Eli Lilly and Co. is reportedly willing to pay as much as $3.7 billion to acquire a Cambridge, Mass.-based biotech company with a troubled leukemia drug, according to United Kingdom newspaper The Daily Mail.
The paper claims Indianapolis-based Lilly is leading a field of suitors for Ariad Pharmaceuticals Inc. that includes U.K.-based GlaxoSmithKline PLC and Ireland-based Shire PLC. All three firms made “friendly approaches” to Ariad, according to The Daily Mail, and are willing to pay up to $20 per share.
Ariad currently has 185.7 million shares outstanding, meaning such a purchase price would total $3.7 billion, more than double the company's current market value.
The reliability of the report is uncertain. The Daily Mail based its report on “whispers heard across the Pond” by “dealers.”
Lilly spokesman Mark Taylor declined to comment. “It is our policy at Lilly not to comment on market rumors or deal speculation,” Taylor wrote in an e-mail.
Nevertheless, Ariad’s stock has shot up on the news, which was first posted on The Daily Mail’s website last Wednesday evening. Shares rose 20 percent on Friday, to $8.99 each, the stock's biggest one-day gain since Dec. 18. That followed a 12-percent gain on Thursday.
Ariad launched a leukemia drug, called Iclusig, last year, then had to pull it from the market in October due to safety concerns. Ariad’s stock plunged and the company laid off 160 workers, according to the Boston Globe.
The leukemia drug was relaunched this month, but only for a limited number of patients with no other effective treatments.
Ariad executives say they plan to conduct more clinical trials to prove the drug’s safety and efficacy.
“There is significant value to be realized from Iclusig, AP26113, and the company’s highly efficient drug-discovery platform,” Jim Birchenough, an analyst at BMO Capital Markets, wrote in a research report, Bloomberg News reported. "AP26113 is a drug in development. Ariad assets are likely to attract large pharma interest.”