J&J in Talks to Acquire Immunology Partner Protagonist Therapeutics

Johnson & Johnson (J&J) is reportedly in discussions to acquire its immunology partner, Protagonist Therapeutics, in a move that could significantly bolster its pharmaceutical portfolio. The potential deal, as reported by The Wall Street Journal, is expected to value Protagonist well above its current market capitalization of over $4 billion.

Icotrokinra: A Promising Asset in Immunology

At the heart of this potential acquisition is icotrokinra, a targeted oral peptide designed to selectively block the interleukin-23 (IL-23) receptor. The drug candidate, born out of a 2017 collaboration between J&J and Protagonist, is currently under review by both the FDA and European regulatory authorities for the treatment of plaque psoriasis. Additionally, icotrokinra is being studied for psoriatic arthritis and ulcerative colitis.

Recent clinical data has strengthened icotrokinra's position in the competitive immunology market. Last month, the drug demonstrated superiority over Bristol Myers Squibb's Sotyktu in phase 3 trials for psoriasis treatment. Analysts at Jefferies have projected peak sales of $7.5 billion in the U.S. alone for icotrokinra across its various indications, underscoring its potential as a blockbuster medication.

Expanding Horizons: Rusfertide and Hematology

The acquisition would also bring rusfertide, Protagonist's blood disorder medication, under J&J's umbrella. Rusfertide, which received a $300 million investment from Takeda last year, has shown promise in reducing blood procedures for patients with polycythemia vera in a phase 3 trial.

While J&J already maintains a strong presence in hematology, particularly in blood cancers, the addition of rusfertide would expand its reach into rare blood disorders. This diversification could prove strategic as J&J's top-selling immunology drug, Stelara, faces increasing pressure from generic competition.

Strategic Moves in a Competitive Landscape

The potential Protagonist acquisition aligns with J&J's recent M&A strategy. Earlier this year, the company made a significant $14.6 billion investment to acquire Intra-Cellular and its schizophrenia and bipolar treatment, Caplyta.

As news of the potential deal broke, Protagonist's shares surged by more than 30%, reaching approximately $88 per share. While the exact terms of the negotiations remain undisclosed, industry observers anticipate a substantial premium over Protagonist's current market value.

This move by J&J reflects the ongoing consolidation in the pharmaceutical industry, as major players seek to strengthen their pipelines and expand their therapeutic reach. The acquisition of Protagonist would not only cement J&J's position in immunology but also provide new avenues for growth in hematology and rare diseases.