Image source: Celator Pharmaceuticals.

What: After reporting late-stage trial results that clear the way to an FDA approval and announcing that it has agreed to be acquired by Jazz Pharmaceuticals (JAZZ 0.61%), Celator Pharmaceuticals (NASDAQ: CPXX) saw its shares nearly double last month, according to S&P Global Market Intelligence. 

So what: Celator Pharmaceuticals surprised Main Street investors with phase 3 trial results for Vyxeos in acute myeloid leukemia (AML) in March. In its study, Vyxeos improved overall survival versus standard of care by 3.6 months, without decreasing safety.

The Vyxeos results are impressive because this addressable patient population is notoriously tough to treat and there have been few advances in AML therapy in decades. 

Since Vyxeos may replace standard of care in this indication, Jazz Pharmaceuticals agreed to pay $30.25 per share in cash, or about $1.5 billion, to acquire Celator Pharmaceticals on May 31.

Image source: Jazz Pharmaceuticals.

Now what: This acquisition is expected to close sometime in the third quarter, but there's still work to be done to get Vyxeos across the finish line and into doctors' hands. An application for FDA approval needs to be submitted and accepted, and then an FDA green light has to be secured. Assuming that happens without a hitch, Vyxeos could be on the market sometime next summer.

At that point, the success or failure of Vyxeos will rest in the hands of Jazz Pharmaceuticals' existing sales team. Fortunately, Jazz Pharmaceuticals already calls on doctors likely to embrace Vyxeos.

Jazz Pharmaceuticals currently markets Defitelio, a therapy used in patients who have undergone hematopoietic stem-cell transplantation, which is often done in patients with bone marrow cancers such as AML. Jazz Pharmaceuticals also markets Erwinaze, a therapy for acute lymphoblastic leukemia.

Overall, I believe Vyxeos could generate hundreds of millions of dollars per year in sales, but investors hoping to benefit from those sales will need to buy Jazz Pharmaceuticals, because Celator Pharmaceuticals already trades close to its acquisition price. Luckily, investing in Jazz Pharmaceuticals might make sense. Although Jazz Pharmaceuticals shares have rallied this year, they're still 20% below last year's peak, and they're trading at an attractive forward P/E of 12.