Ambrx (AMAM) Skyrockets 102% on $2B Buyout Offer From J&J
Ambrx Biopharma AMAM signed a definitive agreement with Johnson & Johnson JNJ. Per the agreement terms, the pharma giant will acquire all outstanding shares of Ambrx for $28 per share in cash, aggregating to $2.0 billion.
A clinical-stage biopharmaceutical company, Ambrx is focused on developing next-generation antibody drug conjugates (ADCs) designed to target multiple cancer indications. Its lead asset, ARX517, targets the prostate-specific membrane antigen (PSMA) expressed in prostate cancer cells. The candidate is being evaluated in the phase I/II APEX study in patients with metastatic castration-resistant prostate cancer (mCRPC).
Apart from ARX517, Ambrx is also evaluating other ADC candidates, including ARX788 and ARX305, in separate clinical studies for metastatic HER2+ breast cancer and renal cell carcinoma indications, respectively.
The transaction, expected to be completed by first-half 2024, is subject to customary closing conditions and clearance from regulatory authorities. Ambrx’s and J&J’s board of directors have already approved this transaction.
Following this news announcement, Ambrx’s shares surged 101.5% on Jan 8. In the past year, the stock has skyrocketed 1,007.7% against the industry’s 12.9% fall.
Image Source: Zacks Investment Research
Ambrx currently lacks a steady revenue stream due to a lack of approved drugs. The company is dependent on its pipeline candidates for growth. An acquisition by a big pharma giant like J&J, which has high reserves of cash flow and expertise in the oncology space, would enable the company to ramp up the development of its pipeline. Once the pipeline candidates are approved for marketing, Ambrx will have access to J&J’s larger and well-established commercial supply chain and network distribution.
J&J expects the acquisition to diversify its oncology portfolio, enabling it to design, develop and market targeted oncology therapeutics. The pharma bellwether clearly sees potential in ARX517, as it intends to accelerate the APEX-01 study. This is substantiated by the encouraging results shared by Ambrx last October from the phase I portion of the APEX study, wherein treatment with ARX517 led to at least a 50% reduction in prostate-specific antigen levels in more than half of the study participants.
The above transaction is one of the few deals in the ADC space. Last year, pharma giants like Merck MRK and Pfizer PFE made several similar deals to expand their portfolios to develop novel ADC therapies.
Last October, Merck entered into an agreement with Daiichi Sankyo to jointly develop and market the latter’s three investigational ADC candidates for a total consideration of up to $22 billion. To further diversify its oncology pipeline, Merck recently made a $680-million buyout offer for cancer drugmaker Harpoon Therapeutics and expects to complete it by the first half of 2024.
Through these deals, Merck intends to reduce its dependence on the blockbuster anti-PD-1 therapy Keytruda, which is expected to face generic erosion following the loss of patent exclusivity post-2028. In the first nine months of 2023, Merck recorded $18.4 billion in sales from Keytruda, representing nearly half of the company’s top line during the period.
Last month, Pfizer completed its acquisition of ADC drugmaker Seagen for a total value of $43 billion. As a result of this acquisition, PFE’s oncology portfolio doubled in size, with 60 programs spanning multiple modalities, including ADCs, small molecules, bispecifics and other immunotherapies. The acquisition also added four of Seagen’s marketed drugs, namely Adcetris, Padcev, Tukysa and Tivdak, to Pfizer’s portfolio of marketed products. As part of its 2024 guidance, PFE expects to generate $3.1 billion in revenues from Seagen’s marketed products.
Ambrx Biopharma Inc. Price
Ambrx Biopharma Inc. price | Ambrx Biopharma Inc. Quote
Zacks Rank
Ambrx currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Ambrx Biopharma Inc. (AMAM) : Free Stock Analysis Report
