Johnson & Johnson's (NYSE:JNJ) Ortho-McNeil division jumped on the antisense bandwagon yesterday when it agreed to a partnership with Isis Pharmaceuticals (NASDAQ:ISIS).

The deal gives Johnson & Johnson the rights to develop ISIS 325568 and ISIS 377131 -- two of the molecules Isis is using to treat diabetes. Hopefully, Johnson & Johnson first step will be to change their names to something original.

Isis will receive a $45 million up-front licensing fee, and it could be entitled to an additional $230 million in milestone payments as development and regulatory hurdles are met for the two compounds. If either drug makes it to market, the company also would be entitled to royalties on the sales.

Personally, I think Johnson & Johnson may have overpaid for the molecules. The company is designing a phase 1 trial for ISIS 325568, and ISIS 377131 isn't even in the clinic yet. Granted, Johnson & Johnson has analyzed the preclinical animal data that I haven't seen, but a lot of drugs fail in early stages in the clinic, and as far as I can tell, Johnson & Johnson didn't get a money-back guarantee.

The deal also establishes a partnership for the companies to discover other novel molecules for fighting metabolic diseases, including Type 2 diabetes and obesity. Johnson & Johnson will pick up the tab for the research -- about $15 million. The companies hope to have two candidate drugs picked out in two years, with Isis enjoying another potential $150 million in milestone payments for the additional dugs.

The influx of cash will allow Isis to buy back the rights to its most promising drug, ISIS 301012, which it licensed to Symphony GenIsis. It licensed the drug, along with the two it's about to transfer to Johnson & Johnson, with the rights to repurchase the trio of drugs -- in essence, borrowing money using the drugs as collateral. The early buyback will save the company about $75 million in interest charges, which it can use to fund its new joint venture with Alnylam Pharmaceuticals (NASDAQ:ALNY).

Overall, Isis seems fairly financially sound. It will be quite a while before the company has a marketable product, and there may be some hurdles for RNAi technology to clear, but with money in the bank to fund operations through 2010, I don't think we'll see any dilutive financing from Isis anytime soon.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a Motley Fool Income Investor recommendation. The Fool has a disclosure policy.