September 30, 2014 / 12:55 PM / 5 years ago

Johnson & Johnson to buy private drug developer for $1.75 billion

(Reuters) - Johnson & Johnson (JNJ.N) agreed to pay $1.75 billion in cash to buy privately held Alios BioPharma Inc, which is developing a drug for a common respiratory viral infection in children for which there is no approved treatment.

A first aid kit made by Johnson & Johnson for sale on a store shelf in Westminster, Colorado April 14, 2009. REUTERS/Rick Wilking

J&J said Alios would also give it access to a portfolio of drugs targeting other viral infections.

J&J has been increasing its focus on treatments for infectious diseases, having signed two other deals earlier this year – one for the maintenance treatment of people with HIV and the second to treat influenza.

Alios’s experimental drug, AL-8176, to treat infants with respiratory syncytial virus (RSV) is currently in mid-stage trails. In July, the company reported positive results from a similar study in adults.

“We have great expectations for this drug to help children who suffer with RSV,” William Hait, research chief for J&J’s Janssen unit, said in a telephone interview.

In the United States, RSV is the most common cause of an inflammation of the airways in the lung and pneumonia in infants under the age of 1, according to the U.S. Centers for Disease Control and Prevention (CDC).

Every year on average, RSV leads to 1.5 million outpatient visits among children younger than 5 years old, according to the CDC.

J&J is developing its own treatment for RSV and said Alios’ AL-8176 would complement its own portfolio. The J&J drug has not yet been tested in humans, Hait said.

While RSV has no approved treatment, AstraZeneca Plc (AZN.L) sells the only approved vaccine to prevent RSV in children.

The vaccine, Synagis, generated U.S. sales of $47 million in the three months ended June 30.

The deal to buy Alios has been approved by the board of both companies and is expected to close in the fourth quarter, the companies said.

J&J shares were up 5 cents at $106.61 in afternoon trading on the New York Stock Exchange.

Goldman, Sachs & Co acted as financial adviser to Alios and Latham & Watkins LLP was its legal adviser. J&J declined to disclose its advisers in the deal.

Reporting by Vidya L Nathan in Bangalore and Bill Berkrot in New York; Editing by Kirti Pandey, Savio D'Souza and Bernard Orr

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