J&J beefs up ADC pipeline by acquiring Ambrx for $2B

Not to be outdone by its Big Pharma peers, Johnson & Johnson has fattened up its antibody-drug conjugate (ADC) pipeline via the acquisition of Ambrx Biopharma for $2 billion.

By paying $28 per share, which J&J noted was a 105% premium of the La Jolla, Calif-based biotech’s closing price Friday, the pharma giant will get its hands on ARX517, an ADC that has had some success in prostate cancer during an early-stage trial.

The transaction, which values Ambrx at $2 billion, is expected to close in the first half of the year if the biotech’s shareholders give it the go-ahead.

“With our deep and unique knowledge of precision engineering of protein therapeutics enabled by our proprietary technology incorporating synthetic amino acids in living cells, Ambrx has developed next-generation novel drug candidates such as site-specifically conjugated highly stable antibody drug conjugates,” Ambrx CEO Daniel O’Connor said in the release.

“Through this transaction, we will continue to advance our leading prostate cancer candidate and Ambrx’s promising pipeline, while delivering significant and certain cash value to our shareholders,” O’Connor added.

ADCs drove a fourth-quarter spike in licensing deal proceeds and provided a glimmer of hope to an industry battered by outside forces and grim financing prospects, according to a report from J.P.Morgan ahead of the firm’s headline healthcare conference this week.

Biopharma licensing partnerships accounted for $63 billion in total value during the fourth quarter from 108 deals. Just one deal—Merck & Co.’s ADC partnership with Daiichi Sankyo—accounted for $22 billion of that. Another huge one was another ADC bet, with Bristol Myers Squibb signing on to work with SystImmune for a total value of $8.4 billion.

J&J is no stranger to the ADC space either, with the pharma’s Janssen unit paying Mersana Therapeutics $40 million upfront back in 2022 for a collaboration that involved the unit providing proprietary antibodies, while Mersana contributed its Dolasynthen platform to help find new ADC candidates.  

More recently, J&J gave itself a late Christmas present when it announced Dec. 26 that it had picked up licensing rights to LegoChem Biosciences’ Trop2-directed ADC LCB84 for $100 million upfront plus $1.7 billion in potential milestones.

The Big Pharma clearly sees potential in Ambrx’s ARX517. Data shared by the biotech at the ESMO conference in October showed that the ADC produced a 50% or more reduction in prostate-specific antigen levels in more than half of the 23 patients in the phase 1 trial.

The readout was some welcome good news for a company that a year earlier had laid off 15% of its staff and trimmed the pipeline down to ARX517 and a couple of other early-stage assets in the wake of the perceived failure of a breast cancer program.