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 -0.95% rose 5.3% on Monday afternoon, while shares of Iovance Biotherapeutics Inc. /zigman2/quotes/206632254/composite IOVA -1.20% shot up 13% and shares of Turning Point Therapeutics Inc. /zigman2/quotes/211319679/composite TPTX -0.77% jumped 12.6%. Shares of Blueprint Medicines Corp. /zigman2/quotes/209215354/composite BPMC -0.50% rose around 6% and Mirati Therapeutics Inc. /zigman2/quotes/209009887/composite MRTX +0.10% shares gained 5.4%, while the SPDR S&P Biotech ETF /zigman2/quotes/205950134/composite XBI -1.36% 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 -0.67% is looking to expand its pipeline of cancer drugs with this acquisition. Array’s /zigman2/quotes/202383769/composite ARRY 0.00% 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 -0.64% , Biogen Inc. /zigman2/quotes/201531540/composite BIIB -0.41% , Gilead Inc. /zigman2/quotes/210293917/composite GILD -3.23% and Novo Nordisk A/S /zigman2/quotes/203484366/composite NVO -0.60% — 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 -1.43% acquisition of Loxo Oncology and Biogen’s acquisition of Nightstar Therapeutics. Merck & Co. /zigman2/quotes/209956077/composite MRK -1.57% announced just last week that it would be buying cancer-treatment biotech Tilos Therapeutics.
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