(Reuters) - Johnson & Johnson (NYSE:JNJ) said on Monday it had agreed to buy drug developer Ambrx Biopharma for $2 billion to gain access to drugs that belong to a class of targeted cancer therapies which have drawn interest from other drugmakers.
J&J will pay $28 per share of Ambrx, which represents a premium of about 105% to the stock's last close. Shares of the company surged to $27.24 in premarket trading.
Ambrx is developing therapies that belong to the class of drugs called antibody drug conjugates (ADC), which are described by researchers as "guided missiles" to target cancer cells and minimize damage to healthy tissue.
The deal would help J&J add a promising therapy for cancer and move further into a hot space for drugmakers that has witnessed a rush of deals in recent months.
In November, AbbVie (NYSE:ABBV) said it would buy ADC-developer ImmunoGen (NASDAQ:IMGN) for $10.1 billion in cash. Other deals include Pfizer (NYSE:PFE)'s $43 billion deal for Seagen and Merck's MRK.N> announcement that it would pay Daiichi Sankyo $5.5 billion to jointly develop three ADCs.
Ambrx's lead treatment, named ARX517, is being tested in early-stage studies in patients with prostate cancer.
The company, which recently spun off its consumer health business, said it would use its expertise in prostate cancer therapies to speed up development of ARX517. J&J sells the prostate cancer drug Zytiga.
J&J has been focused on driving up sales in its medical devices and pharmaceuticals business since hiving off its consumer unit. U.S. sales of its blockbuster drug Stelara are expected to come under pressure in 2025.