June 17, 2013 / 3:35 PM / in 5 years

UPDATE 2-J&J in $1 bln deal to bolster prostate-cancer focus

By Ransdell Pierson
    June 17 (Reuters) - Johnson & Johnson said it would pay up
to $1 billion for Aragon Pharmaceuticals and its experimental
drugs for prostate cancer, to bolster 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
    Moreover, although Zytiga has become a blockbuster only two
years after being launched, it could face competition from
cheaper generics by 2016 in the United States, while ARN-509
will have U.S. marketing exclusivity until 2028, Leerink Swann
analyst Danielle Antalffy said in a research note.
    "We expect that J&J will be able to accelerate ARN-509's
development timeline and expand the depth of clinical programs
in order to reach the market ahead of Zytiga's U.S. patent
expiration," Antalffy said.
    Zytiga and ARN-509 are both meant for patients who fail to
benefit from treatments that block testosterone, the male
hormone that fuels prostate cancer. But the two drugs work
    ARN-509 has potential to be the most effective treatment for
such patients, Antalffy said.
    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
    "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.
    ARN-509, which belongs to a new class of drugs called
androgen receptor signaling inhibitors, works in a similar way
to Medivation Inc's already approved Xtandi treatment.
But Antalffy said early clinical data suggest ARN-509 has 
potential to be more potent, and to sidestep seizure risks seen
with the Medivation drug.
    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
full-year sales well above the $1 billion J&J paid for Cougar
    "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 closed up 0.8 percent to $85.63 on the New
York Stock Exchange, outpacing a 0.3 percent gain for the ARCA
Pharmaceutical Index of large U.S. and European
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