SEC Docs Say Pfizer Beat Out 4 Companies to Buy Medivation

SEC Docs Say Pfizer Beat Out 4 Companies to Buy Medivation September 1, 2016
By Mark Terry, Breaking News Staff

When late last month Pfizer announced it was buying San Francisco’s Medivation for about $14 billion, the biggest element of surprise was that Pfizer beat out Paris-based Sanofi for the cancer company. The secondary response tended to be: That much?

Recent proxy filings by Medivation show that Pfizer wasn’t just competing with Sanofi, but three other companies. Sanofi’s last public offer for Medivation in July had an enterprise value of $10 billion. The final Pfizer deal, at $14 billion, was for $81.50 per share.

On August 8, Pfizer made a preliminary, non-binding bid at $65 per share. According to the proxy filings with the U.S. Securities and Exchange Commission (SEC), four other companies made bids. They are only identified as Companies 1, 2, 3 and 4. Company 3 and Company 4’s bids included contingent value rights (CVRs) as part of their offers. CVRs are essentially “deal sweeteners,” a little cash bonus if undeveloped assets hit milestones.

For example, Sanofi’s last rejected offer was $58 per share, but had a CVR of up to $3 per share.

Company 4 dropped out in the second round. In that round of bids, Pfizer offered $81.50 a share, Company 1 offered $80.25 a share, and Company 2 offered $80 a share.

Although the companies aren’t identified in the filing, several other companies believed to be interested include Celgene Corp. , Gilead Sciences , Merck & Co. and AstraZeneca .

The big interest in Medivation was for the company’s prostate cancer drug Xtandi. It was approved in 2012, and in 2015 U.S. sales exceeded $1 billion. The company’s pipeline isn’t very large, but it’s promising. It has pidiluzumab in mid-stage trials for blood cancer, and of greater interest, it has talazoparib. This drug is in a later-stage trial for advanced breast cancer patients who have BRCA mutations. It is also being studied in small cell lung cancer, prostate cancer and ovarian cancer.”

The acquisition of Medivation is expected to bolster Pfizer’s success with Ibrance (palbociclib) in HR+/HER2-metastatic breast cancer and the company’s generally strong immuno-oncology portfolio. Albert Bourla, group president, Pfizer Innovative Health, said in a statement in August, “Ibrance and Xtandi are anchor brands in breast and prostate cancer respectively, giving Pfizer leadership in two hormone-driven cancers. Similar to Ibrance in the breast cancer setting, Xtandi is being explored for its potential to move from metastatic prostate cancer to treat earlier stage of non-metastatic prostate cancer. In addition, Medivation’s portfolio within prostate cancer and across diverse tumors will complement Pfizer’s broad IO portfolio.”

In an interview Mad Money’s Jim Cramer gave to TheStreet, he said, “They came in well above what Sanofi was willing to pay. That just shows you that Pfizer wants some growth into a new area, oncology. I think it’s a very strong purchase, because if the drugs they have are as big as people think, Pfizer will look back and say Pfizer’s got its groove back. So this was very smart, even though it looks like a dramatic overpay.”

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