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Seattle’s Fred Hutch Taps a Harvard, Merck Vet As New President

Xconomy Seattle — 

The Fred Hutchinson Cancer Research Center in Seattle has unveiled D. Gary Gilliland as its new president and director. He steps to the helm with a strong tailwind, as the center’s research is part of a new field that has shown early promise eradicating leukemia from some of the sickest patients in the country.

Gilliland was previously vice president of precision medicine at the University of Pennsylvania’s Perelman School of Medicine, and before that had a 20-year run at Harvard Medical School. In between Harvard and Penn he served a short but notable stint at Merck Research Labs ((NYSE: MRK).

Xconomy interviewed Gilliland in 2012 when he was still in charge of Merck’s oncology pipeline, including the drug that eventually became pembrolizumab (Keytruda), a so-called “checkpoint inhibitor” and immunotherapy treatment that the FDA approved two months ago. The first checkpoint inhibitor to win approval was ipilumumab (Yervoy) from Bristol-Myers Squibb (NYSE: BMY). Other checkpoint inhibitors are in the pipeline, including Bristol’s nivolumab (Opdivo), which is approved in Japan and awaits an FDA decision that is due next March.

Cancer immunotherapy is Fred Hutch’s bread and butter. Its highest-profile research programs at the moment are a bit different than the checkpoint inhibitor antibodies. Fred Hutch’s cell-therapy programs, which use a patients’ own immune-system cells as the basis for cancer treatment, have advanced into clinical trials under the roof of Seattle’s Juno Therapeutics.

Juno filed IPO paperwork this week and revealed that Fred Hutch has an unusual tech-transfer arrangement with the company. Academic centers that license programs to the for-profit sector usually negotiate for a slice of royalties if the products ever come to market.

The Hutch has those in place with Juno, but it also will get paid based on Juno’s stock price once it goes public. As the stock price increases to $40 a share, the so-called “success payments” increase, up to a total of $375 million. The payments can be made with equity instead of cash.

New York’s Memorial Sloan-Kettering Cancer Center, which has also licensed programs to Juno, has a similar deal that tops out at $150 million. Fred Hutch owns 13 million Juno shares, and MSK owns 2 million.

(The third academic partner of Juno is Seattle’s Children’s Research Institute; it has a more standard licensing agreement with Juno based on product milestones and royalties, but there is no mention of stock-based “success payments.”)

Fred Hutch has been searching for a new head since Larry Corey stepped down at the end of June. Corey, who ran the center for less than four years, was instrumental in negotiating the Juno deal and became a co-founder, as Xconomy reported last December. He owns 2 million Juno shares, according to the regulatory filings.

When he stepped down from the Hutch, Corey, a physician-scientist that founded the HIV Vaccine Trials Network, said he wanted to go back to his prior research pursuits—namely, developing vaccines for HIV and cancer. Fred Hutch hit an all-time in fundraising under his watch, thanks in part to a $20 million gift from the Bezos family.

Gilliland starts work on January 1.