Sanofi Makes Hostile $9.3 Billion Bid for Bay Area’s Medivation
April 28, 2016
By Mark Terry, BioSpace.com Breaking News Staff
With echoes of the months-long wooing of Baxalta by Dublin-based Shire last year, Paris-based Sanofi went public today with its intentions of acquiring San Francisco-based Medivation (MDVN).
On March 25 and April 3, Olivier Brandicourt, chief executive officer of Sanofi, talked on the phone with David Hung, Medivation ’s chief executive officer, concerning a potential acquisition. Hung and the Medivation board told Brandicourt the company had “no interest in discussing a transaction.”
Sanofi then followed up on April 15 with a letter, outlining an official proposal. Medivation apparently did not respond.
In the proposal, Sanofi offered $52.50 per share, a 50 percent premium to Medivation’s average share price the two months prior to the offer. It was a nonbinding, all-cash offer.
On Mar. 31, inside sources indicated that Medivation had hired JPMorgan Chase & Co. (JPM) to fend off a potential acquisition. Sanofi’s $52.50 offer really doesn’t look all that attractive at the moment. The last several weeks of rumors have driven the company’s to a current share price of $52.05. Shares traded for $27.32 on Feb. 8.
Sanofi has been struggling somewhat as its hold on the diabetes market weakens. It had a major failure with its licensing deal with MannKind Corp. for an insulin inhaler, Afrezza, primarily the result of reimbursement issues. In the 2015 fourth quarter, U.S. sales of its diabetes drugs slowed by 25 percent, and worldwide was down by 13 percent.
As part of Brandicourt’s new strategy, Sanofi plans to push into the oncology market. “Last November, Sanofi outlined our midterm strategy, which includes rebuilding our position in oncology, one of the largest and fastest growing therapeutic areas in the biopharmaceutical sector,” said Brandicourt in a statement today. “With Medivation’s best-in-class offerings in prostate cancer, we believe a combination would benefit patients and, at the same time, generate value for shareholders of both companies.”
Medivation’s prostate cancer drug, Xtandi, with its marketing partner, Astellas Pharma (ALPMY), grew sales by 73 percent in the U.S. last year and 116 percent globally. In the last quarter of 2015, company sales increased 30 percent.
In addition, Medivation is developing pidilizumab to treat B-cell lymphoma and other blood cancers, and talazoparib for breast cancer.
One issue facing Medivation and Xtandi is its price. During this U.S. presidential election cycle, one of the many hot-button issues that has caught the public’s interest is drug pricing. Xtandi runs $129,000 for a course of treatment, which is about three times the price of the drug in Japan and Sweden. On the other hand, despite that 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.”
Sanofi is not the only company interested in Medivation, although so far the only one to go public with an offer. Other companies rumored to be potential buyers include AstraZeneca , AbbVie , Roche and Novartis .
Bidnessetc notes that earlier this month the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) recommended that additional clinical data on Xtandi be included in the European label, which showed the drug worked better than rival drugs.
In addition, Sanofi has a history of successfully merging companies, the deal would be all-cash with no restrictions, and is showing growth in the urology market. “This tie-up does not only offer advantages for Sanofi; there is a lot riding in favor of Medivation as well. Among all possible suitors for Medivation, the French drug-maker offers the best fit for the prostate cancer drug, Xtandi. Sanofi, soon expected to become the dominant force in the urology treatment market, has several top-selling urology drugs in its portfolio.”
Only time will tell, but perhaps the Shire-Baxalta deal is a clue. After months of back-and-forth negotiations, public pronouncements designed to pressure shareholders into swaying Baxalta’s board, Baxalta accepted Shire’s offer.