Arrowhead Pharmaceuticals Inc (NASDAQ: ARWR) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced that it has entered into a licensing agreement with Jannsen Pharmaceuticals, part of the Johnson & Johnson (JNJ) family of companies. Of course, the agreement excited investors, sending the stock on a run for the top. Today, we’ll talk about:
- The agreement;
- what we’re seeing from ARWAR stock as a result; and
- what we’ll be watching for ahead.
ARWAR Heads Up On JNJ Licensing Agreement
As mentioned above, Arrowhead Pharmaceuticals is flying early on in the pre-market hours this morning after announcing a license agreement. In a press release issued early this morning, the comapny said that it has entered into a license and collaboration agreement with Jannsen Pharmaceuticals. The agreement surrounds the development and commercialization of ARO-HBV.
The company also said it entered into a research collaboration and option agreement with Jannsen to potentially collaborate on three additional therapeutics in the future. All in all, the transactions have a combined total of $3.7 billion that will be paid to ARWR.
According to the terms of the agreement, the company will receive a $175 million upfront payment. Also, JNJ will make a $75 million equity investment in ARWR at a price of $23 per share of common stock. The company will also be eligible to receive up to $1.6 billion in milestone payments, including a $50 million milestone payment linked to the Phase 2 study. Also, the company is eligible to receive approximatelly $1.9 billion in option and milestone payments for the collaboration agreement related to the three new treatments. Finally, the company will receive tiered royalties on sales of approved products up to the mid-teens. In a statement, Christopher Anzalone, Ph.D. President and CEO at ARWR, had the following to offer:
This agreement represents an important next step for ARO-HBV. Arrowhead has established a leadership position in the field over the past several years, and Janssen’s proven development capabilities, global commercial reach, and commitment to HBV make it the ideal partner to potentially accelerate our goal of bringing a functional cure to patients with chronic HBV… The collaboration also represents further validation of the TRiM™ platform and provides an important opportunity to create up to three additional novel medicines by leveraging Arrowhead’s speed and expertise in RNAi drug discovery and Janssen’s clinical development and commercial capabilities.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of Arrowhead Pharmaceuticals, the news proved to be overwhelmingly positive. Not only has the company entered into license and collaboration agreements with one of the biggest pharma companies out there, it has the potential to bring in $3.7 billion from the agreements. So, it comes as no surprise that excited investors are sending the stock screaming for the top in the market this morning. At the moment (8:01), ARWAR is trading at $22.27 per share after a gain of $3.71 per share or 19.99% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on ARWR. In particular, we’re interested in following the license and collaboration agreement as it has the potential to bring the company to the next level. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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