Biotech sector exchange traded funds rallied Monday after Pfizer (NYSE: PFE) said it would acquire Array Biopharma Inc. (NasdaqGS: ARRY) in a $10.6 billion deal to bolster its portfolio of cancer fighting drugs in face of rising competition in the generics drug space.
Among the best performing non-leveraged ETFs of Monday, the ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) surged 7.6% and the SPDR S&P Biotech ETF (NYSEArca: XBI) jumped 4.7%, breaking above both their 50- and 200-day simple moving average.
Meanwhile, the more widely observed iShares Nasdaq Biotechnology ETF (NASDAQGM: IBB) increased 2.8% on Monday.
The largest U.S. drugmaker is paying a 62% premium on Array Biopharm to access the small biotech’s approved treatments for skin cancer, along with its other experimental drugs, CNBC reports.
Array Biopharma shares advanced 56.6% on the acquisition announcement. ARRY is SBIO’s largest component holding, accounting for 6.3% of the ETF’s portfolio.
Under the new Chief Executive Officer Albert Bourla, Pfizer has been looking into ways to diversify its drug pipeline as its blockbuster pain drug Lyrica loses patent protection and faces increased competition among other generics providers.
”(The acquisition) sets the stage to create a potentially industry-leading franchise for colorectal cancer alongside Pfizer’s existing expertise in breast and prostate cancers,” Bourla said.
The acquisition is also seen as a way for Pfizer to achieve its “15 in 5” goal of launching 15 experimental treatments, each with at least $1 billion annual sales potential, over a five-year period, which has pushed the drugmaker to invest heavily in cancer drugs and gene therapies.
Further strengthening the biotech segment, ArQule (NasdaqGS: ARQL) rallied on Monday after announcing promising interim data for an ongoing, early-stage clinical trial for ARQ 092 in treating rare overgrowth diseases, the Motley Fool reports.
ArQule shares surged 16.3% on Monday. ARQL makes up 1.2% of SBIO’s underlying portfolio.
The new revelation on ARQ 092 comes just one trading day after management unveiled promising data for its ARQ 531 concoction in treating cancers affecting white blood cells, which helped shares increase over 44% on that update.
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