Pfizer has been investing in cancer drugs and gene therapies in the face of competition for its blockbuster pain drug Lyrica.Andrew Kelly/Reuters
Pfizer Inc. on Monday struck a deal to buy Array Biopharma Inc. for $10.64-billion in cash to expand its portfolio of potentially lucrative cancer drugs.
The largest U.S. drugmaker is paying a hefty premium of 62 per cent to get access to Array’s approved treatments for skin cancer as well as its other experimental drugs.
Pfizer’s growth has slowed in recent years. Under new chief executive officer Albert Bourla, Pfizer has been pushing its “15 in 5” plan to launch 15 experimental treatments, each with at least $1-billion annual sales potential, over a five-year period and has been investing in cancer drugs and gene therapies.
The company has been saying for more than a year that it would eschew transformative deals. But in April, Pfizer said it would consider bolt-on deals worth a few billion dollars to complement its pipeline.
Oncology has become one of the most profitable areas for drug companies as breakthroughs in treatments have improved survival rates and costs for the drugs have surged.
The deal is Pfizer’s biggest deal since its $14-billion deal to buy Medivation – also a cancer deal. It picked up prostate cancer drug Xtandi through that acquisition, which generated nearly $700-million in sales last year and is expected to top $1 billion in annual sales next year, according to analysts.
Pfizer is paying $48 per Array share, which rose 60 per cent to $47.38 in light premarket trading. Pfizer’s shares were marginally higher.
The U.S. Food and Drug Administration last year approved Array’s oral combination treatment for use in patients with melanoma – the deadliest form of skin cancer.
The company is also testing its triple combo therapy in colorectal cancer patients.
“(The acquisition) sets the stage to create a potentially industry-leading franchise for colorectal cancer alongside Pfizer’s existing expertise in breast and prostate cancers,” Bourla said.
Pfizer said it 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.
Pfizer said it 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.