ARIAD Pharmaceuticals, Inc.’s ARIA shares surged 72.8% after the company announced a definitive agreement to be acquired by Japan-based Takeda Pharmaceutical Company Limited TKPYY for approximately $5.2 billion.
Per the agreement, ARIAD stockholders will receive $24.00 in cash for every share they own, reflecting a premium of 75% on Friday’s closing price. The transaction is slated to close in the first quarter of 2017.
ARIAD’s three-month share price movement shows that the stock has significantly outperformed the Zacks classified Medical-Drugs industry. Specifically, the company gained 74.2%, while the industry lost 2.3%.
Through the acquisition, Takeda will add ARIAD’s sole marketed product, Iclusig, to its portfolio. Iclusig is approved in both the U.S. and the EU for the treatment of adult patients with T315I-positive chronic myeloid leukemia (CML: chronic, accelerated or blast phase) or Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ALL), for whom no other TKI therapy is approved. The drug generated sales of $33.6 million in the third quarter of 2016, up 66% year over year.
Meanwhile, ARIAD is working on expanding Iclusig’s label to include earlier lines of treatment, which will expand the drug’s target market significantly.
Apart from Iclusig, the transaction will allow Takeda to progress with its objective of discovering, developing and delivering precision therapies for rare cancers.
The acquisition is expected to provide immediate and substantial value to Takeda’s shareholders in the form of cash premium. Moreover, it will broaden Takeda’s hematology portfolio and transform its global solid tumor franchise through the addition of two innovative targeted therapies.
Zacks Rank & Other Key Picks
ARIAD currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Kite Pharma, Inc. KITE and Enzo Biochem, Inc. ENZ. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kite Pharma’s loss estimates widened from $5.50 to $5.48 for 2016 and from $7.00 to $6.85 for 2017 over the last 30 days. The company posted a positive earnings surprise in two of the four trailing quarters with an average beat of 7.89%. Its share price increased 8.6% in the past one month.
Enzo Biochem’s loss estimates widened from 17 cents to 16 cents for 2016 over the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 22.50%.
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