Partner = Buyout? Not So Fast.

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Idenix Pharmaceuticals (UNKNOWN: IDIX.DL  ) has teamed up with Johnson & Johnson (NYSE: JNJ  ) to create an all-oral hepatitis-C combination. Neither company can do it alone.

Johnson & Johnson figured that out a while ago. The big pharma paired up with Vertex Pharmaceuticals last year to test their hepatitis-C drugs together. And before that, it signed separate deals with Bristol-Myers Squibb and Pharmasset, which Gilead Sciences eventually bought.

The newest deal has Idenix pairing its IDX719 with two of Johnson & Johnson's hepatitis-C drugs, simeprevir and TMC647055. The drugs are in three different classes, so they should complement each other to help kill the virus.

Idenix will be in charge of running the clinical development program for the potential combo therapy, which will start with a drug-drug interaction study to confirm the drugs are compatible. If all goes well, by the end of the first quarter, Idenix hopes to start a phase 2 trial testing a combination of IDX719 and simeprevir plus a generic called ribavarin. Later, the companies plan to add TMC647055 to the mix with and without the use of ribavarin.

Idenix is up big on the news, which is reasonable; IDX719 isn't all that useful without a partner. And having Johnson & Johnson as a partner could make it easier to partner up IDX184 if it can ever get the drug off the FDA clinical hold it was put on last year.

But being late to the combination party, Idenix has to worry that it might get left out in the cold. Johnson & Johnson is in the driver's seat here since all of these are non-exclusive deals. The health-care giant could seek to be part of multiple cocktails, or it could just throw its entire weight behind the best one.

Investors should be careful not to read too much into this deal. Having a partner doesn't mean that elusive buyout deal is any closer to happening.

In the world of health care, companies simply don't come any bigger than Johnson & Johnson. Many own the stock, but few understand its story. Offering everything from baby powder to biologics, critics think the company has spread itself too thin, becoming nothing more than a bloated corporate whale. Is this true, or is J&J a well-diversified giant that's perfect for your portfolio? Make sure you understand the full story behind the stock, along with its key opportunities and risks, by checking out our brand new premium report on Johnson & Johnson. To claim your copy simply click here now for instant access.

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