Arrowhead confirms J&J’s plan to dial back hepatitis B drug research
07 Feb 2023
Phase 2
Arrowhead Pharmaceuticals’ chief executive on Monday confirmed Johnson & Johnson is dialing back its hepatitis B drug research, leaving the future of a lucrative partnership between the two companies unclear.
Arrowhead’s disclosure came days after Fierce Pharma reported J&J is restructuring its infectious disease work. According to the report, J&J’s vaccines and infectious disease research are being merged into a single division. Layoffs and executive departures are expected, and certain programs — among them work in hepatitis B — are being deprioritized, the report said.
“As the world’s largest most diversified healthcare company, we are constantly assessing ways to be more innovative and competitive,” a J&J spokesperson said in an email to BioPharma Dive. “We are evolving amidst a rapidly changing environment to better meet the needs of the patients we serve around the world.”
The situation leaves the future uncertain for a top program at Arrowhead, a hepatitis B treatment known as JNJ-3989.
J&J licensed the drug in 2018 as part of a wide-ranging alliance with Arrowhead that was worth up to $3.7 billion. The medicine is one of several RNA-based treatments in advanced testing for hepatitis B. Those therapies are seen as potentially offering a functional cure for the chronic infections that affect hundreds of millions people worldwide. In January, Arrowhead indicated that Phase 2b results may be coming this year.
JNJ-3989 could now be caught up in J&J’s restructuring, however. Anzalone said J&J hasn’t formally terminated the partnership, but that Arrowhead, at this point, doesn’t yet know “where JNJ-3989 will ultimately end up.” J&J can’t sublicense it to another party, but it could assign it to someone else with Arrowhead’s approval or send it back to the company. “We don’t know what their goals are here,” he said. “We will just have to wait to see.”
The results have financial implications for Arrowhead. The company could still receive about $1.6 billion in downstream payments, as well as royalties on sales, according to a research note from Cantor Fitzgerald analyst Prakhar Agrawal.
RBC Capital Markets analyst Luca Issi speculated the drug rights are “likely to be returned” to Arrowhead and that the company is “unlikely to invest in the program without a partner given the size of the indication and mixed data so far.”
Anzalone said the company “will have better clarity ... in the coming weeks.”
The J&J spokesperson declined to specify whether the company has made a decision on the partnership.
Arrowhead shares slid 2% in early trading Tuesday.
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