Dr. Denner continued, “The transaction also underscores the tremendous value that shareholder activism can create for shareholders, patients and society. While ARIAD’s stock price was collapsing and many investors were abandoning the company, Sarissa Capital saw a company with important drugs and innovation and stepped in to become one of ARIAD’s largest shareholders. However, many things needed to be fixed before the value could be realized. With a new board and management team, ARIAD was able to focus on optimal capital allocation and operational excellence. As a result, the company created meaningful shareholder value and advance the options for those suffering from rare cancers.”

“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 chief executive officer of Takeda. “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.”

 

Eoin Treacy's view

Developing new drugs is prohibitively expensive. With no guarantee of success large pharmaceutical companies have in many respects outsourced the bulk of R&D to small biotech companies. The result is that these smaller companies spend a great deal of time and effort developing new drugs and become takeover candidates when they develop high probability solutions. Considering the fact that the cost of developing new drugs continues to increase the biotech ecosystem is likely to remain in this condition for the foreseeable future. 

I last commented on Ariad Pharmaceuticals in a review of immuno-oncology companies in September. Teaching the immune system to identify tumours as alien organisms represents a novel approach to treating this genus of disease. It also highlights the acceptance that every tumour is genetically different and that there is unlikely to be a one size fits all solution.  

Bluebird Bio has been subject to some quite acute volatility not least because of political opportunism during the US Presidential election campaign. The share firmed from the region of the trend mean last week and a sustained move below $60 would be required to question potential for additional higher to lateral ranging. 

Kite Pharma pulled back into a developing base formation in early October but has firmed from the lower boundary, and a sustained move below $40 would be required to question potential for a successful upward break. 

Clovis Oncology consolidated mostly above the trend mean until immediately after the election and has since resumed its recovery. 

Immunogen collapsed to a November low near $1.50 but rallied over the last week to break the progression of lower rally highs. A sustained move below $2 would be required to question potential for a reversionary rally. 

Illumina is not an immuno-oncology company but it does produce the machines required to sequence DNA in a rapid, cost effective manner. The share failed to sustain the move to new reaction lows in December and has now closed the overextension relative to the trend mean. A sustained move above $150 would confirm more than temporary support in the region of the lower side of the more than yearlong range.