Please ensure Javascript is enabled for purposes of website accessibility

Why Arvinas Jumped 10% Today

By James Brumley - Jul 22, 2021 at 2:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The smaller biopharma outfit just inked an encouraging deal with an industry powerhouse.

What happened

Shares of Arvinas (ARVN 7.82%) rallied nearly 10% during Thursday's trading session, in response to the announcement of a new collaboration with drug giant Pfizer (PFE -1.18%). The two companies will co-develop and then co-market Arvinas' ARV-471, currently in trials as a treatment for certain forms of breast cancer.

In conjunction with the agreement, Pfizer is making an investment in Arvinas stock as well as advancing the smaller biopharma company a sizable sum of cash.

So what

Partnerships among pharmaceutical companies are nothing new, although this one is arguably more significant than others due to its relative scope. In addition to a $350 million equity investment in the $4 billion organization, Pfizer is also awarding Arvinas with an upfront payment of $650 million in exchange for shared rights to assist in the development and eventual marketing of ARV-471.

Rising bar chart, with a rising blue arrow marking the uptrend.

Image source: Getty Images.

The drug in question is currently in phase 2 trials as a therapy for estrogen receptor-positive and human epidermal growth factor receptor 2-negative breast cancers. If approved, the two companies will split the drug's costs and profits evenly.

Now what

Companies the size of Pfizer can afford to take chances on drugs in mid-stage trials that show promise. But Pfizer's upfront payment and purchase of Arvinas -- in addition to $1.4 billion worth of additional milestone awards -- suggests the evidence of efficacy thus far is better than average.

Better still, given that the poorly served $20 billion breast cancer market could be worth twice as much in just a matter of years, at the very least Pfizer's interest makes Arvinas a compelling prospect.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Arvinas, Inc. Stock Quote
Arvinas, Inc.
$55.43 (7.82%) $4.02
Pfizer Inc. Stock Quote
Pfizer Inc.
$49.27 (-1.18%) $0.59

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.