Johnson & Johnson to Acquire Ambrx Biopharma for $2 Billion, Marking Exit of First U.S. Biotech Fully Owned by Chinese Capital

On January 8th, U.S. time, Johnson & Johnson announced that it had reached a definitive agreement to acquire Ambrx Biopharma, Inc., a clinical-stage biopharmaceutical company with a proprietary synthetic biology platform for designing and developing next-generation antibody-drug conjugates (ADCs).

Johnson & Johnson will acquire all outstanding shares for $28.00 per share in cash, representing a premium of approximately 105% over the closing price, with an equity value of approximately $2 billion (approximately 14.3 billion yuan), or $1.9 billion after deducting estimated acquired cash.The transaction has been unanimously approved by the Ambrx board of directors and is expected to be completed in the first half of 2024. Of course, the conditions of the transaction include the approval of Ambrx shareholders and the approval under the Hart-Scott-Rodino Antitrust Improvements Act.

According to the industry media ENDPOINTS NEWS, the offer price of $28 per share in this acquisition is approximately twice the closing price of Ambrx on Friday (January 5), and is almost comparable to the tender offer price (according to overseas practices, to ensure the completion of a tender offer, the acquisition price offered is usually much higher than the normal trading price of the stock in the securities market, generally exceeding the market price by more than 20%). Before the opening today (January 8), the share price of Ambrx surged by 99%, reaching $27 per share.

This is Johnson & Johnson's first comprehensive acquisition of a biopharmaceutical company in recent years.In December last year, Johnson & Johnson signed a licensing agreement with LegoChem for a Trop2-targeted ADC for $1.7 billion, and acquired a Phase III clinical ophthalmology gene therapy pipeline for over $400 million.

In the just-passed 2023, ADC almost became a must-enter track for every MNC. On the one hand, the increasingly competitive ADC track has seen numerous impressive approvals and clinical data. On the other hand, with the arrival of the ten-year patent period (such as Johnson & Johnson's blood thinner Rivaroxaban and AstraZeneca's Olaparib), many MNCs have either acquired with hefty sums to maintain their prominent advantages in a certain field or to seek the next "blockbuster drug."

In 2003, Ambrx Biopharma, Inc. spun off from The Scripps Research Institute (TSRI). The latter is a private, non-profit biomedical research institution established in 1924, covering fields such as immunology, molecular and cellular biology, chemistry, neuroscience, autoimmune diseases, and cardiology. It is particularly renowned for its research on the fundamental structures and design methods of biomolecules and is one of the few world-leading centers in this area.

In June 2015, Fosun Pharma led a consortium comprising HOPU Investments, Everbright Healthcare Fund, and WuXi AppTec to jointly acquire Ambrx Biopharma, Inc. According to media reports, this marked the first U.S.-based high-tech biopharmaceutical company to be fully acquired by Chinese capital.

On August 4, 2016, Ambrx completed a US$45 million Series E financing round. This round was co-led by Apricot Capital and Northeast Securities Prosperity Healthcare Fund, with participation from China National Pharmaceutical Group Capital Management Co., Ltd., Renfu Medicine Holding Co., Ltd., and existing investors Shanghai Fosun Pharmaceutical, Houpu Fund, and Everbright Holdings.

After being acquired by a Chinese consortium, the management team of Ambrx at that time was mainly composed of Chinese individuals, including Li Bing, the chairman of Ambrx appointed by Fosun Pharma, and Dr. Tian Feng, the chief scientist of Ambrx. Meanwhile, Ambrx's cooperation with Chinese pharmaceutical companies became increasingly close.

As early as June 2013, Ambrx Biopharma and Zhejiang Medicine had already collaborated on the development and commercialization of ARX788. According to the agreement, Ambrx retained commercial rights outside of China and received royalties from product sales within China. Currently, the development and commercialization of ARX788 are under New Code Biotech, a subsidiary of Zhejiang Medicine. In addition, New Code Biotech also holds the rights to Ambrx's ARX305 (a CD70 ADC from the same technology platform).

In March 2019, Ambrx and BeiGene reached a global research and development collaboration. Under the terms of the collaboration, Ambrx will receive a $10 million upfront payment; if BeiGene decides to proceed with subsequent research projects, Ambrx will also receive up to an additional $19 million in upfront payments. Moreover, Ambrx is eligible to receive up to a total of $446 million in potential development, regulatory, and sales-based milestone payments across all programs, plus tiered royalties on future global sales. BeiGene will obtain worldwide development and commercialization rights to all drugs arising from this collaboration.

