After Roche (RHHBY) announced a definitive agreement to acquire Ignyta (RXDX), a company focused on precisely targeted cancer therapeutics guided by diagnostic tests, in a transaction valued at $1.7B, Wall Street analysts are opining on what read-through this deal may have on other smaller companies exploring similar areas of oncology.

ROCHE AGREEMENT: Roche announced this morning a definitive agreement to fully acquire Ignyta at a price of $27 per share in an all-cash transaction valued at $1.7B on a fully diluted basis. This price represents a premium of 74% to Ignyta’s closing price on December 21 and a premium of 71% and 89% to Ignyta’s 30-day and 90-day volume weighted average share price, respectively, as of yesterday. Ignyta’s lead molecule entrectinib is being developed for tumors with one of two genetically defined gene rearrangements: ROS1 fusions in non-small cell lung cancer, or NSCLC, and NTRK fusions across a broad range of solid tumors. An ongoing pivotal phase 2 clinical trial will support, if successful, dual NDA submissions, the company has noted.

POSITIVE FOR LOXO: In a note to investors following the deal announcement, Stifel analyst Stephen Willey said he anticipates bears will say this agreement reflects the potential competitiveness of Ignyta’s entrectinib relative to Loxo Oncology’s (LOXO) larotrectinib in malignancies caused by NTRK fusions. However, he is “firmly” in the bull camp that Roche’s acquisition was primarily focused around the opportunity for entrectinib in treating ROS-1 fusions in NSCLC and that this deal reflects big pharma’s appetite for targeted agents and long-duration oncology assets. Similarly, Jefferies analyst Maury Raycroft said this deal could be seen as demonstrating big pharma still has an appetite for targeted oncology assets despite the recent focus in the industry on Immuno-Oncology.

OTHERS TO WATCH: Raycroft thinks Roche’s deal could have read-through to others with targeted cancer therapies, including Mirati Therapeutics (MRTX), Exelixis (EXEL), Sierra Oncology (SRRA) and Karyopharm (KPTI).