J&J Borrows $6.5 Billion to Buy Momenta While Its Other Divisions Face Mounting Lawsuits
Johnson & Johnson finalized a deal to acquire Momenta Pharmaceuticals for $6.5 billion, the largest drug industry merger this year. Momenta’s stocks soared 69.2%, nearly reaching the $52.50 per share appraisal Johnson & Johnson is paying. Over the course of the previous year, Momenta stock had already seen gains of nearly 200%, though some analysts this summer were wary of the company’s cash burn, labeling it “essentially still a development-stage biotech.”
Johnson & Johnson, however, forecasts big money in the near future. Momenta’s primary selling point is its flagship drug called Nipocalimab, currently in late stage research for various autoimmune conditions. According to Johnson & Johnson, Nipocalimb could see billions in annual sales once it wins approval.
Johnson & Johnson is leaving behind lawsuit-ridden or low-performing divisions to pursue the highly lucrative frontier of drug treatments for autoimmune diseases. Nipocalimb is potentially just a small indicator of Momenta’s potential, and Johnson & Johnson sees the economic potential of investing in drugs and companies working in autoimmune diseases. The global autoimmune treatment market is forecast to double from 3.28 billion dollars in 2017 to 7.95 billion by 2025 and already accounts for the world’s best selling drug, Abbvie Inc’s Humira.
Johnson & Johnson was so eager to acquire Momenta, they borrowed $7.5 billion to fund the purchase. According to Moody Investors Service, “the higher leverage incurred to fund the purchase is expected to affect the pharmaceutical giant’s ability to pay for the liabilities arising from litigation related to the talc and opioid cases.” It remains to be seen if Momenta will be able to uphold their value of “absolute integrity” as they begin their partnership with Johnson & Johnson, “unwavering in [their] convictions to do what is right, even when there is pressure to do otherwise.”
Articles Referenced in This Post:
Johnson & Johnson buying Cambridge biotech Momenta for $6.5b"Johnson & Johnson buying Cambridge biotech Momenta for $6.5b
Here's Why Momenta Pharmaceuticals Dropped 13.5% Today
J&J strikes $6.5 billion deal for autoimmune disease specialist Momenta
Global Autoimmune Treatment Market
Johnson & Johnson Borrows $7.5B to Fund Its Purchase Of Momenta
