J&J hands Ar­row­head a plum $3.7B deal for hep B-plus 3 — cor­ralling a pos­si­ble game-chang­ing RNAi drug

Two years af­ter Ar­row­head Phar­ma­ceu­ti­cals $AR­WR con­ced­ed that a sub­stan­tial seg­ment of their RNAi pipeline was hope­less­ly com­pro­mised and had to be jet­ti­soned, crip­pling their stock price, the biotech is stag­ing a ma­jor come­back.

Chris An­za­lone

In the wake of an ear­ly look at pos­i­tive ear­ly re­turns for their he­pati­tis B can­di­date, J&J is step­ping up with one of their fa­mous li­cens­ing pacts, fork­ing over $250 mil­lion in cash for an up­front and eq­ui­ty stake, sea­son­ing it with a $50 mil­lion near-term plum and promis­ing much, much more for a break­through per­for­mance in a key dis­ease tar­get.

In the deal, J&J is get­ting world­wide rights to ARO-HBV, a “po­ten­tial­ly cu­ra­tive ther­a­py for pa­tients with chron­ic he­pati­tis B virus in­fec­tion.” The pact comes just weeks af­ter Ar­row­head shares rock­et­ed up on pos­i­tive da­ta from just 8 pa­tients.

But that was enough for J&J, which has a busy BD group with a long track record for scour­ing the plan­et for break­through drug can­di­dates that do great things for core dis­eases.

Here’s the break­down on the deal.

Math­ai Mam­men

Aside from the Big Phar­ma val­i­da­tion, which is worth plen­ty, Ar­row­head gets $175 mil­lion up­front plus $75 mil­lion in an eq­ui­ty stake at a pre­mi­um share price. There’s an­oth­er $3.5 bil­lion in po­ten­tial mile­stones, which has a $50 mil­lion mile­stone in goal mon­ey added for the Phase II start — which Ar­row­head had ini­tial­ly pen­cilled in for ear­ly 2019, ac­cord­ing to CEO Chris An­za­lone.

Al­most half of that mile­stone mon­ey — $1.6 bil­lion — is fo­cused sole­ly on the hep B pro­gram.

“I think we have done what no oth­er com­pa­ny could have done: go­ing from a stand­ing start to a Phase I/II read­out in less than 2 years,” says the CEO. “This is a re­al­ly good time to hand off the da­ta, go­ing for­ward to en­ter in­to a very com­pli­cat­ed, very ex­pen­sive glob­al set of stud­ies. We think that Janssen is bet­ter tooled to do that. Speed is go­ing to be crit­i­cal here; the glob­al or­ga­ni­za­tion is go­ing to be crit­i­cal.”

Mar­i­anne De Backer

What brought J&J to the ta­ble at the end?

Less than a month ago Ar­row­head saw its share price rock­et up 43% af­ter the com­pa­ny un­veiled new da­ta that it says sup­port the work they’re do­ing on an RNAi ther­a­py for he­pati­tis B. 

Their state­ment: 

The da­ta demon­strate that three month­ly dos­es of ARO-HBV led to a max­i­mum re­duc­tion in cir­cu­lat­ing HBV sur­face anti­gen (HB­sAg) of 4.0 log10, with mean re­duc­tions of ap­prox­i­mate­ly 2.0 log10 on day 85 in the 100 mg co­hort and 1.4 log10 on day 71 in the 200mg co­hort (cur­rent­ly the last com­plete da­ta point avail­able). All eight pa­tients achieved greater than 1.0 log10 re­duc­tions in cir­cu­lat­ing HB­sAg.

J&J has been on the hunt for a break­through he­pati­tis B pro­gram for years, buy­ing Novi­ra in 2015 while lat­er ink­ing pacts with Sino and Arc­turus. This deal, though, ranks as one of the biggest in the space, in­di­cat­ing that J&J wasn’t the on­ly bid­der at the ta­ble.

An­za­lone adds that J&J is al­so get­ting the rights to up to 3 ad­di­tion­al RNAi pro­grams, a help­ful en­dorse­ment from a phar­ma gi­ant that’s been known to ante up a sig­nif­i­cant amount of cash to snag the big drug can­di­dates it wants to add to its mid- and late-stage pipeline.

Across from the bar­gain­ing ta­ble, says An­za­lone, J&J was rep­re­sent­ed by R&D chief Math­ai Mam­men, who al­so bet big re­cent­ly on a BC­MA can­di­date from Chi­na’s Leg­end, and Mar­i­anne De Backer, a long­time deal­mak­er at the com­pa­ny.

