Why J&J Expands Antiviral Franchise but Doesn't Buy Achillion, Novavax

NEW YORK (TheStreet) -- Johnson & Johnson (JNJ) is buying Alios Biopharma, a privately held developer of antiviral drugs, for $1.75 billion in cash. J&J's deal announcement this morning highlights Alios' experimental vaccine for respiratory syncytial virus, or RSV, a serious respiratory disease affecting infants and small children. 

William Hait, global head of R&D at J&J's Janssen subsidiary, said:

We are excited that this acquisition will enable us to explore treatment options for a number of viral infections, including RSV, the last of the major pediatric diseases with no available preventive therapy. AL-8176 complements our existing early stage portfolio for RSV which aims to prevent and treat this disease, the leading cause of acute lower respiratory infection in children under the age of five.

For investors (or people like me who write about investing), it's always interesting to speculate about the motivations behind significant takeovers, including consideration of companies that may have been passed over.

J&J is not going to tell anyone publicly if it looked at other targets before deciding to buy Alios, but conceivably Novavax (NVAX) could have been on the target list. Novavax is developing an RSV vaccine, among other drugs. 

J&J did not buy Novavax. 

Outside of RSV, Alios' pipeline includes hepatitis C drugs. If Alios sounds familiar, you probably remember Vertex Pharmaceuticals (VRTX) licensed one of Alios' hepatitis C "nucs" -- ALS-2200. That partnership fizzled when Vertex gave up on hepatitis C. Earlier this month, Alios presented some preclinical data on another Hep C nuc -- AL-335 -- which is wholly owned. Given J&J's commitment to Hep C, it seems likely the Alios acquisition was also motivated by the desire to own another Hep C asset. 

Nucs are still the hottest, most sought-after Hep C drugs. Gilead Sciences' (GILD) Sovaldi is a nuc.

Who else is developing a Hep C nuc? Achillion Pharmaceuticals (ACHN) is developing ACH-3422, a Hep C nuc, also wholly owned. Investors are waiting anxiously for Achillion to announce some important proof-of-concept data on ACH-3422, but that hasn't prevented takeover speculation. J&J has been bandied about as a possible suitor for Achillion. 

But today, J&J bought Alios, which has a Hep C nuc similar in structure to Achillion's ACH-3422. J&J did not buy Achillion. Interesting.

I'm offering pure speculation, of course, and nothing precludes another big company from buying Achillion or Novavax. But not today. Why not? 

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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