Johnson & Johnson ($JNJ), fighting to keep up with the blockbuster race to launch quick cures for hepatitis C, has agreed to pay as much as $1.1 billion for the rights to Achillion Pharmaceuticals' ($ACHN) pipeline of antiviral treatments.
Under the deal, J&J is making a $225 million investment in its partner and promising up to $905 million in milestone payments in order to get its hands on a group of in-development hep C treatments. The plan is to develop Achillion's drugs in combination with one another and, ideally, come up with a regimen that can cure the infection in as few as four weeks. Leading the pipeline is ACH-3102, Achillion's Phase II NS5A inhibitor, followed by the complementary ACH-3422 and sovaprevir.
For J&J, the three assets present another set of potential shots on goal as it works to catch up with Gilead Sciences ($GILD) and AbbVie ($ABBV) in the field of next-gen hep C treatments. The company markets Olysio alongside partner Medivir but has struggled to compete with the all-oral cures that now dominate the market.
Eyeing down-the-line success, J&J spent $1.75 billion on Alios BioPharma last year to pick up some early-stage nucleotide analogs, and its latest deal with Achillion is designed to further widen the company's antiviral pipeline.
For Achillion, however, the agreement falls short of what many investors had hoped to see come of the biotech's assets. Under the deal, the Connecticut drug developer is handing over worldwide rights to its top prospects in exchange for equity, not upfront cash, holding on to a royalty percentage between the mid-teens and low-twenties, depending on future sales.
In February, Achillion reported that a combination of ACH-3102 and Gilead's blockbuster Sovaldi notched a 100% cure rate after 6 weeks in a 12-patient study, sending the biotech's shares skyward and stoking hopes that it might be a major takeout target. In the end Achillion's investors--some of whom had openly hoped Gilead might step in and acquire the company at a steep premium--were disappointed with the terms of the J&J deal, sending the biotech's shares down about 5% after hours on Tuesday.
|Achillion CEO Milind Deshpande|
But CEO Milind Deshpande contends the new agreement is a win-win. Putting its assets in the hands of J&J's storied Janssen unit gives them the best chance of success, Deshpande said, while the equity investment will allow Achillion to accelerate its preclinical work on drugs that target the complement pathway.
Meanwhile, Gilead and AbbVie are raking in billions with their combo hep C treatments. Behind them, a cadre of contenders including Merck ($MRK) and Bristol-Myers Squibb ($BMY) is developing new regimens that promise to rid more patients of the virus at a faster clip, angling for the top spot in a blockbuster market.
- read the announcement (PDF)