Ambrx Biopharma soars on $2 billion takeover by Johnson & Johnson

Updated at 8:27 AM EST

Ambrx Biopharma  (AMAM) - Get Free Report shares soared in early Monday trading after the cancer-drug specialists agreed to a $2 billion takeover by pharma giant Johnson & Johnson  (JNJ) - Get Free Report.

Johnson & Johnson said it would pay $23 a share cash for La Jolla, California-based Ambrx, a near 70% premium to the group's Friday closing price. 

The deal, which is expected to close in the first half, will see Ambrx merged with a subsidiary of and its shares removed from the Nasdaq Global Select market.

Ambrx focuses on so-called antibody drug conjugates, which attack cancer cells from the outside without damaging healthy tissues in the rest of the body. The group has used its techniques to target breast cancer and prostate cancer in recent clinical trials and has won fast-track designation for its ARX517 prostate therapy from the U.S. Food and Drug Administration.

“Ambrx’s ADC technology offers unique advantages in the conjugation of stable antibodies and cytotoxic linker payloads, which results in engineered ADCs that effectively kill cancer cells and limit toxicities,” said Johnson & Johnson's global therapeutic area head, Yusri Elsayed. 

“The results seen to date with ARX517 in [metastatic castration-resistant prostate cancer] are promising and represent a potential first- and best-in-class targeted therapy for the treatment of this aggressive disease," he added. 

"In addition, Ambrx’s pipeline and ADC platform present exciting future opportunities to deliver enhanced, precision biologics as we look to transform the treatment of cancer and improve patients’ lives.” 

Ambrx shares were marked 98.8% higher in premarket trading immediately following news of the deal to indicate an opening bell price of $27.07 each. 

Johnson & Johnson, meanwhile, slipped 0.35% and are expected to open at $160.56 each.

Oncology takeovers in U.S. pharma sector

Oncology takeovers have dominated the U.S. pharma sector over the past year, with Pfizer  (PFE) - Get Free Report paying $43 billion for cancer specialists Seagen in March and Merck  (MRK) - Get Free Report buying Prometheus Biosciences for $10.8 billion in June.

Bristol Myers Squibb  (BMY) - Get Free Report is also buying cancer drug specialists Mirati Therapeutics for $5.8 billion in an all-cash deal.

Johnson & Johnson, meanwhile, is banking on solid demand for its new cancer-focused treatments, Carvykti and Tecvayli, following the separation of its consumer health-care unit last year.

Johnson & Johnson lifted its 2023 earnings forecast by around 5 cents per share in October, taking the midpoint to around $10.10 per share, with operational sales expected between $83.6 billion and $84 billion. 

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