Large pharma acquisitions don’t always have to take a long time to negotiate. In the case of Johnson & Johnson’s proposed $14.6 billion purchase of Intra-Cellular Therapies, it took just one month from the time the buyer revealed its intention to the signing of the deal.
J&J announced the Intra-Cellular buy on Jan. 13, a Monday, after penning the agreement behind closed doors the prior Friday. Before that, on Dec. 6, 2024, Nauman Shah, J&J’s head of innovative medicine business development, first reached out to request a meeting with Intra-Cellular’s CEO Sharon Mates, Ph.D., a securities filing (PDF) shows.
During that meeting, carried out on Dec. 13, Shah and J&J’s innovative medicine head, Jennifer Taubert, for the first time offered to acquire Intra-Cellular at $115 per share, which marked a 33% premium to the biotech’s 30-day volume-weighted average price.
Besides the price tag, J&J made at least two other things clear in the letter. The large pharma would focus on Intra-Cellular’s Caplyta, an atypical antipsychotic already approved in schizophrenia and bipolar depression, and ITI-1284, a phase 2 candidate being studied in generalized anxiety disorder and Alzheimer’s disease-related psychosis and agitation.
Second, J&J “was prepared to move expeditiously,” aiming to announce a transaction before the 2025 J.P. Morgan Healthcare Conference scheduled to begin on Jan. 13., according to the document.
A major part of J&J’s interest in Intra-Cellular hinges on Caplyta’s potential to expand into the large major depressive disorder indication after two positive phase 3 readouts and a subsequent FDA filing in December. As Caplyta passed both tests with flying colors, showing impressive improvement in depressive symptoms, analysts have assigned various blockbuster peak sales to its potential. Mizuho’s Graig Suvannavejh, Ph.D., for example, figured Caplyta could reach $6 billion in peak sales.
After reviewing J&J’s initial offer with advisers, Intra-Cellular’s board ruled that the price significantly undervalued the company but agreed to grant J&J certain due diligence information so the large pharma may refine its views.
Centerview Partners and Jefferies, which are financial advisers to Intra-Cellular, also presented three other names that they believed would be interested in—and have the capability of—acquiring Intra-Cellular. However, the board decided against making contacts because the biotech was not otherwise looking for a sale.
In the next few days, J&J and Intra-Cellular would enter a confidentiality agreement and conduct due diligence sessions.
But the discussions appeared to hit a deadlock on Dec. 21, when Intra-Cellular declined to provide J&J further due diligence information even though the potential buyer said it was not prepared to increase its initial price without the requested access.
To break the stalemate, on Dec. 27, J&J CEO Joaquin Duato spoke with his counterpart at Intra-Cellular, assuring Mates that J&J was serious about the purchase price once it had obtained additional confidential information.
It worked.
After speaking with the board, Mates on Dec. 31 granted J&J additional access and continued to provide more data as requested through Jan. 10.
As talks with J&J accelerated, Intra-Cellular’s board changed its mind and instructed its bankers to contact those three potential buyers on Jan. 6. However, those firms quickly declined, saying they were not interested in a potential transaction.
Meanwhile, Duato kept his communication with Mates. An improved $126.5-apiece offer from Duato was knocked back by Mates on Jan. 9 after another internal Intra-Cellular board meeting discussed the long-range projections of the company, taking into account a new settlement with Sandoz that pushed back the generic entry of a Caplyta copy to July 1, 2040.
Mates, relaying a message from the board, told Duato that an offer price closer to $140 per unit would be necessary to win over the board. Duato, in return, delivered a revised proposal, instead saying that $132 per share would be J&J’s best and final offer.
Intra-Cellular’s directors and management team gathered again. Considering that J&J improved its offer by 15% to nearly a 60% premium to Intra-Cellular’s prior closing price, the lack of interest from other companies and the risks in achieving the long-term projections, Intra-Cellular caved.
On the evening of Jan. 10, the two companies executed the merger agreement.
The deal jogs one’s memory of Pfizer’s $11.6 billion acquisition of Biohaven—or its CGRP migraine portfolio, to be specific—in 2022. Both $10 billion-plus takeovers featured a derisked FDA-approved medicine for neurological diseases. In Pfizer’s case, it was a call from CEO Albert Bourla, Ph.D., that revived Biohaven’s previously abandoned takeout plan. In that case, the discussion of a buyout also took just a month, although those two firms were previously already commercialization partners.