Johnson & Johnson (NYSE:JNJ) is reportedly in discussions to acquire Protagonist Therapeutics (NASDAQ:PTGX).

Citing people close to the talks, the Wall Street Journal reported that the deal is not guaranteed, and the terms have yet to be finalized.

Year to date, Protagonist Therapeutics' stock has gained around 132%, as per data from Benzinga Pro.

Partnership May Evolve Into Full Ownership

Johnson & Johnson and Protagonist already share a collaboration to develop an oral therapy targeting plaque psoriasis and ulcerative colitis.

Also Read:

Under their current agreement, Johnson & Johnson holds exclusive rights to commercialize the treatment and owns about 4% of Protagonist's shares, the report noted, citing data from FactSet.

Acquiring Protagonist would strengthen Johnson & Johnson's immunology business and grant it access to rusfertide, an experimental therapy co-developed with Takeda Pharmaceutical Co. Ltd. (NYSE:TAK).

Rusfertide has shown encouraging results in late-stage trials for polycythemia vera, a rare blood cancer.

Both drugs are expected to complement Johnson & Johnson's expanding portfolio of immune and oncology products.

Protagonist's Strong Market Run

Protagonist's shares have surged more than 100% this year, supported by positive clinical updates from its programs targeting plaque psoriasis and ulcerative colitis.

Since its 2016 initial public offering, the stock has gained over 450%, reflecting investor optimism about its therapeutic pipeline.

Despite the premium likely required for an acquisition, the WSJ report highlighted that the transaction would be financially manageable for Johnson & Johnson.

Strategic Rationale Amid Competitive Pressures

The potential deal comes as J&J faces mounting competition for its top-selling immunology drug, Stelara.

Johnson & Johnson has leaned on new product launches and targeted acquisitions to counterbalance those losses.

Buying Protagonist would fit neatly into that strategy, enabling the company to reinforce its long-term growth in immunology and oncology as it navigates an increasingly competitive landscape.

PTGX Price Action: Protagonist Therapeutics shares were up 34.04% at $89.86 at the time of publication on Friday. The stock is trading at a new 52-week high, according to Benzinga Pro data.

Read Next:

• T1 Energy Jumps After Investing In Cutting-Edge US Solar Project

Image via Shutterstock