Given that Johnson & Johnson is willing to pay a king's ransom for ARN-509, it's highly doubtful the company intends to lose out in any court case, especially since Medivation would still need to prove that it is the right-holder of the drug.
Investors shouldn't overreact here, however. Given Xtandi's market dominance, it's premature to speculate that Medivation would immediately lose market share if and when ARN-509 receives approval from the Food and Drug Administration.
Granted, Johnson & Johnson has deep pockets, but money has rarely mattered when it comes to the FDA. Plus, we can rule out the possibility that both Xtandi and ARN-509 can be successful at the same time. There's precedent here.
In the meantime, some will question the merits of this deal and its structure and will wonder if Aragon is worth $1 billion. For Johnson & Johnson, which has close to $22 billion in cash, this was a deal it had to make.As I noted in my last article mentioned above, as important as cancer drug Zytiga is to Johnson & Johnson's recovery, the company needed better diversification and leverage. This deal offers that and more. It was dangerous to assume that Johnson & Johnson could live by Zytiga alone. Management agreed. Accordingly, the stock is now a buy. At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV