With $14 billion Medivation purchase, company will get top
prostate-cancer drug
By Jonathan D. Rockoff
Pfizer Inc. said Monday that it had agreed to buy biotech
Medivation Inc. for about $14 billion, in a move that adds one of
the crown jewels of the multibillion-dollar market for cancer drugs
to Pfizer's portfolio.
The agreement ends months of bidding for San Francisco's
Medivation, one of the most desired independent biotechs because it
sells a leading prostate-cancer drug.
Pfizer will pay $81.50 a share, a 21% premium to Medivation's
closing stock price Friday. Medivation shares moved up nearly 20%
to $80.41 in trading on Monday in New York, as Pfizer shares fell 5
cents to $34.86.
Medivation's drug, Xtandi, already generates about $2 billion in
yearly sales and has the potential to more than double, according
to analysts.
Pfizer said the deal would add 5 cents to earnings in the first
full year after closing and isn't expected to affect its 2016
financial guidance. Pfizer said it plans to finance the transaction
with its cash holdings.
If the acquisition isn't completed, Medivation could pay Pfizer
a $510 million termination fee, according to a regulatory
filing.
News of the impending deal was reported Sunday.
Pfizer has been seeking to expand its lineup of such oncology
treatments. Xtandi would give the New York drug company a beachhead
in prostate cancer complementing its breast-cancer treatment
Ibrance, which is on track to be a blockbuster.
Medivation's drugs in development also could complement Pfizer's
efforts to develop combinations of cancer agents with so-called
immunotherapies, which deploy the immune system in the fight
against cancer.
The acquisition would further Pfizer CEO Ian Read's efforts to
bolster what he refers to as the innovative side of the company's
business. The move "accelerates our strategy in line with our
priorities," he said on a call with analysts Monday.
The deal is expected to close in the third or fourth quarter of
2016 and is subject to customary closing conditions and U.S.
antitrust clearance.
Pfizer agreed to take over Allergan PLC late last year in a $150
billion deal, but the two companies parted ways in April after the
Obama administration targeted the proposed combination with new
rules.
Mr. Read has said Pfizer would decide by year's end whether to
split into two, with one company selling fast-growing brand-name
drugs such as Ibrance and another selling drugs that have lost
patent protection -- a move that often has been discussed in recent
years.
Financial Chief Frank D'Amelio said Monday that the Medivation
deal "will not impact the timing of any decision" to break up the
company.
Some analysts have said Pfizer needs to do more deals to add
patent-protected drugs if that side of the company was to develop
the critical mass of revenue it would need to function on its
own.
Cancer is one of the pharmaceutical industry's biggest markets,
with world-wide sales amounting to roughly $80 billion a year and
growing more than 10% annually, according to EvaluatePharma.
Despite charging high prices, often surpassing $100,000 a year
per patient, companies haven't faced the challenges securing
reimbursement that have limited sales of new drugs for other
diseases.
Medivation is one of the few independent biotechs left with a
cancer treatment that already is approved and selling well.
CEO David Hung says he decided to found the company in 2003
after watching a 28-year-old breast-cancer patient die during his
oncology fellowship.
Xtandi has held its own against a rival prostate-cancer
treatment from Johnson & Johnson called Zytiga.
Xtandi, which Astellas Pharma Inc. also offers, could be one of
the top-selling cancer drugs by 2020, according to
EvaluatePharma.
But J&J is developing a new prostate-cancer drug that could
pose a threat to Xtandi, according to analysts.
Medivation was put in play after French drug company Sanofi SA
made an unsolicited proposal of $52.50 a share in cash, which the
biotech rejected in April, saying the offer substantially
undervalued the company. Medivation shares were trading as low as
$26.41 in February.
Following Sanofi's proposal, a bidding war ensued. With Pfizer's
deal, Medivation is fetching more than double the $6 billion it was
valued at earlier this year.
On Monday, Sanofi said that while it saw benefits to a potential
deal with Medivation, "we are first and foremost a disciplined
acquirer and remain committed to acting in the best interests of
Sanofi shareholders."
Austen Hufford and Noemie Bisserbe contributed to this
article.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
August 23, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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