Array BioPharma's stock rockets after $11.4 billion buyout deal with Pfizer

Monday's deal is valued at more than $11 billion. File

Monday's deal is valued at more than $11 billion. File

The combination recently had positive results in colorectal cancer, a disease where it could become the first-line treatment.

The U.S. Food and Drug Administration a year ago approved Array's oral combination treatment for use in patients with melanoma - the deadliest form of skin cancer.

The data "is really a landmark publication in one of the most dismal tumors", Pfizer research chief Mikael Dolsten said in a phone interview. BRAF mutations are estimated to occur in up to 15% of colorectal cancer cases and represent a poor prognosis for these patients.

Braftovi and Mektovi, launched last July for the deadliest form of skin cancer at a price of $22,000 per month, had sales of around $72 million over their first nine months. Pfizer will get royalties from future Braftovi and Mektovi revenue as part of the deal. Pfizer's shares were marginally higher.

Under the new Chief Executive Officer Albert Bourla, Pfizer has been looking into ways to diversify its drug pipeline as its blockbuster pain drug Lyrica loses patent protection and faces increased competition among other generics providers. Pfizer bought Array BioPharma to expand its cancer drug portfolio.

In a conference call in April, Pfizer said it was considering "bolt-on" deals worth a few billion dollars to complement its pipeline.

Read had previously failed to close megadeals to acquire rivals AstraZeneca and later Allergan.

BRAF mutations are estimated to occur in up to 15% of colorectal cancer cases, investigators for the BEACON trial stated in a presentation of positive study results a year ago at the 2018 Gastrointestinal Cancers Symposium (ASCO GI) in San Francisco.

Array also has a several two clinical stage targeted cancer medicines and a portfolio of out-licensed products, including: Vitrakvi (larotrectinib; Bayer), selumetinib (AstraZeneca), tucatinib (Seattle Genetics), ipatasertib (Roche), varlitinib (Aslan), Loxo-292 (Lilly) and MRTX849 (Mirati Therapeutics).

For Pfizer, Array is the second biggest acquisition after the takeover of Medivation for $14 billion, three years ago. The transaction is expected to be dilutive to Pfizer's earnings per share (EPS) by $0.04 to $0.05 in 2019, $0.04 to $0.05 in 2020, neutral in 2021, and accretive beginning in 2022, with additional accretion and growth anticipated thereafter.

Pfizer expects to finance the majority of the transaction with debt and the balance with existing cash.

Upon closing of the deal, Array's employees will join Pfizer and continue to be located in Cambridge, MA, and Morrisville, NC, as well as Boulder, CO.

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