Ariad Pharmaceuticals (ARIA) Spikes on Eli Lilly (LLY) Buyout Rumors

Joel Anderson |

Rumors that major pharmaceutical companies may be circling Ariad Pharmaceuticals (ARIA) regarding a potential buyout helped drive shares of the volatile stock higher on Thursday. Ariad was up over 11 percent Thursday on extremely heavy volume, continuing Ariad’s bigs swings that have come to characterize the stock in recent months.

Ariad Buyout Rumors Spark Run

The inciting incident for today’s gain appears to be an article that appeared in the Daily Mail that speculated that several major buyers could be interesting in buying Ariad. The article states that Eli Lilly (LLY) , GlaxoSmithKline (GSK) , and Shire (SHPG) are all interested in purchasing the company following the approval of Iclusig (a pill form of Ponatinib treatment) for treatment of leukemia patients.

The frontrunner is reportedly Eli Lilly, who may be willing to pay as much as $20 a share. That would take the price close to the share value in October prior to a massive plunge following serious regulatory concerns.

Could Ariad’s Wild Ride Finally be Coming to a Close?

Ariad Pharmaceuticals has been on a long, wild ride that has taken shares from a 52-week high of $23 a share, to $22.50 a share in October before the FDA put a hold on Iclusig because of worries about blood clots. That sent shares plummeting to the 52-week low of just $2.15 a share. Shares continued to exhibit big volatility on heavy volume over the next month, with double-digit swings in a single day not at all out of the norm.

However, things started to stabilize for Ariad after the FDA approved Iclusig again with new prescribing guidelines. Now, Ariad’s been making steady gains since mid-December and appears to have left the worst behind it.

What the future holds for Ariad is still far from clear, and the fact that the stock is trading at under $7.50 a share should prove that a certain healthy skepticism of the $20 a share price quoted in the buyout rumors.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ALRHF Allreal Holding Ag 133.80 0.00 0.00 0
ARIA ARIAD Pharmaceuticals Inc. 7.97 -0.11 -1.36 7,305,398
GSK GlaxoSmithKline Plc ADR (Sponsored) 42.71 0.70 1.67 2,623,155
LLY Lilly (Eli) & Co. 74.99 0.91 1.23 3,712,042
SHPG Shire Plc (Jersey) ADR (Sponsored) 187.82 1.66 0.89 3,938,779

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