- Janssen, the research unit of Johnson & Johnson, has inked a potentially $3.75 billion licensing deal that gives it rights to as many as four RNA interference therapies from Arrowhead Pharmaceuticals.
- In a Thursday statement, Janssen said it already selected one of those therapies to license: ARO-HBV, an investigational, subcutaneous and potentially curative treatment for hepatitis B. Arrowhead started a Phase 1/2 study of ARO-HBV earlier this year, but Janssen intends to take over development and commercialization moving forward.
- When the deal closes, Arrowhead will receive $250 million right away through a $175 million upfront payment and a $75 million equity investment from J&J's investment arm. The California-based biotech is also eligible for $3.5 billion in milestone payments, plus royalties on commercial sales for any of the licensed therapies that come to market.
RNA interference, or RNAi, is built on the premise that diseases can be cured by silencing problematic genes. In August, the Food and Drug Administration handed out its first-ever approval of an RNAi therapy to Alnylam Pharmaceuticals' Onpattro (patisiran) for peripheral nerve disease caused by an uncommon condition known as hereditary ATTR amyloidosis.
Landmark approval aside, it doesn't look like Onpattro will have the market to itself for long. Ionis Pharmaceuticals and its spinout Akcea Therapeutics have been pushing Tegsedi (inotersen), an antisense oligonucelotide treatment for hereditary ATTR, toward market despite some regulatory setbacks. An approval decision on inotersen should come any day now.
Other drugmakers, meanwhile, are also exploring the potential of RNAi, including Dicerna Pharmaceuticals and Silence Therapeutics.
At Arrowhead, such exploration brought with it substantial business challenges. Less than two years ago, against the backdrop of a clinical hold, the company decided to eliminate 30% of its workforce and stop further development of all clinical programs — opting instead to route resources toward preclinical assets.
Interestingly, the clinical hold that crushed Arrowhead was for an earlier hepatitis B therapy named ARC-520. Now, the company's third-generation hepatitis B therapy, ARO-HBV, is helping bring in millions. Arrowhead could receive around $1.6 billion in milestone payments for the ARO-HBV license per deal terms, including a $50 million milestone payment linked to a Phase 2 study.
The Phase 1/2 study of ARO-HBV is testing it in healthy patients and those with hepatitis B. Arrowhead gave an initial glimpse into the data from that trial during the World Gastroenterologists Summit last month, showing activity among various types of hepatitis B patients, such as patients positive or negative for the hepatitis B e antigen and those who had or had not received treatment with a nucleos(t)ide analogue.
While early, those data bode well for ARO-HBV, according to a Sept. 14 note from Jefferies analyst Maury Raycroft, and set the tone for "what should be a more mature, robust dataset" at the upcoming American Association for the Study of Liver Diseases meeting.
As for the up to three additional RNAi therapies, Arrowhead could receive around $1.9 billion in option and milestone payments, plus tiered royalties up to the mid teens on any product sales stemming from these treatments.
On a Thursday conference call, Arrowhead management was quite optimistic about the deal and how the company's therapies would advance in the hands of J&J.
Investors, however, weren't sold. Though Arrowhead shares initially opened 7% higher Thursday, they quickly fell in later morning trading — hitting $15.70 apiece around noon, more than a 15% drop from the per share value at Wednesday's market close.