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.
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.
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.”
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.
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.