What happened

Shares of biotech company ArQule (NASDAQ:ARQL) rocketed 108% higher last month, according to data from S&P Global Market Intelligence

December's jump brought ArQule stock's 2019 gain up to a whopping 621%. For context, the S&P 500 returned 31.5% last year.

Large fish with an open mouth and a dollar sign on it swimming after three small fishes, each with a dollar sign on it.

Image source: Getty Images.

So what

We can attribute ArQule stock's powerful performance last month to Merck's (NYSE:MRK) Dec. 9 announcement that it plans to acquire ArQule. Shares surged to a closing gain of 104% that day. 

The all-cash, $2.7 billion deal values ArQule at $20 per share, representing a fat 107% premium over the stock's closing price of $9.66 on the previous trading day, Friday, Dec. 6. 

What does Merck want with ArQule? The main prize is its drug candidate ARQ 531, which is in a phase 2 clinical study as a treatment for B-cell malignancies. (B-cell malignancies include non-Hodgkin lymphomas and chronic lymphocytic leukemia.) 

In the press release, Merck Research Laboratories president Roger Perlmutter said, "This acquisition strengthens Merck's pipeline with the addition of these strategic assets including, most notably, ARQ 531, a compelling candidate for the treatment of B-cell malignancies."

Now what

The deal is expected to close in the first quarter of 2020. 

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