Major benchmarks drifted lower Monday as uncertainty over a trade deal continued to weigh on the market. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) closed near session lows.

Today's stock market

Index Percentage Change Point Change
Dow (0.38%) (105.46)
S&P 500 (0.32%) (9.95)

Data source: Yahoo! Finance.

As for individual stocks, two pharmaceutical giants announced plans to snap up smaller companies working on cancer drugs, stepping up competition in the hottest area of drug development. Merck (NYSE:MRK) has made a deal to buy ArQule (NASDAQ:ARQL), and Sanofi (NASDAQ:SNY) plans to pay a big premium for Synthorx (NASDAQ:THOR).

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Image source: Getty Images.

Merck plans to buy ArQule

Merck moved to strengthen its leading position in oncology by agreeing to buy ArQule for $20 a share in an all-cash deal worth $2.7 billion. Shares of ArQule soared 103.9% to $19.71 on the news while those of Merck slipped 0.2%.

ArQule, a clinical-stage company that focuses on small-molecule drugs for use in precision medicine to target biomarker-defined patient populations, also presented positive clinical trial results for its lead drug candidate, ARQ 531, at the annual meeting of the American Society of Hematology today. The drug targets B-cell malignancies in blood cancers such as types of leukemias, lymphomas, and myelomas. Eight out of nine patients with chronic lymphocytic leukemia (CLL) in the phase 1 study responded to the drug after having failed other lines of treatment, and positive results were noted across other malignancies as well.

ArQule believes ARQ 531 has blockbuster potential in CLL and has the potential to treat other cancers as well. The company also has three other drugs in its development pipeline that could also help Merck diversify its pipeline.

Sanofi pays up for Synthorx

Sanofi is also working to bolster its oncology pipeline by agreeing to pay a monster 172% premium for Synthorx. The French pharmaceutical giant will be shelling out $68 per share, or a total of $2.5 billion, for the San Diego-based biotechnology company, whose shares skyrocketed 170.5% to $67.71. Sanofi stock fell 1.6% on the news.

The price for Synthorx may be similar to what Merck is paying for ArQule, but Sanofi will be getting a company that's not as far along in developing its lead asset. THOR-707, which is just enrolling its first clinical trial in patients with solid tumors, is a variant of interleuken-2 (IL-2) designed to stimulate the body's immune system to fight cancer with higher effectiveness and less frequent dosing than older IL-2 treatments.

Synthorx will also give Sanofi a drug development technology called the Expanded Genetic Alphabet platform, which allows the company to engineer therapeutic proteins using novel amino acids. The deal may come with a hefty price tag, but Sanofi is clearly thinking long-term with this move.