Johnson & Johnson said it would pay up to $1 billion for Aragon Pharmaceuticals and its experimental drugs for prostate cancer, bolstering J&J's role in the field after it acquired another experimental prostate-cancer treatment four years ago that has become a leading brand.
J&J on Monday said Aragon's lead product, called ARN-509, has potential to help patients whose prostate cancer has not yet spread to other parts of the body, as well as patients whose cancer has spread.
By contrast, J&J's blockbuster Zytiga treatment, acquired through its $1 billion purchase of Cougar Biotechnology in 2009, was approved in 2011 only for patients whose cancer has already spread.
The drugs are both meant for patients who fail to benefit from treatments that block testosterone, the male hormone that fuels prostate cancer, but they work through different means.
J&J spokeswoman Kellie McLaughlin said late-stage trials will be needed to assess how ARN-509 would be used. But she said the drug and Zytiga potentially could work well when used in combination because of their slightly different mechanisms of action.
"They might also be studied to see if they can be used sequentially, with patients first taking ARN-509 and then moving on to Zytiga as their disease progresses," McLaughlin said.
Aragon will receive $650 million in cash upfront from J&J under the deal, and a possible second payment of $350 million if ARN-509 meets certain milestones.
The deal does not include development of Aragon's treatment for breast cancer, which will be spun off into a separate company called Seragon Pharmaceuticals ahead of the deal and will be run by Aragon's chief executive officer.
McLaughlin said Zytiga has had the most successful introduction of any oral treatment for cancer, having been used by more than 60,000 patients worldwide. It generated first quarter sales of $344 million, putting it on track toward achieving full-year sales of well above the $1 billion J&J paid for Cougar Biotechnology.
"Prostate cancer is a key area of focus for us, and we are really excited about ARN-509 and adding it to our portfolio," McLaughlin said.
Shares of J&J rose 1.4 percent to $86.14 in morning trading on the New York Stock Exchange, outpacing a 0.9 percent gain for the ARCA Pharmaceutical Index .DRG of large U.S. and European drugmakers.
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