Array Biopharma Inc (NASDAQ: ARRY) stock surged by whopping 56% on June 18th, 2019 (Source: Google finance) after Pfizer has agreed to acquire Array for $48 per share in cash, for a total enterprise value of approximately $11.4 billion. The Boards of Directors of both companies have approved the merger. The deal is expected to make Pfizer a leader in colon cancer and build up its pipeline of oncology drugs. ARRY sells the combination treatment Braftovi and Mektovi for melanoma. The deal represents the premium of 62% for Array. Array had released positive clinical data showing that Braftovi and Mektovi in combination with Eli Lilly and Co’s Erbitux had helped reduce the risk of death from colorectal cancer by 48% compared to the standard of care in patients with a gene mutation known as BRAF V600E.
Braftovi and Mektovi, got 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. The company also has revenue from royalty and licensing deals. Array drugs could eventually tackle colon cancer earlier in the disease process.
Array is Pfizer’s first major purchase under new Chief Executive Albert Bourla, who took on the role in January. It is also its biggest acquisition since a $14 billion purchase of Medivation in 2016 gave it the prostate cancer drug Xtandi, forecast by analysts to top $1 billion in sales next year.
Meanwhile, Pfizer’s growth has slowed in recent years and Bourla has been touting the company’s “15 in 5” plan to launch 15 experimental treatments, each with at least $1 billion annual sales potential, over a five-year period. The company have been investing in cancer drugs and gene therapies. Pfizer expects to complete the deal in the second half of 2019. The transaction is expected to add to earnings beginning 2022, and will reduce adjusted earnings per share by between 4 and 5 cents this year and in 2020, Pfizer said. Further, Pfizer expects to finance the majority of the deal, which has an enterprise value of about $11.4 billion, with debt and the remaining with existing cash. Pfizer was advised by Guggenheim Securities and Morgan Stanley on the deal. Array’s advisor was Centerview Partners.
On the other hand, Array’s Net Product Sales for BRAFTOVI + MEKTOVI for the third quarter of fiscal 2019 were $35.1 million, compared to $22.7 million for the second quarter of fiscal 2019. Total Revenue for the third quarter of fiscal 2019 was $64.7 million, compared to $82.5 million for the prior quarter.