J&J acquires neuroscience company Intra-Cellular Therapies for USD 14.6 billion

The beginning of the year is an exciting time for everyone, but even more so for biotech investors. It is usually in the first few weeks of January that biotech executives and investors gather at the JP Morgan Healthcare Conference to set the outlook for the year. Historically, the conference has been an ideal venue for announcing major deals and partnerships, giving the sector a sentiment boost at the start of the year.

In 2025, J&J and Intra-Cellular Therapies announced the largest deal to date. Intra-Cellular Therapies has long been a core holding in both our portfolios, driven by its leading position in neuroscience. The company's lead drug, Caplyta, is approved for bipolar depression and schizophrenia and is currently under review for major depressive disorder. With millions of people suffering from these diseases, Caplyta offers a new option to alleviate the symptoms of these conditions without the side effects of previous depression and schizophrenia drugs, such as weight gain and other metabolic effects. As a result of these factors, Caplyta has shown increasing sales and exceptional prescribing trends since its approval in late 2019. This led management to announce peak sales expectations of USD 5 billion last year.

This acquisition reflects the growing focus of pharmaceutical companies on neuroscience and mental health, two previously neglected areas with large patient populations and very limited new treatment options over the past 10-20 years. Bristol Myers Squibb's USD 14 billion acquisition of our former portfolio holding Karuna Therapeutics was also part of this pattern.

As pharmaceutical companies approach the patent expiry of their largest products, they typically replenish their pipelines by acquiring innovative biotech companies. The growing cash piles of the big pharma companies combined with the upcoming patent cliffs usually lead to increased deal-making activity, which could provide a tailwind for the biotech industry.

With more than 20 takeouts in the fund's history, Arctic Aurora's portfolio management team has a strong track record of generating excess returns by identifying takeout candidates in the biopharma space.