January 12, 2025
This story was originally published on BioPharma Dive . To receive daily news and insights, subscribe to our free daily BioPharma Dive newsletter .
Johnson & Johnson on Monday said it has agreed to acquire Intra-Cellular Therapies, a developer of drugs for diseases of the brain, for $132 per share, or about $14.6 billion.
The announcement of the deal, which if completed would be the largest acquisition of a biotechnology company since early 2023, came on the first day of the J.P. Morgan Healthcare Conference, an industry meeting that’s known for dealmaking.
The chief prize in buying Intra-Cellular is a medicine known as Caplyta that’s approved in the U.S. to treat schizophrenia and bipolar depression. The biotech recently asked the Food and Drug Administration to expand Caplyta’s clearance to include major depressive disorder, which affects about 10 times as many people as have schizophrenia and a little more than three times as many as have bipolar depression.
Partly based on that prospect of an expanded market, Intra-Cellular recently told investors it thinks Caplyta could reach $5 billion in annual sales over the next decade.
In a statement, J&J CEO Joaquin Duato said the deal builds on his company's "nearly 70-year legacy" in neuroscience and shows its "commitment to transforming care and advancing research in some of today’s most devastating neuropsychiatric and neurodegenerative disorders."
J&J maintained its investment in neuroscience during the last decade, even as many of its large pharma company peers retreated from the field . The company sells several formulations of Invega, an antipsychotic medicine used for schizophrenia, and in 2019 won U.S. approval for Spravato , a derivative of ketamine that’s cleared for treatment-resistant depression.
To Graig Suvannavejh, an analyst at the investment firm Mizuho Securities who covers Intra-Cellular, the proposed deal makes strategic sense given that J&J has an existing focus on brain drugs and sales from its neuroscience portfolio have recently stagnated. There, the pharma giant recorded $5.34 billion over the first nine months of 2024, about even compared to the same period a year prior.
In keeping with industry trends, though, J&J has over the past few years funneled most of the money it spent on M&A toward cancer and immune system drugs, as well as to bolster its medical device division.
That pattern is now changing as new drugs like Caplyta prove their worth in psychiatric disorders. At the end of 2023, Bristol Myers Squibb agreed to pay $14 billion for Karuna Therapeutics to gain an experimental schizophrenia treatment, while AbbVie bought Cerevel Therapeutics for a similar medicine. (Data disclosed in November, however, showed Cerevel’s medicine didn’t succeed in a pair of clinical trials .)
“Caplyta’s success and the robust pipeline we have built demonstrates the passion and dedication of our talented team, and we are proud of the hundreds of thousands of patients we have helped,” said Sharon Mates, CEO of Intra-Cellular Therapies, in the companies’ statement.
The $132 per Intra-Cellular share J&J has agreed to pay represents a roughly 40% premium to the biotech’s closing stock price on Friday. It’s an even richer offer compared to Thursday’s close, before Intra-Cellular announced a settlement with Sandoz that could prevent the generic drugmaker from launching a Caplyta copy until July 2040. Other patent litigation related to Caplyta remains pending.
Paul Matteis, an analyst at Stifel, sees J&J's offer as a "much-needed win for the neuroscience space" following recent failures of drugs from AbbVie, Alector , Alto Neuroscience and Neumora Therapeutics . The deal is the fourth multibillion-dollar acquisition of a brain drug developer in the last year or so. For Matteis, these transactions affirm the large market opportunities for diseases like schizophrenia, depression and epilepsy, "even in the presence of many old generics."
In a note to clients, RBC Capital Markets analyst Brian Abrahams wrote that J&J's proposed price for Intra-Cellular shares is "not unreasonable." Though it could leave "a little bit of room for a higher bid," Abrahams and his team don't think that's likely "given how much of a natural fit" Caplyta is for J&J's portfolio.
Known scientifically as lumateperone, Caplyta works by regulating dopamine, though in a different way than other mood-stabilizing medicines. Its success in a notoriously difficult treatment area led some analysts to expect deal interest for Intra-Cellular well before J&J ever made a proposal.
"I think great companies, they’re bought, they’re not sold. We’re spending our time building our company," Mates told BioPharma Dive late last year . "However, we always entertain inbound offers, and that includes different kinds of partnerships, different strategic options. We look at all of them, and we’ll continue to do so."
Along with Caplyta, J&J would also gain ITI-1284, a drug in Phase 2 testing for generalized anxiety disorder as well as psychosis and agitation related to Alzheimer’s disease. The additions will pad J&J’s neuroscience pipeline, which includes two closely watched depression drugs, seltotrexant and aticaprant.
J&J intends to fund the acquisition through cash on hand and debt. The companies expect to close the deal later this year.
Editor’s note: This story has been updated with additional detail and analyst commentary.
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