Pfizer bulks up in oncology with $11.4-billion deal to buy Array BioPharma

Pfizer announced Monday that it entered into a definitive merger agreement to acquire Array BioPharma for $48 per share in cash, or a total enterprise value of approximately $11.4 billion, gaining a number of approved and experimental cancer drugs. Pfizer CEO Albert Bourla said the deal "strengthens our innovative biopharmaceutical business, is expected to enhance its long-term growth trajectory and sets the stage to create a potentially industry-leading franchise for colorectal cancer."  

Under the transaction, Pfizer will gain Array BioPharma's BRAF inhibitor Braftovi (encorafenib) and the MEK inhibitor Mektovi (binimetinib), which are approved in combination for the treatment of BRAFV600E or BRAFV600K mutant unresectable or metastatic melanoma. Pfizer noted that the combination, which generated US sales of $35.1 million in the first quarter, has "significant potential" for long-term growth by expansion into other indications, including BRAF-mutant metastatic colorectal cancer.

Last month, Array BioPharma announced that in the Phase III BEACON CRC trial, the pairing of Braftovi and Mektovi in combination with Merck KGaA and Eli Lilly's Erbitux (cetuximab) in patients with BRAFV600E-mutant metastatic colorectal cancer, following one or two prior lines of therapy, met both primary endpoints of confirmed objective response rate and overall survival. The company plans to submit these data for regulatory review in the US in the second half (for related analysis, see ViewPoints: Array's BEACON keeps shining).

Pfizer indicated that the combination of Braftovi and Mektovi is also being investigated in over 30 clinical trials across several solid tumour indications. Meanwhile, Pfizer said the purchase will also provide it with "a broad pipeline of targeted cancer medicines in development, as well as a portfolio of out-licensed potentially best-in-class and/or first-in-class medicines, which are expected to generate significant royalties over time." These drugs include selumetinib, which is partnered with AstraZeneca, and ipatasertib, which is partnered with Roche's Genentech unit.

The acquisition, which represents a premium of 62% over Array BioPharma's closing share price on June 14 and has been approved by the boards of both companies, is expected to close in the second half of 2019. Pfizer indicated that the deal is expected to be dilutive to its adjusted diluted earnings per share by $0.04 to $0.05 in 2019 and 2020, neutral in 2021 and accretive beginning in 2022.  

Pfizer noted that after the transaction closes, Array's operations and employees in Massachusetts, North Carolina and Colorado will become part of its Oncology Research & Development network in addition to sites in California and New York.  

Commenting on the news, Stifel Nicolaus & Co. analyst Stephen Willey suggested that the premium for the Array BioPharma deal was appropriate, given the drugmaker's positive clinical trial news. Willey indicated that the transaction could also provide a tailwind for the sector, especially companies with drugs in the later stages of development.

The purchase, which represents Pfizer's largest transaction since its $14-billion takeover of Medivation, comes after the drugmaker agreed to buy Therachon last month in a deal potentially worth more than $800 million. Commenting on the impact of the Array BioPharma deal, Pfizer chief financial officer Frank D'Amelio, said "from an overall capital allocation perspective, our priorities don't change," adding that the company will continue to look at dividends, buybacks and small or mid-size deals, but doesn't see the need for a large merger.

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