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Investors should bet on biotechs working on cancer treatments, according to Wall Street analysts.
- US drug giant Pfizer just announced that it is acquiring biotech Array BioPharma for $11.4 billion.
- This latest deal points to a trend of big companies snapping up cancer-focused biotechs, with Merck buying the cancer biotech Tilos Therapeutics for up to $773 million last week.
- Investors should consider three biotechs that could get a boost from the trend, according to analysts at Stifel and Cantor Fitzgerald: Exelixis, Blueprint Medicines, and Mirati Therapeutics.
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Giant pharmaceutical company Pfizer just announced that it is buying the biotech Array BioPharma for $11.4 billion, a major deal that's only the latest example of big drugmakers snapping up cancer-focused biotechs.
It's a trend that's well worth investors' attention, analysts at Cantor Fitzgerald and Stifel say.
They point out three biotechs that could get a boost, either because of growth opportunities down the road for the biotechs or because they are potential deal targets.
Pfizer's latest move is part of a wider trend among big drugmakers aimed at expanding their portfolios of cancer treatments, which have proven to be lucrative investments across the industry.
Drugmaker GlaxoSmithKline bought up cancer drugmaker Tesaro for $5 billion late last year, for instance, and Eli Lilly announced the acquisition of biotech Loxo Oncology early this year.
Array already sells a combination of two cancer drugs, Braftovi and Mektovi, for the skin cancer melanoma. The biotech is also testing the combination out in more than 30 research trials, including to treat colorectal cancer.
Pfizer offered $48 per share for Array, representing a 62% premium to the stock's closing price as of June 14, pointed out analysts Varun Kumar and Alethia Young at Cantor Fitzgerald.
And the development should boost other companies developing similar, "targeted" cancer drugs that home in on things like a specific gene mutation in order to better treat cancer, they said.
Across these deals, a common theme is that companies have been eyeing drugs with strong research data that are in late stages of development, "and/or relatively well-defined commercial opportunities in a niche market," they said.
Here are three other cancer biotech companies that could also get a boost, according to Wall Street analysts.
Get the latest Pfizer stock price here.