This Top 1% Biotech Snagged A $2 Billion Takeover. But Don’t Call It ‘Hot.’

Cancer-focused biotech companies Ambrx (AMAM) and Harpoon Therapeutics (HARP) snapped up a pair of takeover deals Monday. AMAM stock nearly doubled while HARP stock ran up by triple digits.


Johnson & Johnson (JNJ) will pay $2 billion to acquire Ambrx while Merck (MRK) agreed to pay $680 million for Harpoon. The deals helped kick off the annual J.P. Morgan Healthcare Conference in San Francisco, Calif. Colloquially JPM, the conference is known for splashy takeover news and big clinical results, and usually pushes biotech stocks higher.

This year is no exception, thus far. AMAM stock surged 98.1% to 27 just after the stock market opened. HARP stock more than doubled, running up 110.8% to 22.24.

Ambrx has shown promise in using antibody drug conjugates, or ADCs, to treat prostate and breast cancer. Think of these like smart bombs for cancer, sending toxic chemicals directly to tumor cells. The company has had a “dramatic year,” Chief Executive Dan O’Connor told Investor’s Business Daily in an interview last month. But don’t call the ADC space “hot,” he says.

“There is a dubbing of the ADC space, a labeling, as a hot area,” he said. “I think that’s a misnomer. Hot implies the whole area can go cold at some point. That’s not going to happen. The landscape is forever changing with ADCs coming into the fore. These drugs have been developed for a long time.”

AMAM Stock: A Highly Rated Biotech

Notably, AMAM stock and HARP stock are highly rated, according to IBD Digital. Ambrx shares have a best-possible Relative Strength Rating of 99, while HARP stock trails with an RS Rating of 98. This puts their 12-month performance in the top 1% and 2% of all stocks, respectively.

Both are focusing on cancer. While Ambrx is testing ADC treatments for prostate and breast cancer, Harpoon is working on immuno-oncology drugs for small cell lung cancer and neuroendocrine tumors. The latter includes cancers that begin in specialized cells called neuroendocrine cells, according to the Mayo Clinic. These cells have traits in common with nerve and hormone-producing cells.

Harpoon’s technology works by engaging the immune system’s T cells to kill cancer cells.

“Our investment thesis was based on HPN328, for which encouraging data focused on small cell lung cancer and neuroendocrine tumors were presented recently,” Leerink Partners analyst Jonathan Chang said in a report Monday.

He notes the deal values HARP stock at a 218% premium to its closing price on Friday. Similarly, the buyout for Ambrx was worth more than double AMAM stock’s last closing price, RBC Capital Markets analyst Brian Abrahams said in a report.

Deals Abound In The ADC Space

Ambrx is far from the first takeover in the ADC space. Last year, Pfizer (PFE) bought Seagen for $43 billion and AbbVie (ABBV) pledged to pay $10.1 billion for ImmunoGen (IMGN). Eli Lilly (LLY) also paid $1.4 billion to acquire Point Biopharma, which is working on targeted radiation treatments.

“Earlier data had validated Ambrx’s ADC platform and positioned the company as a likely takeover candidate,” Abrahams said in a note to clients. He lowered his price target on AMAM stock to 28 from 32 to reflect the takeover price. The deal for Harpoon values HARP stock at 23 a share.

Both transactions are expected to close in the first half of 2024.

In other deals, medtech player Boston Scientific (BSX) is coughing up $3.7 billion for Axonics (AXNX). Novartis (NVS) is also buying privately held Calypso Biotech for $250 million up front.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.


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