Yahoo Finance Deciphera's (DCPH) Shares Surge 74.3% in a Month: Here's Why
Deciphera Pharmaceuticals’ DCPH shares surged 74.3% in the past month after the cancer-focused, commercial-stage biopharmaceutical company announced entering into a definitive merger agreement with ONO Pharmaceutical Co. Ltd.
Through this acquisition, ONO Pharmaceutical is looking to leverage Deciphera’s specialized clinical development capabilities and well-established commercial and sales platforms in the United States and EU to build a strong presence in the oncology market. The transaction will also help ONO Pharmaceutical accelerate business development in the United States and EU, at the same time strengthening its kinase drug discovery research capabilities.
Per the terms of the transaction, ONO Pharmaceutical is set to acquire Deciphera for $25.60 per share in cash, which amounts to a total equity value of $2.4 billion. The purchase price per share represents a 74.7% premium over Deciphera’s closing share price of $14.65 on Apr 26.
The significant premium offered impressed the investors, resulting in the stock price soaring. Per Deciphera, the boards of directors of both companies have unanimously approved the transaction.
Year to date, shares of DCPH have rallied 58% against the industry’s 5.2% decline.
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The acquisition is set to add Deciphera’s only marketed drug, Qinlock (ripretinib), to ONO Pharmaceutical’s commercial portfolio. The drug is currently approved in the United States and over 40 other countries to treat adult patients with advanced gastrointestinal stromal tumors (GIST). Please note that Qinlock is the only approved drug in the post-Gleevec setting that offers a clinically meaningful overall survival benefit for GIST patients. Hence, high demand in the fourth-line GIST market boosts the drug's sales.
In the first quarter of 2024, Qinlock registered $42.6 million in sales, implying year-over-year growth of 28%. In 2023, Qinlock generated sales worth $159.1 million.
Furthermore, Deciphera is also working to expand the label of Qinlock for the larger commercial opportunity in second-line GIST. A potential label expansion for other indications will make the drug eligible to treat a broader patient population and further drive sales.
Additionally, the acquisition will add Deciphera’s diverse portfolio of multiple drug candidates to ONO Pharmaceutical’s pharmaceutical pipeline, including vimseltinib and DCC-3116.
Vimseltinib, a highly selective switch-control kinase inhibitor, is currently being evaluated in a late-stage study for treating tenosynovial giant cell tumors (TGCT). Potential approval, followed by the commercial launch of vimseltinib for the TGCT indication in the United States and EU markets, will generate incremental revenues for ONO Pharmaceutical.
DCC-3116, on the other hand, is a ULK inhibitor that is currently undergoing early to mid-stage development as a monotherapy or in combination with Qinlock in patients with GIST and Lumakras (sotorasib), an FDA-approved KRASG12C inhibitor, for treating patients with advanced or metastatic solid tumors.
The acquisition is expected to close in the third quarter of 2024, subject to the fulfillment of certain customary and regulatory closing conditions.
We note that the pharma sector is especially prone to aggressive M&A activity. This is largely because of the significant amount of time and money it takes to develop new therapeutics from scratch. Hence, this poses an opportunity for large pharmaceutical companies with hefty bank balances to regularly buy innovative small/mid-cap biotech companies to build out their pipelines.
Additionally, the sloppy sales of mature drugs, dwindling in-house pipelines, government scrutiny of drug prices and the emergence of big tech firms like Apple and Google in the healthcare industry whet the M&A appetite of large drugmakers.
Fast-growing and lucrative markets such as oncology, rare disease and cell and gene therapy are likely to remain focus areas for M&A activities. Also, collaborations and partnerships with smaller companies are in full swing. Of late, areas like obesity and inflammatory bowel disease are attracting buyout interest.
There has been a slew of M&A announcements already in 2024, some larger ones being Novo Nordisk’s offer to buy Catalent and Vertex’s buyout offer for Alpine Immune Sciences.
Deciphera Pharmaceuticals, Inc. Price and Consensus
Deciphera Pharmaceuticals, Inc. price-consensus-chart | Deciphera Pharmaceuticals, Inc. Quote
Zacks Rank and Stocks to Consider
Deciphera currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the drug/biotech industry are ALX Oncology Holdings ALXO, Annovis Bio ANVS and Entera Bio Ltd. ENTX. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 30 days, the Zacks Consensus Estimate for ALX Oncology’s 2024 loss per share has narrowed from $3.33 to $2.89. During the same period, the consensus estimate for 2025 loss per share has narrowed from $2.85 to $2.73. Year to date, shares of ALXO have gained 0.7%.
ALX Oncology beat estimates in two of the trailing four quarters, missing the mark on the other two occasions, delivering an average negative surprise of 8.83%.
In the past 30 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has narrowed from $3.35 to $2.46. During the same period, the consensus estimate for 2025 loss per share has narrowed from $2.82 to $1.95. Year to date, shares of ANVS have plunged 59.1%.
ANVS beat estimates in three of the trailing four quarters and missed once, delivering an average negative surprise of 1.39%.
In the past 30 days, Zacks Consensus Estimate for Entera Bio’s 2024 loss per share has remained constant at 25 cents. During the same period, the consensus estimate for 2025 loss per share has remained constant at 54 cents. Year to date, shares of ENTX have surged 296.7%.
ENTX’s earnings beat estimates in three of the trailing four quarters and missed the same once, the average surprise being 6.50%.
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Deciphera Pharmaceuticals, Inc. (DCPH) : Free Stock Analysis Report
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