In a sign that the consolidation wave that swept in the pharmaceutical industry last year is likely to continue, Pfizer (NYSE: PFE) announced the acquisition of Array Biopharma (ARRY) for $10.64 billion in an all-cash transaction. Shares of Array surged in premarket-trading Monday following the report, while Pfizer gained modestly.
Array, a clinical stage drug developer which has been collaborating with Merck (MRCK) and Pfizer for research on several cancer therapies, will strengthen Pfizer’s oncology portfolio. The Boulder, Colorado-based Array has a pipeline of multiple drug candidates targeting various types of cancers.
Array, which has been collaborating with Pfizer for research in several cancer therapies, will strengthen the latter’s oncology portfolio
Currently, Array’s most valuable asset is its FDA approved drug for skin cancer. Pfizer has reportedly been looking for new products to overcome the softness in the sales of its popular painkiller Lyrica, which is facing intense competition. Of late, the company has been focusing a lot on cancer.
The offer price is equivalent to $48 per each share of Array and represents a 62% premium to the last closing price. According to Pfizer’s management, the transaction will be closed in the second half of 2019. It is expected to be dilutive to Pfizer’s adjusted earnings by 4-5 cents per share until next year. By the start of 2022, it will start contributing to earnings.
Last year, a drug developed by Array for the treatment of a severe form of skin cancer received approval from the FDA. The formulation, to be administered in combination orally, is now available for patients in the US. Another promising candidate from Array is its triple combo therapy for the treatment of colorectal cancer, which is currently being tested.
In the first quarter, earnings and revenues of Pfizer increased sharply to $0.85 per share and $13.1 billion respectively and topped the expectations, on the strength of the pharma business. The main growth driver was the Prevnar-Prevenar combo, while the slump in the sales of pain drug Lyrica turned a dampener.
Array shares soared 57% early Monday, following the announcement, and hit a record high. The uptrend was sustained after trading started. In the past six months, the value more than doubled. Though Pfizer moved up modestly initially, the stock pared the gains later.