SAN FRANCISCO – It's been a big week for billionaire physician and biotech veteran Patrick Soon-Shiong. He was awarded two separate presentation slots at the J.P. Morgan Healthcare Conference and his ambitious holding company Nantworks LLC launched new start-up venture Nantcell LLC, an immuno-oncology firm that began by licensing a late-stage monoclonal antibody from Amgen Inc. That news flow, however, was marred by reports surfacing Thursday morning of a whistleblower lawsuit filed by former employees, alleging that one particular venture is not as promising as it appears.

According to the filing, Stephanie Davidson and William Lynch, both of whom were brought on board last year at Panama City, Fla.-based Nanthealth, claim they were terminated in retaliation for raising those issues with management.

Davidson and Lynch were hired to assist with the preparation of an initial public offering (IPO) for Nanthealth, a unit of Nantworks aimed at merging biomolecular medicine and bioinformatics. But, according to the suit, found that Nanthealth management was "engaged in a multitude of fraudulent activities, which would, if known to investment bankers, customers and the public, substantially devalue the company's stock and likely cause the end of the IPO."

Among the issues listed in the lawsuit are allegations that the technology was riddled with defects and the system could not guarantee FDA and HIPPA compliance and could even be dangerous for patients if misused. Nanthealth's clinical operating system "as a platform is 10 years behind in technology capability. It is not ready for large enterprise use, much less for cloud deployment," the plaintiffs claimed.

Though news of the lawsuit was circulating Thursday morning, no mention of it made its way into Soon-Shiong's presentation to a standing-room-only crowd at the J.P. Morgan Healthcare Conference. In fact, during his presentation on Nantomics LLC, another unit under the Nantworks umbrella, Soon-Shiong described how the genomic and proteomic data generated by Nantomics would fit in with the larger infrastructure.

"So you end up at the end of the day with actionable data in real time," he told JPM attendees.

Whether that statement is a foreseeable goal or unfounded hype remains to be seen. But Soon-Shiong has been successful in building up a strong investor base. Launched in 2012, Nanthealth has attracted some big-name backers, including Celgene Corp. The Summit, N.J.-based big biotech committed $25 million last year to Nanthealth, only months after investing $75 million into another Nantworks company, Nantbioscience. Its connection with Soon-Shiong, however, goes back to cancer drug Abraxane (nab-paclitaxel).

Soon-Shiong developed the nanoparticle albumin-bound drug, which Celgene gained via its 2010 buyout of Abraxis Bioscience Inc. for $2.9 billion in cash and stock. (See BioWorld Today, July 1, 2010.)

Shares of Celgene (NASDAQ:CELG) felt little impact, falling $2.89 to close Thursday at $118.21. But Sorrento Therapeutics Inc., which joined Conkwest Inc. late last year in a deal with Soon-Shiong to develop Conkwest's Neukoplast technology platform, saw its stock (NASDAQ:SRNE) drop $1.59, or 14 percent, Thursday to close at $9.79, though observers were mixed on whether the loss was linked to news of the Nanthealth lawsuit or simply a normal post-JPM sell-off.

BUILDING A SYSTEM

For his part, if Soon-Shiong had been distracted by media reports of the lawsuit it didn't show. He spent his half-hour presentation on Nantomics Thursday morning touting that unit as the "world's largest database" of genomic and proteomic data in cancer and reviewing other components of the Nantworks family, all aimed at changing the way cancer is treated.

"We've spent the last 40 years treating cancer based on the wrong assumption," he said. The notion that a drug could hit a single, specific target and wipe out the tumor hasn't been borne out; the drug might appear efficacious temporarily, but the cancer usually returns. Soon-Shiong called resistance the "fait accompli" of cancer.

"Looking at retrospective data is futile," he added. To really treat cancer will involve genomic and proteomic analysis and "iterative monitoring" of patients.

"I see it as whack-a-mole," he said, "and we've been whacking the mole blindly." The goal of adding genomics and bioinformatics into a large-scale system is to be able to predict where the mole will be.

During the presentation, Soon-Shiong also disclosed details of the Sorrento/Conkwest partnership, which will focus on developing and commercializing CAR.TNK, or chimeric antigen receptor tumor-attacking Neukoplast, cell lines, an off-the-shelf version of adoptive cancer immunotherapy.

The aim is to integrate Conkwest's natural killer cell lines with fully human antibody libraries from Sorrento and take advantage of Nantworks' Nantomics proteomics platform, as well as a cell production method and plus technology that allows for gene transfer without the need for lentivirus insertion. The agreement came with a $50 million investment for Conkwest, in the form of a class A stock sale, with Nantworks contributing $48 million and Sorrento the remaining $2 million. (See BioWorld Today, Dec. 26, 2014.)

Soon-Shiong also made reference to the launch of Nantcell earlier in the week. Focused on immuno-oncology, Nantcell gained rights to AMG 479 (ganitumab) from Thousand Oaks, Calif.-based Amgen. The fully human monoclonal antibody is designed to target type 1 insulin-like growth factor receptor and development of the molecule will require next-generation sequencing at the proteomic level to figure out how best to combine it with other drugs.