J&J snags another promising prostate cancer drug in $1B Aragon buyout

Johnson & Johnson has stepped up with another classic billion-dollar cancer drug buyout, agreeing to buy Aragon Pharmaceuticals and its promising next-gen prostate cancer drug for $650 million in cash and up to $350 million in milestones. The deal gives J&J ($JNJ) complete control over a combo approach with blockbuster potential that could help further improve the rapidly changing standard of care in prostate cancer.

Richard Heyman, CEO of Aragon Pharmaceuticals

Aragon's big cancer drug--ARN-509--was built around the idea that if you can build a better anti-androgen drug, you can offer new hope to castration-resistant prostate cancer patients. The biotech saw its therapy as a logical second-generation approach to Medivation's Xtandi, offering some big potential as a future combo package with J&J's Zytiga--another cancer drug that J&J picked up in a billion dollar deal to buy Cougar Biotechnology.

Combining the two drugs would hit "two focal points of androgen-dependent prostate cancer," something CEO Rich Heyman once told FierceBiotech would amount to "androgen annihilation."

J&J is cherry picking in the acquisition. The pharma giant is taking only ARN-509 and leaving the rest of the assets for Aragon's management to spin out into a new biotech, which it will not have a stake in. Just a couple of months ago, Aragon dosed the first patient in a Phase I clinical study of ARN-810, its oral selective estrogen receptor degrader for locally advanced or metastatic estrogen-receptor positive breast cancer in post-menopausal women.

Aragon was named a Fierce 15 company in 2012, after it had already picked up substantial cash backing. Back in the spring of 2012, Aragon raised $42 million from a group of investors which included the Topspin Fund, headed by one-time hedge fund wiz Jim Simons.

Zytiga has been competing with Xtandi, a new prostate cancer therapy marketed by Medivation ($MDVN) and Astellas. Like Xtandi, ARN-509 comes from the lab of UCLA's Charles Sawyer. Seeing it as a clear threat to its franchise, Medivation sued UCLA claiming that its deal covered 509, but J&J clearly was willing to take that threat in stride.

"The acquisition of Aragon further enhances our leadership in prostate cancer drug development. ARN-509 complements Zytiga and provides the potential for exciting, novel approaches to treat prostate cancer patients," said Peter F. Lebowitz, head of oncology research at J&J. "Prostate cancer is one of our main areas of focus, and we are pleased to be adding ARN-509 to our portfolio."

- here's the press release

Special Report: Aragon Pharmaceuticals – 2012 Fierce 15