Summary
- Pfizer acquires Array BioPharma for $48 per share, which brings the value of the deal to $11.4 billion.
- The acquisition of Array gives solid drugs with a proven track record of sales like BRAFTOVI and MEKTOVI, in addition to 30 ongoing clinical trials with massive expansion potential.
- Pfizer and partner Merck KGaA have seen hardship with Bavencio, which has been lagging behind in immunotherapy space, which is why I believe this acquisition of Array was inevitable.
- Before the acquisition of Array BioPharma, BRAFTOVI plus MEKTOVI surged with third-quarter 2019 sales of $35.1 million, which was a 54% quarter-over-quarter increase.
- The shift in focus for Pfizer has been primarily trying to enhance its oncology unit with acquisitions, which I believe has been largely accomplished after its latest buyout of Array BioPharma.
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Pfizer (PFE) announced that it would acquire Array BioPharma (ARRY) for $48 per share, which is about a 62% premium from Friday's close. In total, this deal was worth approximately $11.4 billion. This sets off the notion for the potential of many other oncology acquisitions this year. Pfizer had to take a shift in focus for its oncology pipeline, because of a couple of hardships the last few years. This gives Pfizer a massive pipeline to build upon and specifically with a highly focused competitive advantage as opposed to many other cancer biotechs.
Alternate Route Of Oncology Focus
Pfizer paid a hefty amount to acquire Array BioPharma. The first thing to note is that the deal went smoothly right from the outset. The board of directors of both companies agreed to the merger. It is likely the biggest reason for this merger involves Pfizer's shift in focus for its oncology pipeline. Why I believe it chose to acquire Array was to take on cancer indications with an unmet medical need. In other words, develop drugs to adequately treat cancer with specific genetic mutations. This targeted approach could likely see improved clinical outcomes for these patients, and it could be in an area with limited competition.
Which brings me to the next point, which is that the shift for Pfizer likely comes after its hardship with Bavencio. Pfizer and its partner Merck KGaA (OTCPK:MKGAY) have been doing alright with Bavencio in the immuno-oncology space, but have lagged behind with the likes of Merck (MRK) with Keytruda and Bristol-Myers Squibb (BMY) with Opdivo. Both of these big pharma companies are pretty much neck in neck when it comes to revenue in the anti-PD-1 inhibitor space. For example, Keytruda had generated over $7 billion in sales in 2018. Pfizer and its partner Merck KGaA have seen their share of setbacks in late-stage studies over the last few years with Bavencio. I believe that Pfizer decided to take a different approach, one that I believe will pay off in the long run. Being able to target specific genetic mutations of cancer creates a more personalized treatment approach. On top of that, it is a niche market with limited competition.
