Billionaire Soon-Shiong bets Africa is cure for flatlined stock

The combined entity, which kept the name ImmunityBio, has lost more than 80% of its value in the past 12 months.
Image: Bloomberg

At this time a year ago, investors saw billionaire Patrick Soon-Shiong’s biotech company ImmunityBio Inc. as a moonshot that would make them rich.

Shares of ImmunityBio, which develops treatments for cancer and other diseases, soared by more than 200% in the span of weeks in early 2021, ahead of its merger with another Soon-Shiong company, NantKwest. Around the same time, its Covid-19 vaccine, which Soon-Shiong has said can address future mutations of the virus, was making its way through early clinical trials.

The company’s star has faded since then. And with it, so has Soon-Shiong’s fortune.

The combined entity, which kept the name ImmunityBio, has lost more than 80% of its value in the past 12 months — a much steeper decline than the broader retreat in biotechnology stocks over the period. Just since June, Soon-Shiong’s personal wealth has fallen from $13.3 billion to $10.2 billion, according to the Bloomberg Billionaires Index. That’s a greater drop in wealth than all but a few dozen of the world’s 500 richest people. Soon-Shiong ranks 216th, down from 159th in early June.

Soon-Shiong, 69, plans to reinvigorate his biotech business empire by pivoting to his native Africa. Last month, he unveiled a new vaccine manufacturing plant in Cape Town, vowing to produce at least 1 billion doses of a Covid vaccine in South Africa by 2025 and to launch a series of medical institute outposts across Botswana, Kenya, Ghana and Uganda. It’s part of his push to turn South Africa into a manufacturing hub where vaccines and other treatments are produced for the entire continent.

“It’s really important, as a globally facing pharmaceutical company with the resources we have and the technology we have, to share it with the world, especially South Africa,” Soon-Shiong, who was born to Chinese immigrant parents in South Africa, said in an interview with Bloomberg News.

LA limelight

It’s the latest reinvention for Soon-Shiong, who amassed his fortune by selling two drug companies for a combined $7.4 billion in 2008 and 2010. Since then, he has bought the Los Angeles Times newspaper and a 4.5% stake in the NBA’s Lakers.

The public spotlight has been harsh of late: ProPublica reported in December that he was among the ultra-rich Americans who didn’t pay any taxes for years because of huge deductions from business losses. He has also had to combat claims that his foundation may have run afoul of tax laws. (An IRS audit examining one aspect of potential tax violations cleared the foundation.)

His ambitions in Africa, by contrast, where just 12% of the population is fully vaccinated against Covid, generated praise from leaders who have called for more investment.

“Today is a demonstration of how we are moving forward to being self-reliant as a continent,” South Africa President Cyril Ramaphosa said at an event announcing the vaccine manufacturing campus.

Beyond Covid

Soon-Shiong plans for a newly created company, NantSA, whose name adorns the Cape Town plant, to receive equipment transfers from ImmunityBio. He said another $150 million worth still needs to be invested in the facility, which will be capable of producing vaccines not just for Covid but also for other diseases.

As Soon-Shiong tells it, the driving force behind his push into Africa is clear: To develop “next-generation” vaccines that can target diseases like tuberculosis, HIV, and malaria that kill millions on the continent even as they fade elsewhere.

As for Covid, Soon-Shiong has said the plant will produce 1 billion vaccine doses by 2025. But ImmunityBio’s Covid vaccine candidate still has several more hurdles to clear before potentially gaining regulatory approval. In an email, he declined to comment on what would happen if the NantSA facility couldn’t produce ImmunityBio’s own vaccine.

Shifting money and resources around companies within his orbit is a cornerstone of Soon-Shiong’s business approach. ImmunityBio and another publicly traded firm, NantHealth, together account for only about a quarter of his empire, according to Bloomberg’s wealth index. His fortune is mostly in the form of a constellation of companies organized under Los Angeles-based NantWorks LLC.

Soon-Shiong launched NantWorks more than a decade ago to tackle issues of the human immune system, including cancer treatment. It has since grown to encompass three categories of companies: health and life sciences, energy and renewables, and technology and infrastructure.

It’s harder to evaluate the success of these companies, many of which have a limited or nonexistent online presence, or to keep track of exactly how many of them there are. To name a few: NantMobile, a maker of image recognition technology; NantEnergy, a producer of zinc-based batteries; and urban scooter company NantMobility.

That opacity is one reason why David Nierengarten, a biotech analyst at Wedbush Securities Inc., doesn’t cover ImmunityBio.

“The ownership structure of all of the subsidiaries has been frankly hard for me to understand,” he said in an interview.

Still, ImmunityBio has the largest weighting in the Direxion Moonshot Innovators exchange-traded fund (ticker: MOON), ahead of companies including Dropbox Inc., Nikola Corp. and Virgin Galactic Holdings Inc. The ETF offers investors “exposure to the 50 most innovative US companies at the forefront of changing our lives today,” according to its website.

As for his latest project, Soon-Shiong is confident that ImmunityBio’s Covid vaccine candidate will become an integral part of the effort to combat the virus, especially in Africa. A possibility he has often floated is that his shot, by focusing on a different part of the immune system than most other shots, could be used as a “universal booster.”

“That has been our approach from day one,” he said. “We’ve been screaming at the top of our lungs.”

© 2022 Bloomberg

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