Investors who have long believed in Ambrx Biopharma Inc. are now enjoying substantial returns as Johnson & Johnson’s acquisition offer values the biotech stock at a remarkable 6,700% above its all-time low. Johnson & Johnson has agreed to purchase Ambrx for $28 per share in cash, representing an impressive 105% premium to its closing price before Monday’s announcement and placing the drug developer’s total valuation at $2 billion. This turnaround is particularly striking considering Ambrx’s precarious situation in December 2022 when its shares hit a rock-bottom price of 41 cents, putting the company at risk of delisting.
Key investors, including Darwin Global Fund Ltd and Cormorant Asset Management Ltd, have maintained their positions throughout the stock’s remarkable rebound, securing their positions as the top two shareholders over the past year, as per Bloomberg’s data analysis. Darwin, reporting a stake of approximately 7.6 million shares in Q4 2022, increased it to around 17 million by the end of Q3 last year. Cormorant, steadily rebuilding its stake for over a year, held 11 million shares as of October.
The rollercoaster journey of Ambrx shares highlights the potential for mergers and acquisitions to significantly boost returns in innovative biotech companies. After a challenging two-year period marked by job cuts and financial struggles, the biotech sector managed to achieve a modest gain in 2023, driven by a year-end buying surge.
Based in San Diego, California, Ambrx specializes in developing antibody-drug conjugates (ADCs), a therapeutic approach delivering high doses of medicines directly to tumors while minimizing damage to surrounding tissues.
Analyst Brian Abrahams from RBC Capital Markets noted in a research note, “Earlier data had validated Ambrx’s ADC platform, and positioned the company as a likely takeout candidate,” emphasizing the continued interest of major pharmaceutical companies in the ADC space.
Ambrx’s shares faced pressure throughout 2022 until a mid-December breast cancer trial readout triggered a one-day gain of over 1000%, propelling the stock’s recovery to its prior valuation. This resurgence aligns with a trend of large pharmaceutical companies targeting biotechs specializing in ADCs, often paying a premium for their drug portfolios.
In 2023, Pfizer Inc. acquired Seagen Inc. for approximately $43 billion, AbbVie Inc. agreed to purchase ImmunoGen Inc. for $10.1 billion, and Merck & Co. secured the rights to sell three experimental ADCs from Daiichi Sankyo Co. for as much as $22 billion.
Both Darwin and Cormorant, the major investors in Ambrx, did not respond to requests for comments via email. Ambrx shares surged by 102% on Monday.
