According to a report from S&P Capital IQ, the shares of Array BioPharma (NASDAQ:ARRY) went up by 51% in the month of January. The biopharmaceutical company is fixated on developing new and efficient drugs to fight cancer, and its shares rose when the company announced an acquisition from Novartis (NYSE:NVS) along with obtaining a price target increase from Stifel Nicolaus.
Array BioPharma (NASDAQ:ARRY) acquired Encorafenib, which is a BRAF-inhibitor devised to medicate a type of skin cancer that is deadly in nature called melanoma. This acquisition is what led to the increase in the growth of the pharmaceutical company that was seen last month. To the further delight of the company’s shareholders, the acquisition was done by Array BioPharma (NASDAQ:ARRY) for a minimum amount of payment without any milestones or royalty fees.
It can be said that Novartis (NYSE:NVS) gave Array (NASDAQ:ARRY) the experimental drug which was in the late stages of developments for free. Moreover, Novartis (NYSE:NVS) has also decided to cover any substantial amount that is left on its multiple phase three research. To make things even better, ARRAY (NASDAQ:ARRY) has been able to reacquire the global rights to Binimetinib in the month of December.
Due to this, Array (NASDAQ:ARRY) can now work on the drug melanoma with more strength with the help of Encorafenib, which is a BRAF-inhibitor as well as binimetinib which is a MEK inhibitor. Stifle Nicolaus after the announcement of the acquisition declared that it is increasing its price target for Array (NASDAQ:ARRY) by 50% to $9. Initially the price target was $6.
There is no doubt that the shareholders of Array BioPharma (NASDAQ:ARRY) are pleased with what they are gaining from Novartis (NYSE:NVS). The pharmaceutical company gained access to a drug which is already in its late stage of development for a minimum cost and the company can possibly merge the drug with other products which are being developed in order to gain positive results.
To make things even better Novartis (NYSE:NVS) is still covering a significant amount of the expenses related to its phase 3 trial. Although things seem to be going in the favour of Array BioPharma (NASDAQ:ARRY), however, one should keep in mind that it will take a few years for Encorafenib to get approved and hit the market. On the other hand, melanoma market is also getting too cramped and with the increasing load and only a selected few drugs get the FDA approval.
In the past two years, only a hand full of medicines got approved while a few others are still under the reviewing process. Therefore, it will be hard for Encorafenib to make its place in such a crowded territory. On the whole, it can be said that whatever positive results could emerge from the acquisition have already been witnessed by Array BioPharma (NASDAQ:ARRY).
Things will be a lot more static from now on unless the pharmaceutical company can come up with a newer study data that would help stir the market.