Johnson & Johnson (NYSE:JNJ) routinely releases fresh data sets and pipeline plans at prominent scientific conferences. This year’s 2022 AASLD Liver Meeting in Washington D.C. from November 4-8 might be an interesting trigger for the company as it could announce some exciting new liver candidate results that could be wonderful for the company and partner companies like Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR). Investing in Johnson & Johnson (NYSE:JNJ) or Arrowhead Pharmaceuticals now could get investors in early before the excitement and more data about a potential blockbuster hepatitis B therapy materialize (HBV).
Johnson & Johnson (NYSE:JNJ) presented their Phase 2b candidate for chronic hepatitis B at 2021’s AASLD congress. REEF-1 showed a dose-related response with a favorable safety profile. In the REEF-1 research, JNJ-3989 (previously Arrowhead’s ARO-HBV) was combined with JNJ-6379 and a nucleoside analogue. Here’s an essay I published about AASLD 2021.
Johnson & Johnson (NYSE:JNJ) REEF-1 study ended on April 26, 2022, according to the U.S. clinical trials website. This could signify final or additional study results at this year’s AASLD meeting. With a Phase 2b trial being complete, the question is when a Phase 3 study will be revealed if the data continues to impress. Janssen Pharmaceuticals and Arrowhead launched Phase I research for NASH based on JNJ-75220795 and Arrowhead’s TRiM platform in 2021. Another critical data presented at this year’s AASLD meeting may imply that Johnson & Johnson (NYSE:JNJ) can formally go into Phase 3 for its HBV candidate during or after the sessions.
Chronic hepatitis B affects 257 million people globally and caused 887,000 deaths in 2015. JNJ’s HBV candidate seeks a cure. Janssen defines a functional cure for chronic hepatitis B as a persistent loss of HBsAg with or without seroconversion to HBsAg. JNJ’s candidate, if authorized for commercialization, should not cure the virus but allow sick people to live an everyday life while taking the treatment to control it.
Remember Gilead Sciences (GILD) shares after it cured hepatitis C in 2016?
Gilead was expected to make more money after medication approval than other corporations in decades. Once most patients were cured of hepatitis C, the stock never recovered to its approval highs.
JNJ’s potential functional cure means less of a moonshot on FDA approval and candidate progress but more significant potential for consistent revenue flows for years or decades as hepatitis B has been a tricky virus to treat. The initiation of a Phase 3 trial might be a tiny to modest bounce for Johnson & Johnson (NYSE:JNJ) but a far bigger pop for sub-$5B Arrowhead Pharmaceuticals.
JNJ, a $440B healthcare company, is already preparing for Phase 3 trials. Global trial finder reports that Janssen is setting up 62 sites for long-term follow-up studies for JNJ-3989 patients. These trials are listed as Phase 3, Not Yet Recruiting. Janssen has established the foundation for future Phase 3 trials, but the final Phase 2b results are still pending.
JNJ’s stock is less volatile than others, a big healthcare company, despite Covid-19’s ups and downs.
Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR)
Arrowhead Pharmaceuticals is a volatile company with considerable upside to recent 52-week highs. Arrowhead’s pipeline of wholly owned and partnered prospects with some of the world’s top healthcare businesses includes JNJ-3989.
Arrowhead’s clinical candidates include medications for liver, lung, tumor, and muscle cell illnesses. Arrowhead’s TRiM platform dazzles multiple cell types, from Phase 3 candidates like ARO-APOC3 to pre-clinical possibilities for Covid-19 and emerging pulmonary targets like ARO-RAGE.
JNJ’s huge commercial portfolio and pipeline of possible prospects reduce the danger of a JNJ-3989 failure, especially after being a potential leader in the fight against Covid-19 in recent years. With a market valuation under $5B, JNJ-3989 is a riskier lead contender for Arrowhead. The original $3.7B deal between Janssen and Arrowhead shows the upside for Arrowhead as the deal is worth a substantial share of Arrowhead’s current market cap excluding all of its wholly owned and partnered candidates.
Arrowhead estimates next quarter’s operating cash burn between $70M and $80M despite sitting on $580M in cash. JNJ-3989’s destiny will affect Arrowhead Pharmaceuticals, but it won’t break the company if it fails.
This Fall’s AASLD meeting could provide explosive new data, including more on Johnson & Johnson’s JNJ-3989 cooperation candidate with Arrowhead Pharmaceuticals. With a significant Phase 2b trial completed in 2022, final data sets may soon be available, positioning firms for Phase 3 study announcements. If you’re risk-tolerant, consider betting on Johnson & Johnson (NYSE:JNJ) or Arrowhead Pharmaceuticals. Wishing you the very best of luck.
Featured Image: Megapixl @Rafaelhenriquepress