Pfizer Inc said on Monday it would buy USA cancer drug company Medivation Inc in a deal valued at about $14 billion to boost its oncology portfolio.
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Biotech Medivation received a $9.3 billion, $52.50-a-share bid from Sanofi in April, but rejected that offer.
The Pfizer-Medivation deal also is much smaller than Pfizer’s proposed, $160-billion combination with Ireland’s Allergan, a plan the drugmakers scrapped after the Treasury Department issued new rules this spring aimed specially at blocking that deal.
However, Medivation agreed in July to share confidential information with potential buyers after Sanofi agreed to drop a campaign to oust Medivation’s board of directors.
Pfizer paid a 120% premium to Medivation’s stock price before reports of takeover interest, which is boosting shares of other biopharmaceutical companies such as Tesaro, according to Bloomberg.
Pfizer will pay US$81.50 a share in cash, the companies said in a statement yesterday.
Pfizer expects the acquisition will build upon its success with the breast cancer drug Ibrance and transform it into “a leading oncology company”.
Aside from Xtandi, Pfizer Inc. said Medivation also has a promising pipeline of cancer drugs in late-stage clinical development. That deal was seen by Wall Street as a way of bolstering its generic drugs ahead of potentially divesting the business. Xtandi generates $2 billion in annual sales for Medivation, based in San Francisco.
Last year, Medivation brought in $943 million in revenue, mainly through Xtandi, which it sells in partnership with the Japanese drugmaker Astellas Pharma.
“Given the already very high price being discussed, the hard public relationship between Medivation and Sanofi. we see a higher bid as very unlikely, but not impossible”, RBC Capital Partners wrote in a client note ahead of the announcement.
Sanofi said while it recognized the potential strategic benefits of a combination with Medivation, it was a “disciplined acquirer and remained committed to acting in the best interests of Sanofi shareholders”.
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Shares of other companies that are developing cancer drugs, like Incyte, Clovis, and Tesaro, rose on Monday on hopes they might also attract suitors.
