Japan's Takeda to buy US cancer drug maker Ariad for $5.20 bn

Japan's Takeda Pharmaceutical Co Ltd today struck a deal to buy US cancer drug maker Ariad Pharmaceuticals Inc for $5.20 billion, in order to expand its portfolio of oncology drugs.

Under the terms of the deal agreed by the board of both companies, Takeda will pay $24 for each Ariad share, a premium of about 75 per cent to its Friday closing price of $13.74.

Takeda expects to fund the deal through $4 billion in debt and the remainder from existing cash.

Takeda said that the deal will transform its global oncology portfolio and pipeline by expanding into solid tumors and reinforcing existing strength in hematology.

The deal will give it two innovative precision drugs - Including a leukemia drug, which is expected to generate sales of $170 million to $180 million last year, and Brigatinib – expected to be approved by US regulators in the first half of 2017, with peak sales potential of over $1 billion and the potential to be the best-in-class ALK inhibitor.

Based in Cambridge, Massachusetts, Ariad is focused on discovering, developing and commercialising precision therapies for patients with rare cancers.

Ariad is working on new medicines to advance the treatment of rare forms of chronic and acute leukemia, lung cancer and other rare cancers by designing small-molecule drugs that overcome resistance to existing cancer medicines.

Osaka-based Takeda has been looking to make big-ticket acquisitions in order to replenish some of its biggest products that are expected to lose patents.

The deal is expected to offset sales of Takeda's top-selling blood cancer drug Velcade, which is expected to face generic competition this year as well as other key drugs that will lose their patent from 2020.