Protagonist Therapeutics shares surged over 30% on Friday following reports that healthcare giant Johnson & Johnson is in acquisition discussions with the clinical-stage biotech company. The Wall Street Journal reported that talks between the two companies are ongoing, though no specific deal terms were disclosed and no agreement is guaranteed.
The potential acquisition would strengthen an existing partnership between Johnson & Johnson and Protagonist Therapeutics focused on developing Icotrokinra, a once-daily treatment for ulcerative colitis. Trading in Protagonist shares was temporarily suspended due to intense investor interest following the acquisition report.
Promising Clinical Trial Results Drive Interest
Earlier this week, Johnson & Johnson released positive Phase IIb trial data for Icotrokinra that likely contributed to the acquisition interest. The drug achieved clinical remission in 30.2% of patients with ulcerative colitis, significantly outperforming the 11.1% remission rate observed in the placebo group. Clinical remission was characterized by outcomes such as the absence of rectal bleeding.
Based on these encouraging results, Icotrokinra will advance to Phase III trials to assess the efficacy and safety of the peptide in adults and adolescents with moderate-to-severe active ulcerative colitis. The Phase III study is expected to be completed by 2028.
Strategic Portfolio Expansion
The potential Protagonist acquisition represents another strategic move in Johnson & Johnson's ongoing pharmaceutical portfolio expansion through biotech acquisitions. Earlier this year, the company completed a $14.6 billion acquisition of Intra-Cellular Therapies, bringing the breakthrough schizophrenia and bipolar depression treatment Caplyta into its portfolio. Johnson & Johnson estimates peak sales for Caplyta could exceed $6 billion, with patent protection extending until 2040.
Under the existing collaboration agreement, Johnson & Johnson holds exclusive commercialization rights for Icotrokinra if the drug successfully reaches market approval. The potential acquisition would provide Johnson & Johnson with full control over the asset's development and commercialization.
Market Response and Valuation Considerations
Protagonist Therapeutics' stock price had already risen more than 70% year-to-date prior to Friday's surge, driven largely by positive clinical trial results across its pipeline. The biotech's market performance stood in stark contrast to broader market conditions, with the S&P 500 declining nearly 3% on the same day.
Neither Protagonist Therapeutics nor Johnson & Johnson has officially commented on the reported acquisition discussions, which remains typical during early-stage negotiations. The lack of disclosed deal terms or timeline reflects the preliminary nature of the talks, though the market reaction demonstrates significant investor confidence in the potential transaction's value.
