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JNJ, GSK, LLY Announce M&A Deals at JP Morgan Conference
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Key Takeaways
J&J revealed a $14.6 billion deal to purchase Intra-Cellular Therapies, maker of bipolar drug Caplyta.
Eli Lilly made a $2.5 billion deal for a breast cancer drug; GSK reached a $1 billion-plus deal for IDRx.
The announcements suggest a potential rebound in M&A deals in the healthcare sector for 2025.
The JP Morgan Healthcare Conference, which is being held in San Francisco this year, has been much more active than last year. Among some of the top news at the conference were M&A deal announcements by J&J (JNJ - Free Report) , Eli Lilly (LLY - Free Report) and GSK (GSK - Free Report) .
While J&J announced a big deal to acquire neuroscience company Intra-Cellular Therapies (ITCI - Free Report) , Lilly and GSK announced smaller deals.
J&J Offers to Buy ITCI for $14B
The drug and medical devices giant entered into a definitive agreement to acquire Intra-Cellular Therapies for $132.00 per share or approximately $14.6 billion. The offer price represents a premium of almost 40% to ITCI’s closing price on Friday.
The acquisition will add Intra-Cellular Therapies’ only approved drug, Caplyta, for the treatment of bipolar I and II depression and schizophrenia, to J&J’s neuroscience pipeline. ITCI has also filed a supplemental new drug application (sNDA) to the FDA seeking approval of Caplyta as an adjunctive treatment for major depressive disorder. Additional phase III studies are ongoing on Caplyta in other mental health disorders.
The acquisition will also add Intra-cellular Therapeutics’ other CNS candidates, including ITI-1284, being developed in phase II for generalized anxiety disorder and Alzheimer’s disease-related psychosis and agitation, to JNJ’s portfolio.
Lilly to Buy Scorpion’s PI3Kα Inhibitor for Breast Cancer
Eli Lilly announced that it is buying private biotech Scorpion Therapeutics’ novel mutant-selective PI3Kα inhibitor, STX-478, being developed in a phase I/II study for breast cancer and other advanced solid tumors. The acquisition will stregthen Lilly’s oncology pipeline. The total deal value is approximately $2.5 billion in cash, which includes an upfront payment and subsequent potential milestone payments.
Lilly is taking the STX-478 program and spinning it off into a new independent company. Scorpion’s current shareholders will own the new company, and Lilly will have a minority stake.
GSK Targets Gastrointestinal Cancers With IDRx Acquisition
GSK, meanwhile, announced an agreement to acquire private biotech IDRx, which makes precision therapeutics for treating gastrointestinal stromal tumors (GIST). IDRx’s key pipeline candidate is IDRX-42, a highly selective KIT tyrosine kinase inhibitor (TKI), which has shown the potential to address all key KIT mutations in GIST that drive tumor growth. For the deal, GSK will make an upfront payment of $1 billion and $150 million in a potential regulatory milestone payment in cash.
M&A to Pick Up in 2025?
The acquisition announcements set the tone for a potential rebound in M&A deals in the healthcare sector in 2025 after a rather muted performance in 2024. There were no big acquisition announcements in 2024 from the large drugmakers. Some of the larger M&A deals of 2024 were Vertex’s buyout of Alpine Immune Sciences, Eli Lilly’s buyout of Morphic and Novo Nordisk’s acquisition of Catalent. However, M&A activity is expected to pick up in 2025, particularly with Trump’s return to the White House. Fast-growing and lucrative markets such as rare diseases, next-generation oncology treatments, obesity, immunology and neuroscience are likely to remain focus areas for M&A activities.
All the big drugmakers have R&D pipelines to fill, as their internal candidates are not sufficient to compensate for the upcoming loss of exclusivity of their blockbuster products. Smaller deals are expected to be more frequent while the likelihood of multibillion-dollar deals is less.
Zacks Rank
J&J has a Zacks Rank #2 (Buy), while Lilly and ITCI have a Zacks Rank #3 (Hold) each. GSK has a Zacks Rank #5 (Strong Sell).
Image: Bigstock
JNJ, GSK, LLY Announce M&A Deals at JP Morgan Conference
Key Takeaways
The JP Morgan Healthcare Conference, which is being held in San Francisco this year, has been much more active than last year. Among some of the top news at the conference were M&A deal announcements by J&J (JNJ - Free Report) , Eli Lilly (LLY - Free Report) and GSK (GSK - Free Report) .
While J&J announced a big deal to acquire neuroscience company Intra-Cellular Therapies (ITCI - Free Report) , Lilly and GSK announced smaller deals.
J&J Offers to Buy ITCI for $14B
The drug and medical devices giant entered into a definitive agreement to acquire Intra-Cellular Therapies for $132.00 per share or approximately $14.6 billion. The offer price represents a premium of almost 40% to ITCI’s closing price on Friday.
The acquisition will add Intra-Cellular Therapies’ only approved drug, Caplyta, for the treatment of bipolar I and II depression and schizophrenia, to J&J’s neuroscience pipeline. ITCI has also filed a supplemental new drug application (sNDA) to the FDA seeking approval of Caplyta as an adjunctive treatment for major depressive disorder. Additional phase III studies are ongoing on Caplyta in other mental health disorders.
The acquisition will also add Intra-cellular Therapeutics’ other CNS candidates, including ITI-1284, being developed in phase II for generalized anxiety disorder and Alzheimer’s disease-related psychosis and agitation, to JNJ’s portfolio.
Lilly to Buy Scorpion’s PI3Kα Inhibitor for Breast Cancer
Eli Lilly announced that it is buying private biotech Scorpion Therapeutics’ novel mutant-selective PI3Kα inhibitor, STX-478, being developed in a phase I/II study for breast cancer and other advanced solid tumors. The acquisition will stregthen Lilly’s oncology pipeline. The total deal value is approximately $2.5 billion in cash, which includes an upfront payment and subsequent potential milestone payments.
Lilly is taking the STX-478 program and spinning it off into a new independent company. Scorpion’s current shareholders will own the new company, and Lilly will have a minority stake.
GSK Targets Gastrointestinal Cancers With IDRx Acquisition
GSK, meanwhile, announced an agreement to acquire private biotech IDRx, which makes precision therapeutics for treating gastrointestinal stromal tumors (GIST). IDRx’s key pipeline candidate is IDRX-42, a highly selective KIT tyrosine kinase inhibitor (TKI), which has shown the potential to address all key KIT mutations in GIST that drive tumor growth. For the deal, GSK will make an upfront payment of $1 billion and $150 million in a potential regulatory milestone payment in cash.
M&A to Pick Up in 2025?
The acquisition announcements set the tone for a potential rebound in M&A deals in the healthcare sector in 2025 after a rather muted performance in 2024. There were no big acquisition announcements in 2024 from the large drugmakers. Some of the larger M&A deals of 2024 were Vertex’s buyout of Alpine Immune Sciences, Eli Lilly’s buyout of Morphic and Novo Nordisk’s acquisition of Catalent. However, M&A activity is expected to pick up in 2025, particularly with Trump’s return to the White House. Fast-growing and lucrative markets such as rare diseases, next-generation oncology treatments, obesity, immunology and neuroscience are likely to remain focus areas for M&A activities.
All the big drugmakers have R&D pipelines to fill, as their internal candidates are not sufficient to compensate for the upcoming loss of exclusivity of their blockbuster products. Smaller deals are expected to be more frequent while the likelihood of multibillion-dollar deals is less.
Zacks Rank
J&J has a Zacks Rank #2 (Buy), while Lilly and ITCI have a Zacks Rank #3 (Hold) each. GSK has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.