J&J is well known for cre­at­ing a glob­al net­work of deal­mak­ers in­ter­est­ed in a wide va­ri­ety of de­vel­op­men­tal prod­ucts at every stage of de­vel­op­ment. But it’s the late-stage stars where it’s will­ing to go big.

That hasn’t changed.

As Nas­daq en­rolls the fi­nal batch of 2019 IPOs, how have the num­bers com­pared to past years?

IGM Biosciences’ upsized IPO haul, coming after SpringWorks’ sizable public debut, has revved up some momentum for the last rush of biotech IPOs in 2019.

With 39 new listings on the books and roughly two more months to go before winding down, Nasdaq’s head of healthcare listings Jordan Saxe sees the exchange marking 50 to 60 biopharma IPOs for the year.

“December 15 is usually the last possible day that companies will price,” he said, as companies get ready for business talks at the annual JP Morgan Healthcare Conference in January.

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A fa­vorite in Alex­ion’s C-suite is leav­ing, and some mighty sur­prised an­a­lysts aren’t the least bit hap­py about it

Analysts hate to lose a biotech CFO they’ve come to trust and admire — especially if they’re being blindsided by a surprise exit.

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'Dis­con­nect the bas­tard­s' — one biotech's plan to break can­cer cell­s' uni­fied de­fens­es

Chemotherapy and radiotherapy are the current gladiators of cancer treatment, but they come with well-known limitations and side-effects. The emergence of immunotherapy — a ferocious new titan in oncologist’s toolbox — takes the brakes off the immune system to kill cancer cells with remarkable success in some cases, but the approach is not always effective. What makes certain forms of cancer so resilient? Scientists may have finally pieced together a tantalizing piece of the puzzle, and a new biotech is banking on a new approach to fill the gap.

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While No­var­tis ban­ish­es Zol­gens­ma scan­dal scars — Bio­gen goes on a Spin­raza 'of­fen­sive'

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA. 

Jason Kelly. Mike Blake/Reuters via Adobe

Eye­ing big ther­a­peu­tic push, Gink­go bags $290M to build a cell pro­gram­ming em­pire

Ginkgo Bioworks is on a roll. Days after publicizing a plan to nurture new startups via partnerships with accelerators Y Combinator and Petri, the Boston biotech says it has raised another $290 million for its cell programming platform to reach further and wider.

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UP­DAT­ED: Speak­er Nan­cy Pelosi to un­veil bill for fed­er­al­ly ne­go­ti­at­ed drug prices

After months of buzz from both sides of the aisle, Speaker Nancy Pelosi will today introduce her plan to allow the federal government to negotiate prices for 250 prescription drugs, setting up a showdown with a pharmaceutical industry working overtime to prevent it.

The need to limit drug prices is a rare point of agreement between President Trump and Democrats, although the president has yet to comment on the proposal and will likely face pressure to back a more conservative option or no bill at all. Republican Senator Chuck Grassley is reportedly lobbying his fellow party members on a more modest proposal he negotiated with Democratic Senator Ron Wyden in July.

Jeff Kindler's Cen­trex­ion re­news bid to make pub­lic de­but

Jeffrey Kindler’s plan to take his biotech — which is developing a slate of non-opioid painkillers — public, is back on.

The Boston based company, led by former Pfizer $PFE chief Kindler, originally contemplated a $70 million to $80 million IPO last year— but eventually postponed that strategy. On Wednesday, the company revived its bid to make a public debut in a filing with the SEC — although no pricing details were disclosed.

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'A fourth rev­o­lu­tion in can­cer ther­a­pies': ARCH-backed Bound­less Bio flash­es big check, makes big­ger promis­es in de­but

It was the cellular equivalent of opening your car door and finding an active, roaring engine in the driver seat.

Scientists learned strands of DNA could occasionally appear outside of its traditional home in the nucleus in the 1970s, when they appeared as little, innocuous circles on microscopes; inexplicable but apparently innate. But not until UC San Diego’s Paul Mischel published his first study in Science in 2014 did researchers realize these circles were not only active but potentially overactive and driving some cancer tumors’ superhuman growth.

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Right after jumping on Michael Milken’s FasterCures board on Monday, the newly departed FDA commissioner is back today with news about another life sciences board post that gives him a ringside chair to cheer on a lead player in the real-world evidence movement — one with very close ties to the FDA.

Aetion is reporting this morning that Gottlieb is joining their board, a group that includes Mohamad Makhzoumi, a general partner at New Enterprise Associates, where Gottlieb returned after stepping out of his role at the FDA 2 years after he started.

Gottlieb — one of the best connected execs in biopharma — knows this company well. As head of FDA he championed the use of real-world evidence to help guide drug developers and the agency in gaining greater efficiencies, which helped set up Aetion as a high-profile player in the game.

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