J&J Enhances Brain Health Portfolio with $14B Intra-Cellular Therapies Acquisition

17 January 2025
Johnson & Johnson, an established leader in neuroscience medications, is set to expand its portfolio by acquiring Intra-Cellular Therapies. This strategic move centers on Intra-Cellular's key asset, Caplyta, which holds significant potential to become a top-selling drug across multiple neurological conditions. According to the terms disclosed, J&J will pay $132 per share for Intra-Cellular, marking a substantial premium exceeding 39% over the latter’s recent closing stock price. As of recent reports, Intra-Cellular's shares, based in Bedminster, New Jersey, had already seen an increase due to acquisition rumors. This acquisition values the company at approximately $14.6 billion.

The primary focus of this acquisition is Caplyta, a medication that initially received FDA approval in 2019 for treating schizophrenia in adults. In 2021, its approved applications widened to include bipolar depression. Caplyta, a small molecule taken as a daily capsule, functions by inhibiting specific brain receptors, though the precise mechanism remains undetermined.

Caplyta is currently Intra-Cellular’s sole FDA-approved drug, generating $481.2 million in sales within the first nine months of 2024. In April, Intra-Cellular disclosed positive results from a Phase 3 trial for major depressive disorder (MDD), and subsequently, the company submitted an FDA application for this indication in December. According to John Reed, Johnson & Johnson’s Executive Vice President of R&D for Innovative Medicine, Caplyta’s potential extends to setting a new standard in treating prevalent and severe mental health disorders, if approved for MDD.

Caplyta's possible approval for major depressive disorder could significantly boost its status and sales, potentially surpassing $5 billion, according to Leerink Partners. Analyst David Risinger noted that Intra-Cellular complements J&J's existing neuroscience offerings. J&J’s flagship neuro product, paliperidone, marketed as Invega, generated over $3.1 billion in revenue in the first three quarters of 2024. Additionally, J&J markets Spravato for depression.

Intra-Cellular’s development pipeline also features ITCI-1284, a drug in mid-stage trials for generalized anxiety disorder, Alzheimer’s-related agitation, and psychosis in Alzheimer’s patients. The company projects that ITCI-1284 could reach over $1 billion in peak sales across these areas.

The acquisition is anticipated to conclude this year, pending regulatory approvals. Johnson & Johnson plans to discuss the financial aspects of this transaction further during their January 22 conference call about the fourth quarter 2024 financial outcomes.

In a separate industry development, GSK is enhancing its cancer drug portfolio through a $1 billion acquisition of IDRx. This company’s leading program targets a specific genetic marker in gastrointestinal cancer. The upfront payment, announced on Monday, may be followed by an additional $150 million, contingent on regulatory milestones.

IDRx’s main drug candidate, IDRX-42, aims to treat gastrointestinal stromal tumors (GIST) by inhibiting tyrosine kinase, a type of enzyme associated with cancer progression. Tyrosine kinase inhibitors are already used in cancer treatment, but IDRX-42 claims to address a broader range of KIT gene mutations, which drive 80% of GIST cases. Currently, IDRX-42 is undergoing Phase 1/2 clinical trials, where it has reportedly shown effectiveness against major KIT mutations. Its targeted action could also improve patient tolerance, suggesting a best-in-class potential according to the companies.

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