Bay Area’s Medivation Stock Pops 11% After Rumors It Rejected A Sanofi Acquisition Bid
April 13, 2016
By Mark Terry, BioSpace.com Breaking News Staff
San Francisco-based Medivation has reportedly rejected a bid by Paris-based Sanofi . As a result of the rumors, company popped in after-hours trading about 11 percent, with a current price of $45.73.
On Mar. 31, unidentified sources reported that the company had hired JPMorgan Chase & Co. (JPM) to fend off potential acquisition. Yesterday’s close gave the company a value of about $7.5 billion. In the last quarter of 2015, company sales increased 30 percent. Its prostate drug, Xtandi, has done quite well, with its marketing partner, Astellas Pharma growing sales by 73 percent in the U.S. and 116 percent globally. Despite that, shares dropped 5 percent in 2015.
Some of the company’s stock volatility is probably related to the current U.S. presidential campaign, where a number of candidates have criticized high-priced drugs. In late March, for example, 12 members of Congress, including presidential candidate Sen. Bernie Sanders (I-Vermont), requested that the National Institute of Health (NIH) and the U.S. Department of Health and Human Services (HHS) bring down drug prices, specifically noting Medivation’s Xtandi.
In the U.S., a course of treatment for Xtandi costs $129,000, which is about three times the price of the drug in Japan and Sweden. Despite the high price, a spokesman for Astellas wrote that in 2015, “81 percent of privately insured patients paid $25 or less out of pocket per month for Xtandi and 79 percent of Medicare patients paid nothing out of pocket per month for Xtandi.”
The current rumors indicate that Sanofi has not ruled out the possibility of a hostile bid for Medivation. Sanofi apparently is not the only company considering Medivation, and the Bay Area drug company reportedly wants a higher price than initial bids.
Some analysts have compared Medivation to Pharmacyclics Inc. , which was acquired by AbbVie in May 2015 for $21 billion. Pharmacyclics marketed a first-in-class BTK-inhibitor, Imbruvica (ibrutinib), used to treat hematological cancers.
In an April 4 research note, Hartaj Singh, an analyst at BTIG, said, “Both companies have an approved product that is best in class, torrid sales growth, future indication expansion potential.” Singh also added that Medivation’s operating expenses were very efficient.
Just last week Medivation and Astellas announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has provided a positive recommendation for approval of Xtandi based on data from a head-to-head TERRAIN trial of enzalutamide versus bicalutamide for the treatment of prostate cancer. The data basically showed that the drug worked better than a rival drug, which will allow the company to update its labels in Europe.
In addition to Xtandi, Medivation is developing another immuno-oncology drug, pidilizumab, for the treatment of B-cell lymphoma and other blood cancers. It is also developing talazoparib for breast cancer.
On Mar. 9, the U.S. Food and Drug Administration (FDA) lifted a partial clinical hold on the Investigational New Drug (IND) application for pidilizumab in a Phase II trial for relapsed or refractory diffuse large B-cell lymphoma, as well as other studies. The clinical hold was not related to safety concerns and at the time no patients had been enrolled in the trial. The brochures, protocols and informed consent documents originally utilized were revised to clarify Medivation’s understanding that the drug did not target Programmed Death-1 (PD-1).