In mid-July, Johnson & Johnson (J&J; New Brunswick, NJ) announced that it will use $4.9 million in stock to acquire one of the biopharmaceutical sector's longest lived companies, Centocor (Malvern, PA). The market liked the deal so much that both companies' stock prices rose upon the announcement—J&J gaining $1 to $97.42 and Centocor shooting up 16% to over $57. Biotechnology analysts welcomed the deal, saying that it showed how persistence, courage, and some luck could provide a favorable shareholder outcome even for companies against which fortune (and the financial markets) had turned.
Centocor is a true phoenix of biotechnology, arising from ashes of its own creation in the early 1990s. Back then, Centocor hit the headlines for all the wrong reasons. Its lead molecule, Centoxin—a monoclonal antibody against Gram-negative bacterial endotoxin—had been approved to great fanfare in 1991 in Europe by the Committee for Proprietary Medicinal Products, the forerunner of the European Medicines Evaluation Agency (London). But in February 1992, the company announced that the US Food and Drug Administration (FDA; Bethesda, MD) was "seeking additional information" about the compound, and Centocor's stock price fell by around 30%. When the FDA concluded two months later that it had insufficient data to approve the drug, the stock price fell through the floor.
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