Affirming rumors, Johnson & Johnson(NYSE: JNJ) will indeed buy drug company Scios(Nasdaq: SCIO) for $2.4 billion in cash. When word of the deal leaked Friday, shares of Scios rose 22% to $42.20, and are up again today almost 4% to $44. Scios shareholders will get $45 a share from J&J. From its 1999 lows of just above $2 a share, it has been quite a ride.

Johnson & Johnson will acquire Scios to boost its drug pipeline. Much has been made of the smaller company's two-year-old congestive heart failure treatment, Natrecor. Scios expects the drug to generate sales of $160 million to $170 million in 2003, and it may eventually ring up $500 million in annual sales.

The more interesting story, though, is a drug awaiting approval. Scios' experimental rheumatoid arthritis treatment, SCIO-469, is in phase II trials and could be years away from approval. However, should the drug's promise hold up, sales could one day eclipse those expected for Natrecor.

Rheumatoid arthritis is an autoimmune disease in which the body's own defenses turn against it and attack the sufferer's joints. It's a crippling and incredibly painful illness with no cure.

SCIO-469 is creating a good deal of buzz because of the way it works. The drug blocks the p38 kinase enzyme responsible for stimulating inflammation-causing proteins, such as TNF and COX-2. Other companies are also attempting to create a p38-inhibiting drug, but this one is in the most advanced testing stages.

Another great thing about SCIO-469, compared to existing rheumatoid arthritis treatments, is its dosage. Amgen's(Nasdaq: AMGN) Enbrel, J&J's own Remicade, and Abbott Lab's(NYSE: ABT) Humira are all given as injections. SCIO-469 would likely be approved in pill form, a huge advantage.

One thing must be underlined, though. SCIO-469 hasn't been approved, and similar drugs in the past have been shot down because of safety concerns. Still, J&J will get ahold of an existing successful drug and a potentially promising one -- a healthy dose of optimism for the drug maker.