Johnson & Johnson Looks To Blood Cancer Drug Successor With Early-Stage Deal - Johnson & Johnson (NYSE:JNJ)

Johnson & Johnson (JNJ) teamed up again with Genmab to produce another cancer drug. This would be a drug that would be a successor to Darzalex, which was developed to treat patients with multiple myeloma. This is a good deal to attempt to keep the blockbuster alive for treating patients with this type of cancer. The downside is that this is an early-stage program, so it will take some time to get it through to the clinic. On the flip side, it has the potential to become a blockbuster in the coming years.

Johnson & Johnson had struck a deal with Genmab yet again. This time around the two hope to get another product from pre-clinical work all the way up to potential approvals in multiple territories. The deal is about a next-generation CD38 monoclonal antibody that utilizes a tech known as HexaBody. The goal is to have Genmab start out the partnership by establishing multiple proof of concept studies to prove that the drug works. These proof of concept studies will be for multiple myeloma (MM) and diffuse large B-cell lymphoma (DLBCL). Considering that Darzalex was developed for multiple myeloma, this next-generation drug HexaBody-CD38, should be an ideal clinical product for development. Why is this a good deal for Johnson & Johnson? The bottom line is that it loses nothing in monetary value until it chooses to exercise its license on worldwide rights for the drug. This is only contingent upon if it chooses to do so. That means it will be able to see if Genmab comes out with strong proof of concept data first before making a decision on whether or not it wants to move forward. Then, if Johnson & Johnson sees that the data is strong, it could possibly take the option to license HexaBody-CD38. The deal made could end up costing Johnson & Johnson over $1.1 billion. One key item being that after 2031, there will be a tiered royalty between 13% and 20%. This is a good partnership, and I believe that there could be a lot of value for Johnson & Johnson here. Especially, since HexaBody-CD38 was able to achieve good pre-clinical results in multiple myeloma, lymphoma, and leukemia.

Darzalex is a high selling drug, especially since it produced $2.02 billion in sales in 2018. It is even possible that full-year 2019 sales could reach $3 billion. It has been approved to treat certain types of multiple myeloma indications. The potential successor HexaBody-CD38 may end up being even superior in terms of sales. That's because not only is it being developed for multiple myeloma, but it is also going after many other indications. Such indications include lymphoma, leukemia, and possibly other types of target indications not dealing with cancer. The HexaBody-CD38 monoclonal antibody has the ability for improved potency against a directed target. Meaning, that the drug has a robust effect on the intended cell target. How is that accomplished? That's accomplished when the target binding at the cell surface occurs with antibody hexamers. By having increased potency, the goal is to have a more desired therapeutic effect against a wide range of diseases. What does this mean in terms of a real-world application? The bottom line is that it allows more freedom in terms of going after other target indications and not just limited to a select few diseases. In my opinion, the most important reason this HexaBody platform is ideal is because it can be combined with other antibody platforms. The variability of this type of technology by being combined with other tech makes it ideal for multiple partnerships later down the line.

Johnson & Johnson was right to work with Genmab again, especially to advance a potential successor to Darzalex. Not only will Darzalex be used again to treat patients with multiple myeloma, but there is potential to expand development of the drug to other cancer indications and possibly even against other types of diseases. The risk is that this program is in the early stages of development. That means by the time the HexaBody-CD38 makes into the clinic, the landscape for multiple myeloma treatment may evolve towards other types of treatment. It's possible that treatments such as CAR-T or other cell therapies may offer more robust responses. The good news is that the deal was positioned in such a way that Johnson & Johnson can wait to see how it all plays out before it chooses to license the drug. It may turn out that it eventually chooses not to move forward if it feels that the landscape is highly competitive. That's a good thing because it leaves it a way out just in case things change drastically.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.

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Source: Seekingalpha.com

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