By Elsa Ohlen

Johnson & Johnson has entered an agreement to acquire all outstanding shares of Intra-Cellular Therapies, in a multibillion-dollar bet on mental health therapies.

Johnson & Johnson will pay $132 per share in cash for a total equity value of $14.6 billion, the pharmaceutical company said in a statement Monday. It would be the largest acquisition in the biotech industry in more than a year.

The deal is expected to close later this year.

Intra-Cellular shares soared 34% to $127.43 in early Monday trading, while Johnson & Johnson shares traded 0.6% higher at $142.94. Bloomberg had reported Sunday that a deal could be reached as soon as this week.

"This acquisition further differentiates our portfolio, serves as a strategic near- and long-term growth catalyst," said J&J CEO Joaquin Duato.

Intra-Cellular focuses on developing treatments for mental health and neurological disorders and conditions. Its once-daily oral therapy lumateperone, sold under the name Caplyta, treats adults with schizophrenia and depressive episodes associated with bipolar disorder.

Intra-Cellular recently submitted an application to the Food and Drug Administration to add treatment of major depressive disorder to the Caplyta label. If approved, the medicine "has potential to become a standard of care for most common depressive disorders," Johnson & Johnson said. MDD affects an estimated 21 million adults in the U.S. each year.

Johnson & Johnson will provide commentary on the impact of the deal on its earnings when it provides full-year guidance on Jan. 22, it said.

The news comes as the J.P. Morgan annual healthcare conference kicks off in San Francisco Monday. Intra-Cellular's CEO is set to present at 11:15 a.m. Pacific time.

Coming into Monday trading, Intra-Cellular stock was up about 40% over the past 12 months, while J&J shares are down 13% over the same period.

The healthcare sector has significantly underperformed the S&P 500 in the past two years and is in something of a rut. News of a major deal could inject some much-needed confidence in biotech stocks, and mark the start of turnaround for the sector.

"We are optimistic on the set-up for biopharma M&A in 2025, following subdued deal activity in 2024," Goldman Sachs analysts wrote in a research note Friday.

"Renewed merger activity should also be aided by the potential for a lighter regulatory touch in certain industries under a Trump presidency, " the analysts added.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

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January 13, 2025 10:57 ET (15:57 GMT)

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