By Sarah Toy
Shares of cancer-therapy companies shot up on Monday after Pfizer Inc. announced it would acquire cancer drug maker Array BioPharma Inc. in a deal worth up to $11.4 billion.
Shares of Incyte Corp. /zigman2/quotes/204510994/composite INCY +1.51% rose 5.3% on Monday afternoon, while shares of Iovance Biotherapeutics Inc. /zigman2/quotes/206632254/composite IOVA -4.06% shot up 13% and shares of Turning Point Therapeutics Inc. /zigman2/quotes/211319679/composite TPTX +3.83% jumped 12.6%. Shares of Blueprint Medicines Corp. /zigman2/quotes/209215354/composite BPMC +0.20% rose around 6% and Mirati Therapeutics Inc. /zigman2/quotes/209009887/composite MRTX +1.11% shares gained 5.4%, while the SPDR S&P Biotech ETF /zigman2/quotes/205950134/composite XBI +0.33% advanced 4.2%.
Pfizer’s acquisition “signals more deals will happen,” Jefferies health-care trading desk strategist Jared Holz told MarketWatch in an email, adding that the amount Pfizer paid — $48 a share, an almost 13% premium over Monday’s share price — bodes well for potential acquisition targets. Anticipation around M&A should continue to drive momentum in the share price of some cancer-therapy companies, he said.
Pfizer /zigman2/quotes/202877789/composite PFE +0.11% is looking to expand its pipeline of cancer drugs with this acquisition. Array’s portfolio includes Braftovi and Mektovi, which have been approved for combined use in the treatment of certain advanced metastatic melanomas. The combined therapy has significant potential for long-term growth, Pfizer said, and is being tested in more than 30 clinical trials for treatment of several other cancers, including metastatic colon cancer.
Moody’s said in a report last week that several biopharma giants — specifically Amgen Inc. /zigman2/quotes/209157011/composite AMGN +0.28% , Biogen Inc. /zigman2/quotes/201531540/composite BIIB -0.93% , Gilead Inc. /zigman2/quotes/210293917/composite GILD -0.50% and Novo Nordisk A/S /zigman2/quotes/203484366/composite NVO -0.35% — had “very high” capacity for M&A, thanks to generous cash stores and what the agency called moderate debt-to-earnings ratios. The ratings agency said it predicts a rise in M&A, especially in the oncology and gene therapy spaces, mirroring recent moves like Monday’s Pfizer announcement, Eli Lilly & Co’s /zigman2/quotes/200106384/composite LLY +0.33% acquisition of Loxo Oncology and Biogen’s acquisition of Nightstar Therapeutics. Merck & Co. /zigman2/quotes/209956077/composite MRK +1.01% announced just last week that it would be buying cancer-treatment biotech Tilos Therapeutics.
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