How Johnson & Johnson’s billion-dollar bet on NM26 could transform atopic dermatitis treatment

Johnson & Johnson (NYSE: JNJ) has successfully concluded its acquisition of Yellow Jersey, a division previously part of Numab Therapeutics, for a substantial $1.25 billion. This strategic move secures Johnson & Johnson the exclusive global rights to NM26, a pioneering bispecific antibody set to advance into Phase 2 trials for treating atopic dermatitis (AD).

NM26 targets two critical pathways: the IL-4R alpha subunit (IL-4Rα) and IL-31, both key drivers in Th2-mediated skin inflammation and itch. With its dual-action, NM26 stands out as a promising solution in the realm of dermatological treatments, especially for AD which is notably difficult to manage due to its heterogeneity. David Lee, Global Immunology Therapeutic Area Head at Johnson & Johnson Innovative Medicine, expressed optimism about the impact of NM26. “NM26 is designed to help different subpopulations of patients by targeting two disease-driving pathways, which is key when treating a heterogeneous disease like AD,” Lee explained.

AD is the most common inflammatory skin disease, characterized by severe itching and inflammation, often exacerbated by scratching. These symptoms significantly impair quality of life and can lead to more severe complications like infections and mental health issues. Candice Long, Worldwide Vice President of Immunology at Johnson & Johnson, emphasized the pressing need for more effective therapies. “Nearly three-quarters of people with AD are not achieving remission with currently available treatments. The unmet need is high, and we must do better for patients,” stated Long.

The acquisition not only includes the NM26 program but also integrates Yellow Jersey Therapeutics into Johnson & Johnson’s portfolio. This expansion is part of Johnson & Johnson’s broader strategy to enhance its influence and capabilities in treating immune-mediated diseases globally. Additionally, Johnson & Johnson has expanded its reach by securing rights for NM26 in the Asia Pacific region through an agreement with Kaken Pharmaceutical.

The acquisition, considered an asset purchase under US GAAP, involves a charge of approximately $1.25 billion for in-process research and development in the third quarter of 2024. This is expected to result in a full year adjusted EPS dilution of $0.56 in 2024, with a lesser impact of about $0.10 in 2025. More details will be disclosed in the upcoming second quarter earnings call on July 17, 2024.

This acquisition reflects Johnson & Johnson’s commitment to leading the charge in medical innovation, particularly in the immunology space. By investing in advanced treatments like NM26, Johnson & Johnson not only addresses a critical gap in dermatological care but also strengthens its market position in the biopharmaceutical sector.