Shares of Array BioPharma (NASDAQ:ARRY), Deciphera Pharmaceuticals (NASDAQ:DCPH), and Blueprint Medicines (NASDAQ:BPMC) rose as much as 14%, 19%, and 16%, respectively, in early morning trading on Monday. All three companies' stocks settled down in the early afternoon but were still up at least 9% as of 3:30 p.m. EST. The price moves appear to be related to the news that fellow cancer-focused biopharma Loxo Oncology (NASDAQ: LOXO) has agreed to be purchased by Eli Lilly and Company (NYSE:LLY).
Biotech stocks, in general, are having a great day. Shares of the SPDR S&P Biotech ETF (NYSEMKT:XBI) were up more than 5% in the early afternoon.
News broke on Monday morning that Loxo Oncology had accepted an $8 billion buyout offer by Eli Lilly. The acquisition price translates into a 68% premium to Loxo's closing price on Friday, Jan. 4.
Lilly said that it agreed to offer such a huge premium to acquire Loxo because it wants to broaden its portfolio of oncology products to be used in the growing field of precision medicine. Buying Loxo was a natural fit as the company recently won approval for its first cancer drug, Vitrakvi, a TRK inhibitor that targets tumors with specific genetic abnormalities.
Traders appear to believe that this sizable financial move by Lilly could convince other big pharma companies to go on a shopping spree. If that happens, it could be great news for investors in Array BioPharma, Deciphera Pharmaceuticals, and Blueprint Medicines since all of these businesses are developing precision-medicine oncology products of their own.
Array BioPharma has already reached the market with two cancer drugs, Braftovi and Mektovi. Sales for these drugs recently came in at $14 million last quarter, which is pretty good when considering that they only became available for sale in July 2018.
Deciphera Pharmaceuticals is still in the clinical stage, but its lead drug candidate, DCC-2618, holds a lot of promise. Deciphera released upbeat data in 2018 from a phase 1 trial of the drug as a potential treatment for gastrointestinal stromal tumors (GIST) with a specific genetic mutation. The results were so good that the company decided to move straight into a phase 3 trial.
Blueprint Medicines is another clinical-stage company whose stock has been red-hot for years. Blueprint has a number of products in development as potential treatments for specific types of liver cancer. Management recently announced that it has set a goal of having two of its products on the market by the end of 2020, and at least four other products in regulators' hands by the same time. That time frame suggests that the next few years will be an incredibly exciting period for investors.
Healthcare investors should expect that the next couple of days will be a highly volatile stretch for scores of individual stocks. The reason is that the annual J.P. Morgan Healthcare Conference is just getting underway. It's common for companies to give presentations at the conference in which they share market-moving information such as clinical or financial updates.
Array BioPharma and Blueprint Medicines both gave their investor presentations earlier in the day. Deciphera Pharmaceuticals is scheduled to provide investors with a detailed update on Tuesday.
If you're an investor in any of these businesses, then it will be worth your while to comb through their presentations to get the latest information.