Bob Duggan’s pharmaceutical company Summit Therapeutics paid $500 million in upfront licensing fees to the Chinese pharmaceutical company Akeso, Inc. (HKEX Code: 9926. HK). This was cash/stock deal that was finalized in March 2023.

Summit Therapeutics paid the half-billion dollars to obtain the exclusive rights to develop and commercialize Akeso’s still-in-development anti-cancer drug called ivonescimab. Summit’s rights cover the U.S., Canada, Europe and Japan.

From Summit’s press release:

Having aligned his company with a Chinese pharmaceutical firm which is incorporated in the Cayman Islands, Bob Duggan places himself squarely on the radars of the US State Department and the US Department of Defense as the relationship between the US and the People’s Republic of China (PRC) continues to deteriorate.

Duggan also risks his investment as Chinese companies are intertwined with the Chinese government, and both have shown they cannot be trusted with intellectual property belonging to foreign companies and governments. The Chinese are notorious for technological theft, hacking, and spying.

The US State Department’s current statement on China; its investment climate; and the PRC’s lack of protection for foreign intellectual property:

IP rights remain subject to PRC Party and State policy objectives. For U.S. companies in China, infringement remained both rampant and a low-risk “business strategy” for bad-faith actors. Further, enforcement and regulatory authorities continue to signal to U.S. rights holders that application of China’s IP system remains subject to the discretion of the PRC government and its industrial policy and innovation goals, which resulted in, among other things, wide-spread delays for IP enforcement matters involving U.S. parties, particularly before PRC courts. High-level remarks by President Xi Jinping and other senior leaders continued to signal the importance of intellectual property in developing “indigenous innovation,” free from foreign control, and strengthening China’s science and technological power vis-à-vis other nations. These and related statements calling for PRC protection and enforcement authorities to resolve the “chokehold problem” (i.e., the ability of foreign entities to control use and access to technologies critical to China’s development and national security) raise serious concerns for the business community regarding the impartiality of IP authorities in handling matters involving foreigners, including U.S. entities. While on paper China’s IP protection and enforcement mechanisms have improved relative to other foreign markets, in practice, international business associations predict fair, transparent, and non-discriminatory treatment will very likely continue to be denied to U.S. rights holders whose IP ownership and exploitation impede PRC economic development and national security goals.

Why Bob Duggan thinks he can trust the Chinese with his $500 million and their promises on paper is a serious question given Duggan’s inexperience in international trade deals. Indeed, his only foreign venture is Genuine First Aid International. This is a firm which makes band-aids and basic first aid kits in Hong Kong. Duggan appears to have made a deal with Spang CM Ltd but that deal seems murky and few details are available.

Genuine First Aid International is in the Panama Papers and shows Duggan partnered with Ali Shawkat, an Iraqi who, along with his father Mudhar Shawkat, took $140 million out of Iraq in a telecom deal that was so question that Appleby’s in London would not initially take the Shawkat money due to its murky provenance. We reported on this in our 2017 article entitled Billionaire Bob Duggan, the Panama Papers, and the Scientology Money Club.

Curiously, Shawkat and his wife showed up with a $10 million IAS trophy and then seems to have disappeared altogether from Scientology.

This is the Panama Papers chart showing Duggan linked to Ali Shawkat:

Has Bob Duggan made a bad $500 million bet by partnering with a Chinese pharma firm? This question is an especially relevant one to ask given the fact that China’s Covid-19 vaccine was ineffective according to Dr. Anthony Fauci. Given its vast resources, the PRC’s failure to make a vaccine on a par with the West forces any analyst to ask if Akeso, Inc. can actually come through for Summit Therapeutics.

Summit Therapeutics is not in a strong cash position. According to its most recent Q3 2023 reporting, Duggan’s firm only has enough cash on hand to continue operations through the second half of 2024 (emphasis ours):

Financial Highlights
• Aggregate cash and cash equivalents, restricted cash, short-term investments, and receivables on September 30, 2023 totaled $200.5 million as compared to $654.7 million on December 31, 2022.

◦ Our cash, cash equivalents, restricted cash, and short-term investments on September 30, 2023 was $198.9 million as compared to $648.6 million on December 31, 2022. Accounts receivable and research and development tax credits receivable on September 30, 2023 were $1.6 million as compared to $6.1 million on December 31, 2022.

◦ Our short-term investments consist of U.S. treasury securities.

◦ Our current notes payable balance at September 30, 2023 was $100.0 million, which is due in September 2024.

Based on our current cash and investments position, current operating plans, and with the $100.0 million notes payable due in September 2024, we have sufficient funds to operate into the second half of 2024.

• Net loss for the three and nine months ended September 30, 2023 was $21.3 million and $578.4 million, respectively. Net loss for the three and nine months ended September 30, 2022 was $21.4 million and $59.6 million, respectively.

◦ The net loss for the nine months ended September 30, 2023 includes one-time in-process research and development expenses associated with the in-licensing of ivonescimab from Akeso of $520.9 million.

Bob Duggan loaned Summit Therapeutics $25 million on March 10, 2022. The SEC Form 8-K contains the details of the loan. The company repaid the loan this year.

If June 2024 arrives and there is no cash left in Summit Therapeutics, Bob Duggan will have to get his checkbook out again. Duggan may even have to make the ultimate sacrifice and not donate a few million to the Church of Scientology. According to estimates made by Forbes, Bob Duggan has donated about $360 million to Scientology.

If push comes to shove, does Chinese Pharma or Scientology get the next tranche of Duggan cash? 

Summit Therapeutics Q3 2023 Financials: