Arrowhead Pharmaceutics Inc. stock ARWR, -8.89% surged 19% in premarket trade Thursday, after the company said it has entered a $3.7 billion license and cooperation agreement with Janssen Pharmaceuticals Inc. to develop and commercialize its ARO-HBV treatment for chronic hepatitis B. As part of the deal, Arrowhead will receive $175 million upon close and Janssen parent Johnson & Johnson Innovation JJDC Inc., a unit of Johnson & Johnson JNJ, -0.62% will buy a $75 million stake priced at $23 a share of Arrowhead common stock. Arrowhead will be eligible to receive up to $1.6 billion in milestone payments and another roughly $1.9 billion in option and milestone payments for reaching three additional targets. The company will also be eligible for tiered royalties on product sales. Janssen will have an exclusive license on the ARO-HBV program, a subcutaneously administered RNAi therapeutic candidate aimed at treating hepatitis B. The deal is expected to close in the fourth quarter. Arrowhead shares have gained 404% in 2018, while the S&P 500 SPX, -0.59% has gained 9%.
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