San Francisco's Medivation Hires J.P. Morgan to Head Off Acquisition Attempts
March 31, 2016
By Mark Terry, BioSpace.com Breaking News Staff
San Francisco-based Medivation has hired JPMorgan Chase & Co. (JPM), according to unidentified sources, to fend off potential acquisitions. Otherwise, the company has no plans to be sold.
Focused on oncology, Medivation has a market cap of $6.1 billion. Something a little peculiar has been going on with the company. In the last quarter of 2015, the company’s sales increased 30 percent. Its prostate drug, Xtandi, has done very 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.
Medivation traded on May 27, 2015 for $65.60, dropped to $39.15 on Sept. 29, and bumped up to $48.34 on Dec. 31. Shares are currently trading for $37.39.
Probably some of what’s been going on with the stock is related to the current U.S. presidential campaign, where a number of candidates have come down hard on high-priced drugs. Earlier this week, 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 Xtandi.
In the U.S., a course of treatment for Xtandi costs $129,000. That is three times the price of the drug in Japan and Sweden, the congressmen said. They also suggested those departments use “march-in rights” to decrease the drug prices, despite its patent protections.
“We believe that the petition to grant ‘march-in’ rights for Xtandi does not meet the criteria laid out in the Bayh-Dole Act nor is it an appropriate way to address perceived pricing disparities in different health care systems,” Medivation told Business Insider in an email.
March-in rights allow the government, on its own or at the request of a third party, to ignore the patent exclusivity and grant additional licenses to other “reasonable applicants.”
Other companies specifically targeted by Sanders and other politicians including Turing Pharmaceuticals and Valeant Pharmaceuticals International . Both companies have been identified as acquiring relatively expensive older drugs and dramatically increasing their prices.
Despite the high price, a spokesman for Astellas wrote that 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.” He went on to point out that for patients who are uninsured or underinsured, or have an annual adjusted household income of $100,000 or less, the Astellas Access Program provides the drug for free. Last year more than 2,000 men with advanced prostate cancer received Xtandi for free.
At least one company, Paris-based Sanofi , has considered a bid for Medivation. Bloomberg indicates that bankers have been urging Medivation to Sanofi, “though it remains unclear whether Sanofi will pursue a deal.” Nor has it been confirmed if Sanofi has even approached Medivation over an acquisition.
Other companies that have expressed an interest in acquiring U.S. companies include Roche Holding AG (ROG) and AstraZeneca .
On Mar. 28, Medivation announced that Jennifer Jarrett will step in as the new chief financial officer on April 23, replacing Rick Bierly, who plans to retire on July 15.
In terms of the company’s wobbly stock price, Brian Feroldi wrote in The Motley Fool in February, “If the company is able to come anywhere close to hitting its expected five-year profit growth rate of 66 percent per year, then today’s share price will likely look like a bargain in retrospect.”