By acquiring Medivation, Pfizer gets Xtandi, a cancer drug that is already approved for sale in the United States and elsewhere, and that analysts project will generate US$1.33 billion in annual sales by 2020.
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Medivation’s (MDVN) stock rating was lowered by several firms on Tuesday morning after the drug maker agreed to be acquired by Pfizer (PFE) for $14 billion yesterday. The drug is an antiandrogen hormone therapy, also known as enzalutamide, according to Xtandi’s website.
It doesn’t appear that Xtandi’s sales growth is about to slow down anytime soon, either.
By purchasing Medication, Pfizer Inc will be able to obtain Xtandi, which is a popular treatment for prostate cancer.
Pfizer has also aggressively targeted AstraZeneca plc (ADR) (NYSE: AZN) and was ready to pay around $100 billion for the UK-based company. Urologists write almost half a million Casodex prescriptions every year, so Xtandi wouldn’t need to win a tremendous amount of script volume away from Casodex to meaningfully boost its sales next year. Talazoparib is now in a Phase 3 study for the treatment of BRCA-mutated breast cancer and has the potential to be a highly potent PARP inhibitor and could be efficacious across several additional tumors. 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. These are certainly large scale deals but Pfizer’s 2015 $15.2 billion acquisition of Hospira is important in terms of what the acquisition adds to Pfizer’s business – even if the price tag is a fraction of prior deals. Additional studies in glioblastoma multiforme and non-small cell lung cancer were expected to kick off next year. The transaction was disclosed in a filing with the SEC, which is available at this link.
Pfizer will also add pidilizumab to its pipeline with this acquisition. With that said, based on total dollar amount spent, 2016 is proving to be a light year for Pfizer on the M&A front. Shares of Medivation climbed in early U.S. trading.
“Our CS Special Situations Desk expects the deal to close with high probability, and we see little likelihood of a competitive bid following the lengthy auction process”.
Since Pfizer is tucking one of the world’s best-selling oncology drugs into its cancer drug lineup, it gets two potential future cancer drugs, and the deal is immediately accretive, there’s little to dislike about this deal. On the one hand, there were no $100-billion deals but on the other Pfizer’s strategy of fueling growth through acquisitions continued throughout the year. The company provides the technology powering contextual ads offered by Yahoo!
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