J&J scuttles a $945M arthritis deal with Astellas on the eve of Phase III

Johnson & Johnson ($JNJ) is walking away from a potential rheumatoid arthritis treatment from Astellas, nixing a deal that could have paid out at $945 million and putting the drug's stateside future in jeopardy.

Under a 2012 agreement, J&J paid $65 million up front and promised loads more to acquire the ex-Japan rights to ASP015K, an oral JAK inhibitor designed to block inflammatory signaling and treat the underlying cause of immune diseases like RA. Now the U.S. pharma giant has exercised its opt-out clause, agreeing to hand back full rights on Jan. 15 and stopping short of running Phase III trials on the RA drug.

Astellas said it plans to stay the course on ASP015K's Japanese program, now entering late-stage studies, and the company is "considering the future plan" for the drug outside its home country.

Last year, ASP015K completed two Phase IIb studies testing its effect as a once-a-day treatment for RA, and ClinicalTrials.gov lists at least one J&J-sponsored study of the drug as actively enrolling. In a statement, J&J said its decision to ditch the JAK inhibitor "is the result of a strategic portfolio decision" made in light of "the depth of our immunology pipeline and the exciting opportunities we see ahead."

That leaves Astellas to go it alone in the world of oral JAK inhibitors for inflammatory disease, contending with the Phase III baricitinib, from Incyte ($INCY) and Eli Lilly ($LLY), and Pfizer's ($PFE) Xeljanz, a drug that has failed to catch on as quickly as analysts expected when it won approval in 2012.

Each hopes to take some market share from the TNF-blocking injectable blockbusters that have long dominated the inflammatory space, led by AbbVie's ($ABBV) Humira, Amgen's ($AMGN) Enbrel and J&J's own Remicade. Such therapies account for tens of billions of dollars in sales every year, but each is nearing patent expiration, meaning the developers of oral alternatives will soon have to compete with cheaper biosimilars as they work to crack the market.

- read the statement (PDF)

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