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Pfizer to Buy Cancer Drug Maker Array BioPharma for $10.64 Billion
Acquisition adds to streak of deals by pharmaceutical companies looking to bolster cancer treatment portfolios
By Jared S. Hopkins and Kimberly Chin
June 17, 2019
Pfizer Inc. agreed to buy Array BioPharma Inc. for $10.64 billion in cash, as one of the world’s biggest pharmaceutical companies seeks to expand its cancer lineup with targeted therapies.
Monday’s deal for Array, which garnered a 62% premium to its closing price Friday, suggests just how important the market for cancer drugs is for the world’s biggest pharmaceutical companies.
Pfizer has been trying to expand its offerings through a combination of deals as well as by ramping up its own drug-discovery efforts.
The deal forArray includes two drugs in an increasingly important segment of the market:for agents that target genetic changes driving the cancers of certain patients.
Array’s two drugs, Braftovi and Mektovi, are currently approved to treat skin-cancer patients with certain genetic alterations. The drugs could also play a role in treating some colon and rectal cancer patients, if studies pan out.
Like a lot of big drugmakers, Pfizer has been trying to beef up its portfolio of cancer drugs to tap into a market projected to reach $237 billion in 2024 world-wide sales, up from $138 billion this year, according to research firm EvaluatePharma.
Also appealing to the big companies is the ability to command high prices and the opportunities to find new treatments furnished by advances understanding the disease.
For Pfizer, the shift has meant moving away from the widely used pills like cholesterol fighter Lipitor and male-impotence treatment Viagra that the company had long been known for. Pfizer’s 18 cancer drugs include three less-expensive copies of biotech drugs known as biosimilars.
Pfizer’s cancer drugs are projected to generate $8.3 billion in sales this year, according to EvaluatePharma.
Big company interest in cancer has driven many recent acquisitions—and high premiums. Last month, Merck & Co. agreed to acquire Peloton Therapeutics Inc. for about $1 billion, whileBristol-Myers Squibb Co. in January announced a $74 billion deal for Celgene Corp.
Targeted cancertreatments are a special area of focus, fueling takeouts like EliLilly & Co.’s roughly $8 billion deal for Loxo Oncology. Lilly paid a68% premium for Loxo and its drugs based on tumors’ genetic traits.
Braftovi andMektovi, which are taken together, each carry a monthly list price ofapproximately $11,000. In May, the combination showed positive results in alate-stage study of patients with advanced colon cancer.
Andy Schmeltz, who heads Pfizer’s cancer business, expressed hope that the two drugs would play a major role in improving treatment for colon cancer, a leading cause of cancer-related deaths in the U.S.
An estimated 145,600 patients in the U.S. will be diagnosed with cancer of the colon and rectum this year, according to the American Cancer Society, and more than 51,000 people are expected to die from the diseases.
Analysts expect Array’s annual product sales will reach $1 billion by 2023, according to FactSet. The company also has several drugs in clinical development that are being tested in patients.
Targeted cancer drugs like those from Array are among those that Pfizer has prioritized in recent years, especially as the company looks forward to the increasing use of the therapies in combination with other cancer treatments.
“The future of cancer medicines arecombinations,” Chris Boshoff, who leads Pfizer’s cancer drug development, saidin an interview. “A big part of that will be targeted cancer medicines.”
Boulder, Colo.-based Array was founded in 1998 by three former scientists at Amgen Inc. —Kevin Koch, Anthony Piscopio and David Snitman—as well as chemistry professor K.C. Nicolaou, now at Rice University in Houston.
Pfizer Chief Financial Officer Frank D’Amelio told analysts on a conference call the company will continue to search for small and midsize deals, and isn’t dependent on larger acquisitions for growth.
Under the terms, Pfizer said it would pay Array shareholders $48 for each of its shares outstanding, a 62% premium to the closing price Friday. Pfizer said it would fund the transaction with debt and existing cash, and expects it to close by year’s end.
Shares of Array climbed 57% to $46.50 in early afternoon trading Monday, while Pfizer slipped 5 cents to $42.71.
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Pfizer said it expects the transaction to hit adjusted per-share earnings by 4 cents to 5 cents in 2019 and 4 cents to 5 cents in 2020. Pfizer expects the deal to add to earnings at the beginning of 2022.
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