had finished, Duggan nonetheless set aggressive sales goals that could be achieved only by actively marketing the drug “off-label” to desperate patients suffering from CLL. Off-label marketing is forbidden, Vardi notes, and

could get sales reps in trouble with regulators, maybe even law enforcement. It seemed to them like Duggan had set the sales targets as if he were still running one of his other companies, like his bakery operation. But Pharmacyclics wasn’t selling cookies.

According to a lawsuit later filed against Pharmacyclics, an employee challenged Duggan, “arguing that it would be wrong to…push sales reps to target off-label patients.” Duggan asked the employee “if he had brought up the issue with [Pharmacyclics’s] compliance team.” When the worker admitted that he had, Duggan responded, “Traitor.”

After the initial J&J investment, Duggan sold all of Pharmacyclics to the pharmaceutical giant AbbVie in 2015. “The deal…shocked Wall Street and set the new high-water mark for success in the biotechnology industry,” Vardi writes. “AbbVie had agreed to buy Pharmacyclics and its solitary drug…for $21 billion…. After taking into account the profit split with J&J, the deal valued [ibrutinib] at more than $42 billion.” This “shock” on Wall Street was followed by another: “In the middle of December 2015, AstraZeneca announced it had struck a deal to buy Acerta, a company few people had ever heard of, and its one promising drug, acalabrutinib, for $7 billion.” Acalabrutinib, like ibrutinib, is a BTK blocker used in the treatment of CLL.

Acerta had been founded in 2013 by the Wall Street investor Wayne Rothbaum, who—along with his friend Joe Edelman, a hedge fund director—had been an early investor in Pharmacyclics but later changed his mind and sold most of his shares. Not long thereafter, due to disagreements over strategy, Duggan axed Pharmacyclics’s senior physician Ahmed Hamdy and the scientist Raquel Izumi, whose joint work was advancing the development of ibrutinib. After Hamdy and Izumi were fired, Rothbaum again changed his mind about BTK blockers and formed Acerta, with Hamdy as its CEO and chief medical officer and Izumi as its clinical development head. Edelman became an investor in the new company. Acerta licensed acalabrutinib from the pharmaceutical giant Merck, which, Vardi writes, had no idea of its potential worth and sold it for $1,000 and a small royalty payment. It was eventually approved by the FDA in 2017.

The competition was not welcome. Vardi writes that Duggan had been pursuing a monopoly on BTK blockers

after reading a newspaper article about the Federal Trade Commission’s 1972 action accusing the nation’s four biggest cereal companies of monopolizing the cereal market. Ralph Nader, the revolutionary consumer advocate, called the government’s case “one of the most important developments in antitrust enforcement in the last decade.”

“It was the cereal companies,” not the FTC, “that were inspiring” to Duggan: “Wow, isn’t that the goal of every business to get to monopoly?”

One way to stifle competition and secure a monopoly is via lawsuits over patent rights. In 2017 AbbVie sued AstraZeneca over rights to Acerta’s BTK blocker, and AstraZeneca countersued. “The litigation surprised nobody,” Vardi writes. “Whenever a second-in-class drug comes to market, the incumbent drug’s company often sues the newcomer if it can find a reasonable way to do so.” The suits were ultimately settled out of court for $550 million, with AstraZeneca retaining all its rights over acalabrutinib.

When Pharmacyclics was sold to AbbVie, Duggan, as CEO, received what Vardi calls a “payday” of cosmic proportions, $3.5 billion. After Acerta’s sale to AstraZeneca, the investor Rothbaum made $2.8 billion, on an initial investment of $80 million. His friend Edelman reaped $700 million for his hedge fund. The senior scientist Izumi stood to make nearly $20 million.

This financial windfall set off heated discussions about the purpose of biotech research. Doctors who participated in the Pharmacyclics clinical trials, including those “as far away as Italy,” focused on the wealth their labor had created for others; Byrd, for example, who like O’Brien worked with Acerta as well as Pharmacyclics, received no financial reward for his contributions. “They had never expected to participate in any financial success,” Vardi writes of these doctors, “and were in it for the patients and their passion for medicine. But, honestly, they never anticipated a drug they helped bring about could be worth $42 billion.”

