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J&J to Buy Momenta for $6.5B to Boost Autoimmune Presence
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Johnson & Johnson (JNJ - Free Report) announced a definitive agreement to acquire Momenta Pharmaceuticals for approximately $6.5 billion in an all-cash deal. J&J has offered a purchase price of $52.50 per share, representing a premium of almost 70% to Momenta’s closing price on Aug 18.
Momenta focuses on the development of novel drugs to treat rare, immune-mediated disorders and thus will allow J&J to strengthen its pipeline position in autoimmune disease. With the deal, J&J will get full global rights to Momenta’s pipeline candidate nipocalimab, which is being developed for autoantibody-driven autoimmune disease like generalized myasthenia gravis (gMG – phase II), hemolytic diseases of the fetus and newborn (HDFN – phase II) and warm autoimmune hemolytic anemia (wAIHA – phase I/II). In autoantibody-driven autoimmune diseases, the body’s antibodies attack or damage its own proteins, cells and tissues. Some of these diseases are rare and are undertreated by currently available medicines. If nipocalimab can be successfully developed for any of these autoimmune diseases, it can bring in significant sales for J&J.
Momenta’s Vivacity-MG, the phase II study of nipocalimab for gMG, recently met its primary endpoint demonstrating that nipocalimab led to linear and highly statistically significant correlation between rapid and durable reduction in immunoglobulin G (a type of antibody) and efficacy in MG. The study is expected to be completed in the third quarter of 2020. Additionally, Momenta plans to conduct an end of phase II meeting with the FDA before the end of 2020 and anticipates initiating a late-stage study in the first quarter of 2021.
The transaction has been approved by the boards of both the companies. The transaction is expected to close in the second half of 2020. J&J maintained its 2020 adjusted earnings guidance in the range of $7.50 - $7.90 per share, even though the acquisition is expected to be modestly dilutive
So far this year, J&J’s shares have risen 3.1% compared with the industry’s 1.9% increase.
The drug/pharma sector is characterized by aggressive M&A activity. Given that it takes several years and millions of dollars to develop new therapeutics from scratch, large pharmaceutical companies sitting on huge piles of cash regularly buy innovative small/mid-cap biotech companies to build out their pipelines. Also, sloppy sales of mature drugs, dwindling in-house pipelines, government scrutiny of drug prices and emergence of big tech firms like Apple and Google in the healthcare industry whet the M&A appetite of large drugmakers. However, after a flurry of deals in 2019, M&A activity significantly slowed down in 2020, mainly due to the impact of the coronavirus pandemic.
However, it seems that M&A activity is picking up. Though the J&J/Momenta deal is relatively smaller than the 2019 mega-mergers of Bristol-Myers and AbbVie-Allergan, it is still one of the largest this year. This week, Sanofi (SNY - Free Report) also announced a definitive agreement to buy San Francisco-based late-stage biotech Principia Biopharma for an aggregate equity value of approximately $3.68 billion. In April, Gilead bought Forty Seven for $4.9 billion. The Gilead/Forty Seven deal was announced in March.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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J&J to Buy Momenta for $6.5B to Boost Autoimmune Presence
Johnson & Johnson (JNJ - Free Report) announced a definitive agreement to acquire Momenta Pharmaceuticals for approximately $6.5 billion in an all-cash deal. J&J has offered a purchase price of $52.50 per share, representing a premium of almost 70% to Momenta’s closing price on Aug 18.
Momenta focuses on the development of novel drugs to treat rare, immune-mediated disorders and thus will allow J&J to strengthen its pipeline position in autoimmune disease. With the deal, J&J will get full global rights to Momenta’s pipeline candidate nipocalimab, which is being developed for autoantibody-driven autoimmune disease like generalized myasthenia gravis (gMG – phase II), hemolytic diseases of the fetus and newborn (HDFN – phase II) and warm autoimmune hemolytic anemia (wAIHA – phase I/II). In autoantibody-driven autoimmune diseases, the body’s antibodies attack or damage its own proteins, cells and tissues. Some of these diseases are rare and are undertreated by currently available medicines. If nipocalimab can be successfully developed for any of these autoimmune diseases, it can bring in significant sales for J&J.
Momenta’s Vivacity-MG, the phase II study of nipocalimab for gMG, recently met its primary endpoint demonstrating that nipocalimab led to linear and highly statistically significant correlation between rapid and durable reduction in immunoglobulin G (a type of antibody) and efficacy in MG. The study is expected to be completed in the third quarter of 2020. Additionally, Momenta plans to conduct an end of phase II meeting with the FDA before the end of 2020 and anticipates initiating a late-stage study in the first quarter of 2021.
The transaction has been approved by the boards of both the companies. The transaction is expected to close in the second half of 2020. J&J maintained its 2020 adjusted earnings guidance in the range of $7.50 - $7.90 per share, even though the acquisition is expected to be modestly dilutive
So far this year, J&J’s shares have risen 3.1% compared with the industry’s 1.9% increase.
The drug/pharma sector is characterized by aggressive M&A activity. Given that it takes several years and millions of dollars to develop new therapeutics from scratch, large pharmaceutical companies sitting on huge piles of cash regularly buy innovative small/mid-cap biotech companies to build out their pipelines. Also, sloppy sales of mature drugs, dwindling in-house pipelines, government scrutiny of drug prices and emergence of big tech firms like Apple and Google in the healthcare industry whet the M&A appetite of large drugmakers. However, after a flurry of deals in 2019, M&A activity significantly slowed down in 2020, mainly due to the impact of the coronavirus pandemic.
However, it seems that M&A activity is picking up. Though the J&J/Momenta deal is relatively smaller than the 2019 mega-mergers of Bristol-Myers and AbbVie-Allergan, it is still one of the largest this year. This week, Sanofi (SNY - Free Report) also announced a definitive agreement to buy San Francisco-based late-stage biotech Principia Biopharma for an aggregate equity value of approximately $3.68 billion. In April, Gilead bought Forty Seven for $4.9 billion. The Gilead/Forty Seven deal was announced in March.
J&J currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>