Shares of Medivation Inc. soared almost 20 percent, or $13.25, to $80.41 before the opening bell Monday, while Pfizer stock slipped 18 cents to $34.80. Post the announcement, the shares of Medivation – which closed at $67.16 on Aug. 19 – rocketed to $80.58 in early trading on Monday, Aug. 22, a jump of almost 20 percent.
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The Boards of Directors of both companies have unanimously approved the merger, and Pfizer expects to complete the acquisition in the third- or fourth-quarter 2016.
Read added that the deal will accelerate the growth of Pfizer’s innovative cancer drug business, “one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term”.
Reuters had reported that Pfizer, Sanofi, Merck & Co Inc, Celgene Corp and Gilead Sciences Inc had submitted expressions of interest to acquire Medivation.
The main gem of Medivation is its prostate cancer drug, Xtandi, which is going smoothly on its track of success and has already clinched $2 billion.
Aside from Xtandi, Pfizer Inc. said Medivation also has a promising pipeline of cancer drugs in late-stage clinical development.
The deal with Pfizer contains a “no shop” provision, under which Medivation would pay Pfizer a $510 million termination fee for Medivation if it ends the deal and accepted another offer.
Soon after it rejected Sanofi’s unsolicited offer, Medivation began talks with Pfizer and Amgen Inc.in May for a possible acquisition.
Medivation is best known for developing drugs to tackle cancer – most notably the prostate cancer drug Xtandi – and will allow Pfizer to expand its oncology portfolio.
Pfizer expects to finance the transaction with existing cash.
Xtandi is now being evaluated in several studies including a couple of late-stage studies in non-metastatic prostate cancer and another phase III study in hormone-sensitive prostate cancer.
Medivation’s portfolio includes Xtandi which is a leading novel hormone therapy in the US. The drug has also generated criticism for its high price. This drug alone makes the company an attractive acquisition target, since prostate cancer is the second-most common cancer among men and one in every seven men is expected to be diagnosed with it during their lives.
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We ran down the list of potential buyers last week, and the closest analyst estimate for Medivation’s price was $80 at Barclays.