A similarly contentious scenario occurred at Acerta. “It was Hamdy’s blood, sweat, and tears, it was Izumi’s garage, vision, and drafting, it was the constant devotion and work of so many unsung heroes that helped create acalabrutinib,” Vardi writes. To be sure, Rothbaum and his fellow investors were necessary for funding research and trials, but according to Dr. Hamdy,

the reward seemed misallocated. While the financial investors spent their time manufacturing equity instruments that allowed them to be paid first and most, those in the trenches spent their time manufacturing medicines and had no idea about potential payouts or how to protect themselves.

The employees became “irate… Capital had reaped most of the gains, but…that was how capitalism functioned.” Many employees, despite becoming multimillionaires, “felt cheated, that they deserved more and had done more and that the fat cats were taking home an outsized portion of the wins created by what they had done.”

Vardi concludes that this is “the harsh reality of the biotechnology revolution. Even in cancer drug development, most of the financial gains often [go] to capital and not to labor.” Drug companies and their investors claim they need large incentives because the risk of development is so high: the cost of research and trials runs to the billions of dollars, and relatively few drugs ultimately obtain FDA approval. Critics note that drug companies spend vast amounts on marketing rather than development and receive enormous profits from highly priced drugs. If those prices weren’t as high, and if company resources were allocated differently, investors might still get substantial returns without forcing patients to make difficult financial decisions.

Duggan had never worked in drug development before, Vardi notes, but he had taken a neglected compound and helped make it an effective cancer therapy:

People were cast aside in the process, dreams broken, strategies co-opted, and companies overtaken. But it was undeniable that Duggan had done the unimaginable and produced something that was saving lives.

In biotech circles, a parlor game emerged. Had Bob Duggan simply gotten lucky or was he good?

Do businessmen like Duggan really have a magic touch in drug development? This was put to the test. With his billions, Duggan went on to richly finance two new companies developing antibiotics, intending to “prove the naysayers wrong again and show that his big biotech success was more than luck and could be repeated.” But other investors were skeptical. “It was seen as a bad bet,” Vardi writes. “Antibiotics can lose effectiveness and, unlike cancer therapies, usually can’t command a high price.” Duggan shot back, “I believe it is a game that we can win.” But the antibiotics “game” played by Duggan’s two new companies ended in abject failure. Likewise, although Edelman’s investment in Acerta became the best bet his hedge fund ever made, his subsequent biotech investments flopped, and the fund incurred enormous losses. (Rothbaum, despite his windfall, suffered from physical and emotional exhaustion and retired from biotech investing.)

These multiple later failures by Duggan and Edelman illustrate what is known as a regression toward the mean. A single success may appear to distinguish the skill and foresight of an individual, but once they repeat their choices multiple times, they don’t stand out as magical.

Two years ago Byrd published the results of a comparative trial in CLL patients that concluded that Acerta’s acalabrutinib was “noninferior” to ibrutinib, meaning of equal benefit, and somewhat less damaging to the heart. This was not enough to dethrone ibrutinib in the marketplace.

Then who was the usurper? In the book, Vardi notes in passing that at a major cancer meeting, Rothbaum spotted two attendees lurking near the poster displaying data on Acerta’s drug.

They were hiding cameras under their jackets, trying to surreptitiously take photos of Acerta’s poster…. Their conference badges identified them as employees of BeiGene, a China-based biotechnology company that had been developing a BTK inhibitor.

Despite it being accepted practice to record publicly presented data on posters at scientific meetings, “Rothbaum told them to get lost.”

But they didn’t. BeiGene developed zanubrutinib, the superior BTK blocker that dethroned ibrutinib. This January, based on the results from the clinical study presented in New Orleans, the BeiGene drug was approved by the FDA for the treatment of CLL. Now there is fierce competition in the marketplace among AbbVie, AstraZeneca, and the newly crowned BeiGene. So far, though, this hasn’t resulted in a change in drug pricing, as BeiGene’s BTK blocker costs a hefty $15,264 for a month’s supply, or $183,168 for a year’s. This proves, as has been noted, that one of the major side effects of such breakthrough drugs is financial.

This article has been updated to correct the first name of the Pharmacyclics CEO Robert Duggan.