J&J backs out of $1.1 billion hep C deal, wiping 22.2% from Achillion’s stock

pharmafile | September 12, 2017 | News story | Manufacturing and Production, Sales and Marketing J&J, JJ, Johnson & Johnson, achillion, hepatitis C, pharma 

Johnson & Johnson has announced that it is to back out of a $1.1 billion deal with Achillion Pharmaceuticals to develop the firm’s hepatitis C drug pipeline. The news sent Achillion’s stock reeling, wiping away 22.2% of its value.

The deal was originally made back in 2015, where J&J agreed to pay Achillion clinical, regulatory and sales milestones, in addition to royalties. In addition to this, J&J also acquired $225 million of Achillion’s stock as part of the partnership.

Now, the arrangement is no more, with J&J citing the increased competition in the hepatitis C market as its reason for severing the deal. When the two companies teamed up, the space was far more lucrative with blockbuster drug sporting much high prices; looking at how the market has changed, with much lower prices and more effective treatments, it is no wonder J&J now sees its previous momentum as a misstep. If the deal had gone ahead, the pharma giant would be  required to pay Achillion up to $100 million just in Phase 3 enrolment and dosing milestones.

As for the 18,367,346 of Achillion’s shares held by J&J, there was no word on whether the pharma giant would be moving to sell them in the near future, but it is known that they are subject to a lock-up period which is due to expire early next year.

For Achillion, the decision is certainly bad news, but the company has been hard at work revamping its drug pipeline to shift focus to treating paroxysmal nocturnal haemoglobinuria, a rare immune system disease. Its lead candidate, ACH-4471, is currently undergoing mid-stage trials.

Matt fellows

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