Johnson & Johnson ( JNJ ) is reportedly in discussions to acquire Protagonist Therapeutics ( 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' ( PTGX ) stock has gained around 132%, as per data from Benzinga Pro.

Partnership May Evolve Into Full Ownership

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

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Under their current agreement, Johnson & Johnson ( JNJ ) 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 ( JNJ ) immunology business and grant it access to rusfertide, an experimental therapy co-developed with Takeda Pharmaceutical Co. Ltd. ( 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 ( JNJ ) 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 ( JNJ ).

Strategic Rationale Amid Competitive Pressures

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

Johnson & Johnson ( JNJ ) 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 ( PTGX ) 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.

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