J&J Gains Marginally on HCV Deal

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Johnson & Johnson’s (JNJ) shares were up slightly following the company’s acquisition of GlaxoSmithKline’s (GSK) hepatitis C virus (:HCV) pipeline candidate, GSK2336805. While Johnson & Johnson’s share price edged up 0.4%, Glaxo’s shares were down 0.5% since the product acquisition was announced.

Janssen Pharmaceuticals, Inc., a part of Johnson & Johnson’s Janssen Pharmaceutical Companies, said that it has acquired all rights to develop and commercialize GSK2336805, including in combination with other drugs. Financial terms of the agreement were not available.

GSK2336805 is an NS5a replication complex inhibitor being developed for the treatment of chronic HCV. Janssen will move the candidate into phase II studies in interferon-free combinations with its protease inhibitor simeprevir (TMC435) and its non-nucleoside polymerase inhibitor, TMC647055, for the treatment of chronic HCV in adult patients with compensated liver disease.

This deal is in line with Johnson & Johnson’s efforts to expand its HCV pipeline. Johnson & Johnson currently has an approved HCV product in the form of Incivo. However, the company is working on bringing new investigational interferon-free treatment combinations to market.

Johnson & Johnson has HCV-focused collaborations with several companies. Simeprevir, which is currently under regulatory review in the U.S. Canada and EU, is being developed in collaboration with Medivir AB. It gained approval in Japan in September. Johnson & Johnson is also evaluating simeprevir in collaboration with companies like Gilead (GILD) and Bristol-Myers Squibb (BMY) among others.

Johnson & Johnson currently carries a Zacks Rank #3 (Hold). While we expect the company to continue facing headwinds in the form of pricing pressure and manufacturing issues, we believe the diversified business model, lack of cyclicality and strong financial position will continue helping the company pave its way through tough situations.

Glaxo currently looks well-positioned with a Zacks Rank #2 (Buy).

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