On Monday, Johnson & Johnson (NYSE: JNJ) announced that it would buy Ambrx Biopharma (NYSE: AMAM) for $2 billion. This is a big investment in the growing field of antibody-drug conjugates (ADCs).
The deal shows that big drug companies are becoming more interested in ADCs, which are flexible drugs that mix antibodies with agents that kill cells.
J&J Offers $28 Per Share for Ambrx
J&J will start an all-cash tender offer to buy all of Ambrx’s outstanding shares for $28 each, as agreed upon in the deal. This is almost 30% more than Ambrx’s final price on Friday.
The $2 billion value includes cash on hand. J&J thinks the deal will go through in the first half of 2024.
When news of the buyout got out, shares of San Diego, California-based Ambrx went up 98% after the market opened. In the meantime, J&J’s stock was trading at $160.34 as of (January 8, 2023 10:25 AM).
Deal Adds ADC Pipeline Candidates
The deal helps J&J’s development of antibody-drug conjugates, which are flexible drugs that target cancer cells with treatment while protecting healthy cells as much as possible.
ARX517 is Ambrx’s most important product. It is an ADC that targets metastatic castration-resistant prostate cancer. The drug is now in a study called APEX-01, which is Phase 1/2.
Scientists from J&J and Ambrx plan to work together to speed up the development of ARX517 after the deal is done. The medicine pairs Ambrx’s site-specific conjugation technology with a cell-killing payload and an anti-PSMA antibody.
“We are excited about the chance to work with J&J Innovation to speed up our clinical programs and get these much-needed cancer treatments to patients,” said Feng Tian, Ph.D., President and CEO of Ambrx.
More Pharma Deals in ADC Space
Leading pharmaceutical firms are becoming more interested in ADCs, which is why Ambrx was bought.
Seagen, the leader of ADC, was bought by Pfizer for $43 billion in December 2023. Also, AbbVie is buying ImmunoGen, a company that specializes in ADCs, for about $10 billion. The deal should be finished in the middle of 2024.
More and more, big drug companies are using mergers and acquisitions to get access to new ADC systems made by smaller biotech companies. Because they can lower systemic toxicity, the modifiable drugs have become an important tool in their field.
It looks like J&J wants to be a leader in using ADCs to treat cancers that are hard to treat instead of just following the pack. The Ambrx deal gives J&J an ADC beachhead that works with their existing in-house projects, like their lead asset teclistamab.
Johnson & Johnson (NYSE: JNJ) Performance History of Last 5 Years
| Year | Income (Millions of US$) | Income Growth |
|---|---|---|
| 2019 | $15,119 | – |
| 2020 | $14,714 | – |
| 2021 | $20,878 | 41.89% |
| 2022 | $17,941 | 14.07% |
| 2023 | $34,624 (Estimated) | 80.74% |
| Year | Total Assets (Millions of US$) | Total Liabilities (Millions of US$) | Total Equity (Millions of US$) |
|---|---|---|---|
| 2018 | 152,954 | 93,833 | 76,409 |
| 2019 | 157,728 | 115,277 | 76,869 |
| 2020 | 174,894 | 125,100 | 70,869 |
| 2021 | 182,018 | 110,574 | 76,804 |
| 2022 | 187,378 | 94,833 | 71,228 |
| Year | Operating Cash Flow (Millions of US$) | Investing Cash Flow (Millions of US$) | Financing Cash Flow (Millions of US$) | Free Cash Flow (Millions of US$) |
|---|---|---|---|---|
| 2018 | 22,201 | (20,825) | (18,510) | 18,531 |
| 2019 | 23,536 | (8,683) | (14,047) | 19,758 |
| 2020 | 23,410 | (12,371) | (8,871) | 20,189 |
| 2021 | 21,194 | (2,317) | (8,871) | 17,185 |
| 2022 | 20,278 | – | (9,470) | 15,737 |