Investing In Johnson & Johnson's Pharmaceutical Collaborations Can Provide Dramatic Returns

[Fishermangents]

Some quotes from SA article:

JNJ is now one of the world's fastest drug developers. Since 2009, JNJ has enjoyed the most FDA approvals of any company, launching 14 new drugs that generated cumulative sales of $18.7B through year-end 2014. The company expects an additional 10 new product filings by 2019, each with blockbuster ($1B+) revenue potential. If the Oncology division were a stand-alone business, it would be the 4th largest oncology company worldwide. It has grown twice as fast as the average top 10 player since the 2009 reorganization.

JNJ selected ibrutinib, daratumumab and imetelstat because each compound offered:
- Blockbuster ($1B+) sales potential
- First-in-class drug status
- Transformational qualities
- Ability to be used in multiple lines of therapy across several cancer indications
- Ability to be used as a single agent or in combination with other treatments

While the three drugs are currently in different stages of clinical development, JNJ's innovative speed-to-market development strategy is the same for each: Load up on accelerated approval designations (Breakthrough/Fast Track/Priority Review/Accelerated Approval), - ibrutinib and daratumumab secured all four, imetelstat's are on the way - take an hematologic indication with a serious unmet need (2nd/3rd line previously treated patients)9 and file for accelerated approval at the conclusion of a successful Phase II trial. Once approved, development then fans out with additional filings in other lines and indications.
On November 13, 2014, JNJ announced it had signed a worldwide license and collaboration agreement with Geron Corporation (GERN) for imetelstat, a telomerase inhibitor under study for the treatment of myeloid malignancies. JNJ plans to move the drug along the same development path as ibrutinib/daratumumab and to that end, a Phase II trial in previously treated myelofibrosis has been underway for several months. Upon successful completion of this trial, JNJ anticipates filing for FDA approval sometime in 2017.

Telomerase inhibition can theoretically be a treatment target for almost every cancer type. JNJ chose hematologic malignancies and myelofibrosis in particular as the initial indication due to unprecedented results seen in an investigator led study sponsored by the Mayo Clinic. Considering imetelstat's potential applicability to a broad range of cancers, if successfully developed, sales could reach into the billions.

GERN closed at $2.76 per share the day of the collaboration announcement. Share price at the time of this writing is $4.54

[Fishermangents]

Here are some interesting comments by Phil from SA:

"Very nice article that is logical and straightforward. I noted the same algorithm in my articles in GERN and felt that algo was a primary basis for JNJ's interest (and hence my interest) in the name. If you actually look at the algo and input numbers, you will note that JNJ/GERN have a 90+% chance of approval for imetelstat in MF and about 80+% chance of success in MDS. AML could and should also have a relatively high chance of success as well.
Also note from this article that JNJ's new drugs average OVER $1Bil in sales a year- that's the average, and based on their averages, we are now just about 2 years away until FDA approval (with 80 and 90% chances of success) of imetelstat. Just factoring this information and doing a PV analysis with conservative numbers, GERN could easily be trading at 2-3 times where it is now, maybe higher, it's probably why PIPER just raised their target to $10- more than a double from here."