The company could soon be swallowed by a very large peer — which also happens to be a business partner.
Clinical-stage biotech Protagonist Therapeutics (PTGX 29.76%) was all the rage on the stock market Friday. The company’s share price closed a dizzying 29.8% higher on the day, thanks to intense takeover speculation. That leap was particularly notable considering it was quite a downbeat day for stocks overall, with the S&P 500 (^GSPC -2.71%) sliding by almost 3%.
Sale in the works?
That speculation was fired that morning by The Wall Street Journal, which reported healthcare giant Johnson & Johnson was in discussions to acquire Protagonist. Although it gleaned this from unidentified “people familiar with the matter,” the financial newspaper had few details to report about the apparent negotiations.
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Protagonist is well known to Johnson & Johnson, as the two companies collaborate on the development of a drug that combats immune disorders such as ulcerative colitis. If and when the medication is developed successfully and comes to market, Johnson & Johnson will hold its exclusive commercialization rights.
If the report is accurate, the would-be acquirer wouldn’t be snapping up Protagonist at a bargain. Thanks largely to positive results in clinical trials for several of its pipeline drugs, the biotech’s share price had risen in excess of 70% year to date — and that was before Friday’s monster pop.
Mum’s the word… for now
Neither Protagonist nor Johnson & Johnson has yet commented on the WSJ report, which is par for the course in early stages of such events. I should stress that this has to be considered speculation at this point, although I would advise investors of either company (or both) to keep a sharp eye on how the apparent deal might shape up.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson and Protagonist Therapeutics. The Motley Fool has a disclosure policy.
