Johnson & Johnson
) recently completed its previously announced acquisition of
privately-held, pharmaceutical discovery and development company
Aragon Pharmaceuticals, Inc.
With the acquisition going through, Aragon's lead pipeline
candidate, ARN-509, has now become a part of Johnson &
Johnson's pipeline. ARN-509 is currently in phase II development
for castration resistant prostate cancer (CRPC) and will be
managed by Janssen Research & Development.
The $1 billion payout for the acquisition includes a $650
million upfront cash payment and up to $350 million on the
achievement of milestones.
Prior to the closing of the acquisition, Aragon transferred
all assets apart from the androgen receptor antagonist program to
a newly formed company - Seragon Pharmaceuticals Inc., which was
spun out of Aragon. Johnson & Johnson will neither have an
ownership stake in Seragon nor will it retain any rights to the
products or programs transferred to the company.
This acquisition signifies Johnson & Johnson's attempt to
strengthen its prostate cancer franchise especially once Zytiga
loses exclusivity. Zytiga, which became a part of Johnson &
Johnson's portfolio following its acquisition of Cougar
Biotechnology, is one of the company's most successful launches
in recent times. Zytiga sales in the recently reported second
quarter of 2013 were $395 million, up 70.3% year over year. The
successful development of ARN-509 will consolidate the company's
position in the prostate cancer market.
Johnson & Johnson currently carries a Zacks Rank #3
(Hold). While we expect the company to continue facing headwinds
in the form of pricing pressure, manufacturing issues, and U.S.
healthcare reform, we believe the diversified business model,
lack of cyclicality and strong financial position will continue
helping the company pave its way through tough situations.
Companies that currently look well positioned include
Biospecifics Technologies Corp.
) among others with all three being Zacks Rank #1 (Strong Buy)
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