In January 2020, Ambrx Biopharma signed a collaboration and licensing agreement with China Biologic Products. Both collaboration products utilize Ambrx's proprietary technology platform. Under the agreement, Ambrx received an upfront payment to create two innovative drug candidates, with China Biologic Products leading clinical trial activities in both China and the U.S. China Biologic Products holds the development and commercialization rights in Greater China, while Ambrx retains rights outside of China.

On June 18, 2021, Ambrx was listed on the New York Stock Exchange. According to the announcement by WuXi AppTec, after the completion of this global offering, WuXi AppTec holds approximately 29,267,600 shares of Ambrx, accounting for about 11.1% of Ambrx's total share capital post-issuance (on a fully diluted basis).

Ambrx's proprietary ADC technology combines the advantages of highly specific targeted monoclonal antibodies, safely linked to potent chemotherapy payloads, to achieve targeted and effective elimination of cancer cells without the common side effects typically associated with chemotherapy. Building on innovations in oncology and prostate cancer,Johnson & Johnson's scientists plan to collaborate with researchers from Ambrx Biopharma to accelerate the Phase 1/2 APEX01 study of ARX517 in advanced prostate cancer, while advancing the pipeline of new candidate products.

(Source: Ambrx official website)

ARX517 is an ADC targeting Prostate-Specific Membrane Antigen (PSMA) and has received Fast Track designation from the FDA for metastatic castration-resistant prostate cancer (mCRPC). PSMA is highly expressed in over 80% of prostate cancers, particularly in mCRPC.

In the phase 1/2 clinical data published in October 2023, 100% (3/3) of patients in Cohort 6 (2.0 mg/kg) achieved a prostate-specific antigen (PSA) reduction ≥50%. In Cohort 7 (2.4 mg/kg), 2 out of 3 patients achieved a PSA reduction ≥50%, and in Cohort 8 (2.88 mg/kg), 2 out of 3 patients achieved a reduction ≥50%. No drug-related serious adverse events or dose-limiting toxicities were observed across all cohorts. Pharmacokinetic data demonstrated that the ADC has strong stability, preventing premature release of the anticancer payload.

(Source: Ambrx official website)

Notably, ARX517 is not the fastest progressing pipeline in Ambrx's clinical portfolio.ARX788, which has entered Phase II clinical trials, is an ADC targeting human epidermal growth factor receptor 2 (HER2) for metastatic HER2+ breast cancer.

This can be traced back to a "self-rescue through amputation" by Ambrx in October 2022. At that time, Ambrx announced a 15% workforce reduction and made significant adjustments to its R&D pipeline – removing the HER2 ADC drug ARX788 from its internal pipeline and suspending development, while seeking external collaborators to continue development in regions outside of China. The company decided to focus on advancing its PSMA ADC drug ARX517 as the lead pipeline candidate. Ambrx attributed this decision to “a significant shift in the competitive landscape for HER2 metastatic breast cancer over the past year.” During that year, Trastuzumab Deruxtecan (marketed as Enhertu), an ADC jointly developed by AstraZeneca and Daiichi Sankyo, received FDA approval for marketing.

Just two months later, ARX788 released preliminary safety and efficacy data from its Phase 2 clinical study. The data showed that in HER2-positive mBC patients who were resistant or refractory to T-DM1, treatment with ARX788 resulted in an objective response rate (ORR) of 57.1% and a disease control rate (DCR) of 100%. Subsequently, Ambrx's stock price surged 10-fold, with its latest market value reaching $175 million.

The commercialization and development rights of ARX788 in China belong to NovoCodex Biopharmaceuticals, a subsidiary of Zhejiang Medicine.In May 2021, the National Medical Products Administration (NMPA) announced that ARX788, an injectable recombinant humanized anti-HER2 monoclonal antibody-AS269 conjugate developed by NovoCodex Biopharmaceuticals, a subsidiary of Zhejiang Medicine, was officially included in the Breakthrough Therapy Designation list. The proposed indication is second-line treatment for HER2-positive advanced breast cancer.In February 2023, ARX788, jointly submitted by Zhejiang Medicine and NovoCodex Biopharma, received the default approval to conduct Phase II/III clinical trials for the treatment of gastric cancer and gastroesophageal junction adenocarcinoma.

References:

"WuXi AppTec's Investee Company Ambrx Biopharma, Inc. Listed on NYSE Acquired by Fosun and Hopu Investments"

Fosun, WuXi AppTec, and Others Jointly Acquire U.S. Innovative Biotechnology Company Ambrx

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