Sanofi Chief Executive Officer Olivier Brandicourt said, in a letter to David Hung Chief Executive Officer of Medivation, “During our first call on March 25, you said that you were unwilling to meet, and in our subsequent conversation on April 3 you said that, after a review with your Board, there was no interest in discussing a transaction”. The Xtandi treatment that is marketed by Medivation posted global sales of $1.9 billion a year ago, but could generate much more if the medicine is eventually approved to treat earlier stages of prostate cancer.
Advertisement
Medivation, which has limited takeover defences, said it would respond to Sanofi’s offer following a board meeting on Thursday, with input from financial advisers Evercore and J.P. Morgan.
Sanofi’s offer represents a premium of more than 50% of Medivation’s two-month volume weighted average price (VWAP) prior to there being takeover rumors.
The French company, whose shares slipped 1 percent, said there was no certainty the deal would get done, but that if it did, it would boost earnings immediately.
The Paris-based drugmaker said its nonbinding, all-cash offer wouldn’t be contingent on any financing conditions.
The U.S. biotech company’s prostate cancer drug makes it attractive for acquisition, given that prostate cancer is the second-most common cancer among men and one of every seven men is expected to be diagnosed with the disease during their lives.
“As we aim to further develop our capabilities in this important area, we believe that Medivation represents a very strong fit and, together with our own clinical pipeline and existing infrastructure, will play an important role in our long-term strategy in oncology”, Brandicourt wrote in the letter. “In these circumstances we believe it is appropriate to make this letter public, which we are doing today”, Brandicourt wrote.
Sanofi ($SNY) has today confirmed rumors that it is indeed seeking to buy the cancer specialist Medivation ($MDVN)-but the Californian biotech has ignored its French suitor’s advances. This would represent a fairly substantial premium to Medivation’s pre-merger-speculation price of $37 and comes as the firm has current market capitalization of $6.1 billion.
Medivation also has a number of other potential cancer treatments in advanced stages of research and development. Presidential hopeful Bernie Sanders wants to nullify the drug’s patent in order to allow cheaper generics to flood the market.
Advertisement
The premium to the unaffected price offered by Sanofi is below some other recent large biotech deals, with Roche paying a 63 percent premium for Intermune in 2014 and Alexion 140 percent for Synageva previous year. Medivation is also developing the drug for liver and breast cancer and analysts have predicted that it could eventually become $3bn-$6bn product.
