Johnson & Johnson expands viral disease pipeline with $1.75-billion deal for Alios BioPharma

Johnson & Johnson announced a definitive agreement on Tuesday to acquire Alios BioPharma for approximately $1.75 billion in cash, boosting its experimental pipeline of drugs for viral infections. The company noted that the deal includes Alios' orally administered antiviral therapy AL-8176, which is currently in mid-stage development for the treatment of infants with respiratory syncytial virus (RSV).

William Hait, global head of R&D at Johnson & Johnson's Janssen Pharmaceutical unit, remarked that the transaction "will enable us to explore treatment options for a number of viral infections, including RSV, the last of the major paediatric diseases with no available preventive therapy." Hait added that "AL-8176 complements our existing early-stage portfolio for RSV, which aims to prevent and treat this disease." Meanwhile, Johan Van Hoof, Janssen's global head for infectious diseases and vaccines, described Alios' pipeline as being "closely aligned with our vision to continue to address important unmet medical needs." The purchase is expected to close during the fourth quarter.

Commenting on the news, RBC Capital Markets analyst Michael Yee estimated that an effective drug for RSV could potentially generate annual sales of at least $1 billion. He noted that Gilead Sciences' investigational oral RSV fusion inhibitor, GS-5806, yielded positive results in a Phase IIa study earlier this year.

In addition to RSV, Alios is developing compounds for influenza, rhinoviruses and hepatitis C. Under a 2011 agreement, the biopharmaceutical company licensed two experimental nucleotide analogues, ALS-2200 and ALS-2158, to Vertex Pharmaceuticals for the treatment of HCV, although Vertex disclosed in May that it was abandoning its R&D efforts into hepatitis C. Earlier this month, Alios also indicated plans to advance its uridine-based nucleotide analogue AL-335 into Phase I testing in the fourth quarter as a potential treatment for the disease.

Yee suggested Alios' nucleotide analogues could potentially compete against Gilead's Sovaldi (sofosbuvir), which was the first nucleotide polymerase inhibitor for hepatitis C to reach the market when it was approved by the FDA last December. Johnson & Johnson currently markets the NS3/4A protease inhibitor Olysio (simeprevir), which US regulators cleared in November 2013 for chronic hepatitis C infection in combination with pegylated interferon and ribavirin, but the company had no nucleotide drugs of its own. Yee said "the long-term 'call option' upside here is the Alios [nucleotides]…if those can show a four-log reduction in HCV virus and have a good safety profile." However, he cautioned that the development of so-called "nukes" can be "extremely difficult and the bar for continued progression is very high," citing Vertex's decision to pull out of developing Alios' HCV nucleotide compounds "due to a narrow therapeutic window."

For related analysis, see ViewPoints: Is Alios deal Johnson & Johnson's play for longevity in hepatitis C market?

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