SAN FRANCISCO—Johnson & Johnson (J&J) has agreed to acquire Intra-Cellular Therapies for approximately $14.6 billion, the companies said, in the largest biopharma merger-and-acquisition (M&A) deal announced in two years—and one that reflects the continuing comeback of interest by pharma giants in neurological drug development during this decade.
Speaking at the 43rd Annual J.P. Morgan Healthcare Conference Monday morning at the Westin St. Francis Hotel, J&J Chairman and CEO Joaquin Duato said the acquisition deal was an exception to his company’s usual strategy of buying out companies at prices of under $5 billion, what market watchers call “bolt-on” or “tuck-in” transactions.
Over the past year, J&J has carried out 75 smaller deals: “That’s where we create the majority of our value,” Duato said. “When you think about deals moving forward, Intra-Cellular has been an important demonstration of what we [can] do. For us, larger deals are more outliers.”
The deal is the largest biopharma M&A transaction since 2023 when Pfizer, then flush with cash due to sales of the COVID-19 vaccine it co-developed with BioNTech, shelled out $43 billion to buy Seagen. The largest deal of 2024 was Vertex Pharmaceutical’s purchase of Alpine Immune Sciences for just $4.9 billion.
Duato said J&J agreed to acquire Intra-Cellular because its sole marketed drug CAPLYTA® (lumateperone), could generate more than $5 billion in peak year sales. That projected performance, J&J concluded, could help it fulfill its commitment to investors to generate 5% to 7% compounded average growth between this year and 2030—and would elevate sales above the projections of analysts covering the company, Duato asserted.
“It’s a catalyst of growth in the short-term and in the long-term,” Duato said during his presentation. “It’s clearly the type of criteria that we have stated consistently that guides our M&A (merger and acquisition) efforts.”
Investors signaled their approval of the deal with a buying surge that sent Intra-Cellular’s shares climbing 34% on Monday, from $94.87 to $127.19. J&J shares rose 1.7%, from $142.06 to $144.47.
CAPLYTA could potentially be generating sales for as long as a decade and a half. Sandoz last week settled a lawsuit with Intra-Cellular by agreeing to let its generic version of the drug enter the market July 1, 2040—though it could be earlier under certain circumstances.
“The timeline for generic entry is even better than our base case settlement scenario of 2035E,” Sumant Kulkarni, a managing director covering biotechnology stocks at Canaccord Genuity, estimated in a January 10 research note.
CAPLYTA is already approved for adults to treat schizophrenia and depressive episodes associated with bipolar I or II disorder (bipolar depression) as monotherapy and as adjunctive therapy with lithium or valproate.
“We know this area”
“Those are three areas that are of high unmet medical need in which CAPLYTA could become a new standard of care, and we know this area very well. We’ve been in this area for 70 years,” Duato said.
Neuroscience is one of J&J’s five core therapeutic areas of focus, along with immunology; infectious diseases and vaccines; oncology; and a single area that combines developing treatments for cardiovascular, metabolism, retina, and pulmonary hypertension disorders.
“We are also market leaders in long actings, and we feel very confident that we’re going to be able to expand the use of CAPLYTA,” Duato added.
Also appealing to J&J, Duato said, was Intra-Cellular’s pipeline, which includes ITI-1284 ODT-SL, now under study in three Phase II programs for generalized anxiety disorder, agitation in patients with Alzheimer’s disease, and psychosis in patients with Alzheimer’s disease. Intra-Cellular’s pipeline also includes:
- Two PDE inhibitors—Lenrispodun (ITI-214), now in Phase II in Parkinson’s Disease, and ITI-1020, a Phase I candidate being developed as a cancer immunotherapy.
- ITI-333—Under development for opioid use disorder (Phase I) and pain and mood disorders (preclinical).
- ITI-1549—A preclinical candidate for mood and other neuropsychiatric disorders.
“It (the acquisition deal) resides exactly at the sweet spot of being able to identify an asset that makes a difference in an area of high unmet medical need where we do have existing capabilities,” Duato said.
GEN “Takeover target”
The deal comes a year after Intra-Cellular appeared on GEN’s A-List of “Top 10 Biopharma Takeover Targets of 2024,” as analysts began buzzing about a buyout after the company aced a Phase III trial in patients with major depressive disorder and bipolar depression (both with mixed features) in 2023.
Last month, Intra-Cellular submitted a supplemental new drug application (sNDA) to the FDA for CAPLYTA® (lumateperone) as an adjunctive treatment for adults with major depressive disorder (MDD).
The sNDA is supported by data from two global, double-blind, placebo-controlled Phase III studies showing CAPLYTA, achieved statistically significant and clinically meaningful improvement in depressive symptoms when used as an adjunctive treatment to antidepressants, as measured by both clinician-rated and patient-reported outcomes.
If the sNDA is approved, CAPLYTA could be the first treatment approved for MDD and depressive symptoms associated with bipolar I and II in more than 15 years.
J&J and Intra-Cellular said additional Phase III trials are underway with CAPLYTA in bipolar I disorder with manic episodes or manic episodes with mixed features (bipolar mania). In November, Intra-Cellular announced positive topline results on the efficacy and safety of CAPLYTA in preventing relapse in adults with schizophrenia.
“Millions of patients have the disorders that Intra-Cellular and CAPLYTA address—bipolar disorder, schizophrenia, major depressive disorder—and it’s an area of high growth that requires innovation to continue to address patient needs,” Duato explained.
According to Intra-Cellular, CAPLYTA is characterized by high serotonin 5-HT2A receptor occupancy and lower amounts of dopamine D2 receptor occupancy at therapeutic doses, the companies said, though the drug’s exact mechanism of action is unknown.
Based in Bedminster, NJ, Intra-Cellular specializes in developing therapies for Central Nervous System disorders.
J&J agreed to acquire all outstanding shares of Intra-Cellular for $132 a share. J&J said is expected to fund acquisition deal through a combination of cash on hand and debt. The transaction is expected to close later this year subject to applicable regulatory approvals, approval by Intra-Cellular Therapies’ stockholders and other customary closing conditions.