The third multibillion-dollar buyout of cancer-treatment developers in the past month was a charm for the shares of targeted oncology companies, as Leerink analyst Andrew Berens said Eli Lilly & Co.’s deal to buy Loxo Oncology Inc. validated the “significant value and interest” in the sector.
Loxo’s stock LOXO, +66.49% rocketed 66% to a record high in midday trade Monday, after the company announced earlier it agreed to be acquired by Lilly LLY, +0.30% in a deal valued at $8 billion . The $235 per-share cash bid for Loxo was 68% above Friday’s closing price, and 24% above the previous record close of $189.96 on July 6.
Lilly shares tacked on 1.4%.
Berens said Lilly-Loxo deal is sparking a “resurgence” in mergers and acquisitions in the oncology space, with the Blueprint Medicines Corp. BPMC, +13.31% the next most likely target of the companies he covers.
Blueprint’s stock shot up 16%, putting it on track for the biggest one-day gain since December 2017.
Less than a week ago, Celgene Corp. CELG, +3.85% agreed to be bought by Bristol-Myers Squibb Co. BMY, +3.69% for $74 billion in cash and stock , in a deal that valued Celgene shares at a 54% premium. A month earlier, GlaxoSmithKline PLC GSK, +0.65% announced a deal to buy Tesaro Inc. TSRO, -0.39% for $5.1 billion in cash , valuing Tesaro shares at a 62% premium.
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“We expect shares of other companies within our targeted oncology universe to benefit,” Berens wrote in a note to clients. “Specifically, we see the most direct read-through to [Blueprint Medicines], as a company with multiple late-stage, near-commercial precision oncology assets, as well as a novel kinase inhibitor library and drug discovery engine capable of generating new pipeline candidates.”
Among shares of other companies Berens said were likely to benefit, Clovis Oncology Inc. CLVS, +19.57% jumped 20%, Epizyme Inc. EPZM, +3.40% surged 5.8% and Agios Pharmaceuticals Inc. AGIO, +9.38% rallied 8.4%.
Elsewhere, shares of Mirati Therapeutics Inc. MRTX, +5.69% gained 3.2%, ArQule Inc. ARQL, +5.96% advanced 4.7%, Principia Biopharma Inc. PRNB, +4.13% rose 1.7% and Sunesis Pharmaceuticals Inc. SNSS, +23.84% climbed 25%.
The iShares Nasdaq Biotechnology exchange-traded fund IBB, +3.27% rose 3.6% and the S&P 500 index SPX, +0.83% gained 1.1%.
Tomi Kilgore Tomi Kilgore is MarketWatch's deputy investing and corporate news editor and is based in New York. You can follow him on Twitter @TomiKilgore.