Pharmaceutical giant Pfizer’s $14 billion purchase of Medivation – a firm which produces one drug, Xtandi, used to treat prostate cancer – sent ripples through the oncology community, and is likely to create a buying frenzy to prevent Pfizer from cornering the market in commercial-stage breast and prostate cancer treatments.
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The potential for Xtandi in the growing market for cancer medicines – it’s also being tested for breast cancer treatment – made Medivation a target of larger pharmaceutical companies.
The offer is a 55-per cent premium to Sanofi SA’s initial bid to buy Medivation for US$52.50 per share in April, which pushed the San Francisco-based company to put itself up for sale.
Ben Gomes-Casseres, a professor at Brandeis International Business School who studies the strategy of business combinations said that the deal was in sharp contrast to the proposed Pfizer merger with Allergan. Pfizer has been seeking to expand its lineup of oncology treatments.
The university was not involved in the deal between Medivation and Pfizer, said UCLA Health spokesperson Phil Hampton. The company will pay $81.50 for each outstanding stock of Medivation.
Medivation stock closed up $13.26, or 20 percent, to $80.42 on Monday. Medivation’s prostate cancer drug enzalutamide (Xtandi) already generates almost $2 billion in annual sales and has the potential to more than double that, analysts report.
Medivation founder and chief executive David Hugh called Pfizer “the ideal partner to extend the reach of our blockbuster Xtandi franchise and take our promising, late-stage assets – talazoparib and pidiluzimab – to their next stages of development”.
Ropes also represented Pfizer a year ago on its $17bn (£13bn) buy of injectable drug giant Hospira, as well as Pfizer’s $130m (£99m) purchase of meningitis vaccines from GlaxoSmithKline and the acquisition of an $87m (£66m) minority interest in Dutch biopharma firm AM-Pharma. One reason is that discoveries in genetics and immunology are allowing for the development of new types of cancer drugs. Asked about further M&A post-Medivation, Read said, “I think we have moved into a more balanced view now”, said Pfizer CEO Ian Read when asked about further M&A, post-Medivation.
Reuters reported earlier this week that Pfizer, Sanofi, Merck & Co Inc., Celgene Corp and Gilead Sciences Inc. had submitted expressions of interest to acquire Medivation.
Pfizer said the deal was approved by boards of both companies and should be completed in the third or fourth quarter.
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J.P. Morgan Securities and Evercore were Medivation’s financial advisers, while Cooley LLP and Wachtell, Lipton, Rosen & Katz served as its legal advisers.
