A Week After Medivation Rumored to Snub Sanofi Bid, AstraZeneca PLC in Talks to Make Its Own $10 Billion Offer
April 18, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Only a week after San Francisco-based Medivation reportedly rejected a bid by Paris-based Sanofi , there is buzz that UK-based AstraZeneca is considering a $10 billion bid for the company.
On Mar. 31, unidentified sources reported that Medivation had hired JPMorgan Chase & Co. (JPM) to fend off potential acquisition by Sanofi. As of April 12, with the company’s stock up, it had a market value of about $7.5 billion. Medivation’s sales increased by 30 percent in the last quarter of 2015, driven by its prostate drug, Xtandi, which it markets with Astellas Pharma . Xtandi sales grew by 73 percent in the U.S. and 116 percent globally last year. Despite that, company shares dropped 5 percent in 2015.
At least some of the company’s volatility is related to the current U.S. presidential campaign. In late March, 112 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 Xtandi treatments runs $129,000. It costs about a third of that in Japan and Sweden. However, an Astellas spokesperson wrote in response 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.”
Analysts and investors believe that Sanofi may come back with another offer. There is some skepticism about whether AstraZeneca is actually considering a bid. The company has tended to stay out of bidding wars.
The argument for it revolves around AstraZeneca’s interest in expanding its oncology pipeline. The company’s cholesterol medication, Crestor, is fading in the market. On Mar. 23, the company announced that in a clinical trial that assessed its cardiac drug, Brilinta (ticagrelor), versus aspirin therapy in patients with acute ischemic stroke or transient ischemic attack (TIA), it did not meet the endpoint.
AstraZeneca’s chief executive officer, Pascal Soriot, is also under pressure to double revenues by 2020, and to get its share price up to what Pfizer (PFE) had been offering in a failed takeover bid in 2014.
Company shareholders are also pushing back on a plan the AstraZeneca board put forth that uncoupled executive bonuses from earnings benchmarks. As The Telegraph wrote on Feb. 27, “AstraZeneca currently ties incentives for senior management to earnings at or above $4.20 (£3) per share, but it is understood that its remuneration committee has discussed with investors lowering this to $4 per share. The move is controversial because investors called for future management pay to be linked to the value of the takeover offer AstraZeneca rejected from its U.S. rival Pfizer in May 2014.”
It’s more than a little bit like moving the finishing line closer to the starting line, just to get a bonus.
Pfizer’s final bid was for £53.50 per share. AstraZeneca’s current price is $29.70 per share, or £20.93.
Reportedly AstraZeneca has been tracking Medivation for about six months and has held talks internally about making an offer. “They are looking very closely at an offer,” an unidentified senior healthcare bank told The Times.