Pfizer acquisition suggests more deals on the horizon
Tuesday, June 18, 2019 11:14 AM

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. INCY, +2.94%  rose 5.3% on Monday afternoon, while shares of Iovance Biotherapeutics Inc. IOVA, +3.83%  shot up 13% and shares of Turning Point Therapeutics Inc. TPTX, +3.40%  jumped 12.6%. Shares of Blueprint Medicines Corp. BPMC, +2.77%  rose around 6% and Mirati Therapeutics Inc. MRTX, +1.73% shares gained 5.4%, while the SPDR S&P Biotech ETF XBI, +1.70%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. 

More on Pfizer and ArrayS&P places Pfizer ratings on CreditWatch negative after $11.4 billion Array deal and Array BioPharma’s stock rockets after $11.4 billion buyout deal with Pfizer

Pfizer PFE, +0.79% is looking to expand its pipeline of cancer drugs with this acquisition. Array’s ARRY, +0.75%  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. AMGN, +1.84% Biogen Inc. BIIB, +1.53% Gilead Inc. GILD, +1.93%and Novo Nordisk A/S NVO, +2.18%  — 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 LLY, +0.83% acquisition of Loxo Oncology and Biogen’s acquisition of Nightstar Therapeutics. Merck & Co. MRK, +1.39% announced just last week that it would be buying cancer-treatment biotech Tilos Therapeutics.

Read more here.