Johnson & Johnson on Monday said it will pay $2 billion in cash to acquire Ambrx Biopharma, a drugmaker specializing in one of the hottest areas of cancer treatment.

Ambrx is aiming to target multiple cancers with drugs called antibody-drug conjugates, or ADCs, which are described by researchers as “guided missiles” to directly target and kill cancer cells and minimize damage to healthy tissue.

The deal, which was announced on the first day of the annual JPMorgan Healthcare Conference, makes J&J the latest drugmaker to bet on ADCs following similar moves by other large drugmakers – including Pfizer, AbbVie and Merck – over the last year. 

The acquisition also comes as J&J scrambles to fill a revenue hole that’s approaching in 2025, when its top-selling drug Stelara, which is used to treat a long-lasting autoimmune disease called psoriasis, is expected to face generic competition. 

“Ambrx’s pipeline and ADC platform present exciting future opportunities to deliver enhanced, precision biologics as we look to transform the treatment of cancer and improve patients’ lives,” Dr. Yusri Elsayed, J&J’s global therapeutic area head of oncology, said in a release.

Under the terms of the deal, J&J will pay $28 a share for Ambrx, or about double the firm’s Friday closing price of $13.63. J&J expects to close the deal in the first half of 2024.

Shares of Ambrx nearly doubled in early trading Monday to just under that purchase price, while J&J’s stock was flat. 

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