Pfizer will get access to Medivation’s prostate cancer drug Xtandi, which the companies said treated 64,000 men to date in the US alone and generated about $2.2 billion in worldwide net sales over the past four quarters.
Advertisement
The appeal of Medivation lies in its cancer drugs, such as its prostate cancer treatment Xtandi and Talazoparib, which is in late-stage clinical development.
Pfizer Chairman Ian Read said on call with investors Monday morning that it expects to take advantage of the Medivation portfolio by creating combination therapies.
News of the acquisition pushed Medivation’s stock price up almost 20 percent on Monday morning, with shares trading around $80 a share, close to the pfizer offer price. Shares of Medivation closed at $67.16 on Friday, and climbed to $80.58 in early US trading Monday.
Pfizer is optimistic that the deal will add $0.05 cents per share to its earnings in the first full year itself after closing.
The deal values Medivation at more than double the $6 billion it was valued at earlier in the year. Top-line results from a phase 2 study of estrogen receptor- and progesterone receptor-positive breast cancer patients are expected later this year, and a phase 3 study of Xtandi in diagnostic-positive-triple-negative breast cancer is on deck to begin enrollment in Q4. Pfizer is paying $81.50 per share of Medivation-or about $20 more than Sanofi’s offer per share.
The Medivation deal illustrates a shift in Pfizer’s M&A strategy from lowering taxes – the rationale behind the failed Allergan tax inversion deal – to strengthening its lineup of branded drugs, especially lucrative cancer treatments.
Xtandi alone has generated $2.2bn in sales since its creation, though Medivation also sports two development-stage oncology assets, talazoparib and pidilizumab.
Pfizer Inc. announced Monday that it will buy Medivation Inc., a biopharmaceutical company that develops disease treatments.
Medivation was put in play after French drug company Sanofi SA made an unsolicited proposal of $52.50 a share in cash, which the biotech rejected in April, saying the offer substantially undervalued the company. In 2011, Pfizer sold off the rights to a PARP inhibitor drug to Clovis Oncology.
Pfizer said the deal was approved by boards of both companies and should be completed in the third or fourth quarter.
Today, Pfizer (PFE – Analyst Report) has announced that it will be acquiring Medivation Inc.
Advertisement
John Boris, an analyst with SunTrust Robinson Humphrey, wrote in a research note Monday that the Pfizer-Medivation deal makes “strategic and financial sense”. Xtandi is jointly marketed by Medivation and Astellas.
