Japan's Takeda Pharmaceutical Co Ltd said it would buy cancer drug maker Ariad Pharmaceuticals Inc in a deal valued at $5.20 billion, to beef up its oncology pipeline. Ariad stock was up 73.1 percent at $23.79 in early trading on Monday. In 2016, its shares had nearly doubled.
Takeda - which in September revealed it was scouting for multi-billion dollar acquisitions to reduce its dependence on domestic sales - agreed to pay $24 for each Ariad share, a premium of about 75 percent to its Friday close. Takeda's top-selling blood cancer drug Velcade is expected to face generic competition this year and other key products go off patent from 2020.
Cancer drugs are appealing to large drugmakers, with high prices being paid for promising assets. San Francisco-based Medivation was bought by Pfizer Inc for $14 billion in August. Given the scarcity of commercial-stage oncology assets and significant potential synergies, other bidders could emerge, SunTrust Robinson analysts said. In November, Reuters reported that Takeda's negotiations to acquire Valeant Pharmaceuticals International Inc's Salix stomach-drug business stalled over price disagreements, citing sources.
With the Ariad deal, the Japanese drug giant gains access to the leukemia drug, Iclusig, which is expected to generate sales of $170 million-$180 million in 2016. Ariad came under fire in October for price increases of Iclusig. A US Food and Drug Administration decision on its lung cancer treatment, brigatinib, which is being touted as a potential blockbuster, is expected by April.
Takeda plans to fund the deal by taking on $4 billion in new debt. The equity value of the deal, which is expected to add to Takeda's earnings in 2018, is $4.66 billion, according to Reuters calculations. Sarissa Capital Management LP, a hedge fund run by investor Carl Icahn's former healthcare lieutenant, had announced a stake in Ariad in 2013.