Why Ariad Pharmaceuticals Inc (NASDAQ:ARIA) Shares Surged More than 70%

Stock market

Ariad Pharmaceuticals Inc (NASDAQ:ARIA) shares advanced 72.85% to $23.75 on Monday then dipped 0.04% to $23.74 in after-hours trading. The company has a market cap of $4.73 billion at 194.20 million shares outstanding. Share prices have been trading in a 52-week range of $4.37 to $23.81.

Recent reports are confirming the planned takeover of Takeda Pharmaceuticals on Ariad Pharmaceuticals Inc for a $4.7 billion deal or around $24 per share, representing a premium of nearly 75% from the stock’s closing price last week. Board members of both companies have given the go signal for the deal, which is expected to be completed in February pending regulatory approval.

Keep in mind, however, that Ariad Pharmaceuticals Inc has previously been in hot water for allegedly ramping up the price of leukemia treatment Iclusig. Members of Congress criticized the company for raising the cost of the drug four times in 2016 to an almost $200,000 yearly cost, an increase of more than $80,000 over the last several years.

“We are very pleased to combine with Takeda, which will allow us to not only accelerate our mission to discover, develop and deliver precision therapies to patients with rare cancers, but also deliver immediate and meaningful value to our shareholders through a substantial cash premium. This exciting transaction is a testament to the hard work and dedication of Ariad’s talented team of employees. We have tremendous respect for Takeda, and I believe our shared commitment to innovation and research-driven cultures will provide for a smooth transition,” stated Ariad Pharmaceuticals Inc CEO and President Paris Panayiotopoulos.

“The acquisition of Ariad is a unique opportunity that will enable us to positively impact the lives of more patients worldwide, advance our strategic priorities and generate attractive returns for our shareholders,” said Christophe Weber, President and CEO of Takeda Pharmaceuticals. “This is a very exciting time for Takeda as we will broaden our hematology portfolio and transform our global solid tumor franchise through the addition of two innovative targeted therapies. Opportunities to acquire such high-quality, complementary targeted therapies do not come often, and we are very excited about the potential for this transaction to benefit patients, our shareholders and other stakeholders.”

This takeover will bring two innovative targeted therapies that will expand and enhance Takeda’s existing oncology portfolio. These are Brigatinib and Iclusig, which will position Takeda for long-term growth potential in the oncology sector.

Ariad Pharmaceuticals Inc is an oncology company focused on transforming the lives of cancer patients with medicines. The Company’s product pipeline includes Iclusig (ponatinib), brigatinib, AP32788 and ridaforolimus. Iclusig is a tyrosine kinase inhibitor that is approved in the United States, the European Union, Australia, Switzerland, Israel and Canada for the treatment of adult patients with chronic myeloid leukemia, and Philadelphia chromosome-positive acute lymphoblastic leukemia.

Brigatinib is an investigational inhibitor of anaplastic lymphoma kinase. AP32788 is a TKI, which is designed as a targeted therapy for patients with non-small cell lung cancer with specific mutations in two kinases, epidermal growth factor receptor, or human epidermal growth factor receptor 2. Its Ridaforolimus is an investigational inhibitor of the mammalian target of rapamycin.