J&J, Genmab in Oncology Deal - Analyst Blog

By Zacks Equity Research,

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Johnson & Johnson's ( JNJ ) Janssen Biotech, Inc. recently signed a worldwide license and development agreement with Danish company Genmab A/S. The agreement covers Genmab's oncology candidate, daratumumab.

Daratumumab, a human monoclonal antibody (mAb) which is currently in phase I/II studies, is being investigated for relapsed, refractory multiple myeloma.

Terms of the Deal

Per the terms of the deal, Genmab will receive an upfront payment of $55 million and development, regulatory and sales milestones. Genmab will also be entitled to receive tiered double-digit royalties on global sales of daratumumab. Janssen will fund all expenses associated with the research, development, manufacturing and commercialization of daratumumab.

Moreover, Janssen will make an $80 million equity investment in Genmab which means it will hold about 10.73% of Genmab's share capital once the deal closes. The total value of the deal could exceed $1.1 billion.

In return, Janssen will gain exclusive worldwide rights to the candidate as well as a back-up CD38 human antibody.

While Genmab will be responsible for phase I/II trials (GEN501 and GEN503) with daratumumab, other development, clinical and regulatory filing activities will be handled by Janssen. More than 10 new studies, including phase III studies, will be conducted under the deal. Genmab expects to initiate a phase I/II study of daratumumab plus Velcade in the coming months.

Besides multiple myeloma, daratumumab has the potential to be evaluated for additional indications like acute myeloid leukemia, diffuse large B-cell lymphoma, plasma cell leukemia, follicular lymphoma, acute lymphoblastic leukemia, and mantle cell lymphoma. Genmab said that it expects to evaluate daratumumab for at least three new indications.

Our Take

This deal is a major positive for Genmab. The deal will not only strengthen the company's financial position in the form of upfront and milestone payments, Genmab will also benefit from Janssen's expertise and experience in the oncology market. Meanwhile, the deal is in line with Johnson & Johnson's focus on hematological cancers. The company already has a multiple myeloma product in its portfolio - Velcade.     

Customary closing conditions like approval by the Danish Financial Supervisory Authority and clearance by the US antitrust authorities need to be fulfilled for the closing of the deal.

Apart from Janssen, Genmab has deals with other companies like Novartis ( NVS ), Cormorant Pharmaceuticals and GlaxoSmithKline ( GSK ).

We currently have a Neutral recommendation on Johnson & Johnson, which carries a Zacks #3 Rank (short-term Hold rating).

GLAXOSMITHKLINE (GSK): Free Stock Analysis Report
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NOVARTIS AG-ADR (NVS): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: GSK , JNJ , NVS

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