Johnson & Johnson pays $175 million upfront for rights to Arrowhead's experimental RNAi therapeutic for hepatitis B

Johnson & Johnson's Janssen Pharmaceuticals unit entered a deal with Arrowhead Pharmaceuticals potentially worth more than $3.7 billion to develop the latter's ARO-HBV for patients with chronic hepatitis B virus (HBV) infection, as well as additional RNAi therapeutics, the drugmakers announced Thursday. The deal includes an upfront payment to Arrowhead of $175 million, with Johnson & Johnson also making an equity investment in the company of $75 million at $23 per share, reflecting a 24-percent premium to Arrowhead's closing share price on October 3. 

Under the agreement, Janssen will receive an exclusive global licence to Arrowhead's ARO-HBV programme, and will be solely responsible for all clinical development and commercialisation beyond Arrowhead's ongoing Phase I/II AROHBV1001 study of the subcutaneous RNAi therapy candidate. Arrowhead is eligible to receive up to approximately $1.6 billion in milestone payments for the HBV license agreement, including a $50-million payment linked to a Phase II study.

ARO-HBV is being developed as a potentially curative therapy for patients with chronic HBV infection. Shares in Arrowhead surged as much as 30 percent last month after the drugmaker unveiled positive data for the therapy from the AROHBV1001 trial. For related analysis, see ViewPoints: Arrowhead moves past defeat and towards RNAi cure for HBV.   

Janssen will also hold options to select up to three additional targets for which Arrowhead will develop clinical candidates using its Targeted RNAi Molecule (TRiM) platform. Arrowhead will perform discovery, optimisation and preclinical testing for these targets, sufficient to allow the filing of investigational new drug applications in the US or equivalent, with Janssen funding this phase of development. Janssen will have the option to exclusively licence these candidates, at which point it will take over clinical development and marketing activities.

Arrowhead is also eligible to receive around $1.9 billion in option and milestone payments related to the three additional targets. Further, the agreement gives Arrowhead tiered royalties up to the mid-teens on all product sales stemming from the collaboration. Shares in Arrowhead jumped as much as 19 percent on news of the deal.

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