J&J to Pay Pharmacyclics as Much as $975 Million in Cancer Deal

Johnson & Johnson (JNJ) will pay Pharmacyclics Inc. (PCYC), the maker of an experimental cancer drug rejected by U.S. regulators, as much as $975 million for an early-stage blood cancer treatment.

Pharmacyclics will receive $150 million up front to jointly advance the experimental therapy, PCI-32765, now being tested in a variety of cancers including non-Hodgkin’s lymphoma, the companies said in separate statements. Pharmacyclics can receive an additional $825 million based upon continued development and regulatory approval, the Sunnyvale, California-based company said in a statement.

“Our goal is to better the treatment and care of oncology patients worldwide, and we believe this partnership is the best way to make that happen now,” Maky Zanganeh, Pharmacyclics chief of staff and chief business officer, said in the statement.

The companies said they will split worldwide profits 50-50. J&J, the second-biggest seller of health products, will pay 60 percent of the costs to develop the drug for blood cancers, inflammation conditions and immune diseases, Pharmacyclics said in its statement.

The deal is expected to reduce J&J’s 2011 earnings per share by 4 cents to 5 cents, the New Brunswick, New Jersey-based company said in its statement.

Pharmacyclics, founded in 1991, doesn’t have any products on the market. Its injectable cancer drug Xcytrin was rejected for marketing approval in December 2007 by the U.S. Food and Drug Administration.

Pharmacyclics shares gained 2.2 percent to $14.94 at 5:11 p.m. in extended trading after declining 2.5 percent at the close in New York before the deal was announced. J&J declined 1 percent to $63.78 at the close.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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