Pfizer Scoops Sanofi With $14 Billion Buyout Deal for Medivation

Pfizer Scoops Sanofi With $14 Billion Buyout Deal for Medivation August 22, 2016
By Mark Terry, Breaking News Staff

Pfizer announced today that it will be acquiring San Francisco’s Medivation for about $14 billion.

The primary surprise is that it’s Pfizer acquiring Medivation, not Paris-based Sanofi . In late March and early April, Olivier Brandicourt, Sanofi’s chief executive officer, contacted Medivation’s founder, president and chief executive officer, David Hung, about an acquisition. Both Hung and the Medivation board told Brandicourt they weren’t interested.

Sanofi responded on April 15 with a written proposal, which Medivation ignored. On April 28, Sanofi went public with its offer in hopes of pressuring the board and shareholders into considering the deal. In that proposal, Sanofi offered $52.50 per share, about a 50 percent premium to Medivation’s average share price around March.

It then became clear that Sanofi didn’t plan on taking no for an answer, and essentially announced a hostile takeover bid and a call for a replacement of the current board.

Other companies were also interested, and in July, Medivation signed confidentiality agreements with Sanofi, Pfizer and Celgene . As part of that deal, Sanofi agreed to pull its consent solicitation that challenged Medivation’s board, and entered into a six-month conditional standstill.

Of primary interest is Medivation’s Xtandi. Approved in 2012 for late-stage prostate cancer, U.S. sales exceeded $1 billion in 2015. It had U.S. net sales of $330.3 million in the second quarter of this year alone.

Although its pipeline isn’t very big, it’s promising. Pidiluzumab is in mid-stage trials for blood cancers. Of greater interest is talazoparib, which is in a later-stage trial for advanced breast cancer patients who have BRCA mutations. Trial data is expected in the first half of next year. It is also being studied in small cell lung cancer, prostate cancer and ovarian cancer.

“We believe the combination of Xtandi and talazoparib has the potential to be a uniquely value-added combination in the treatment of prostate cancer and should be closely watched,” analysts with Leerink, told clients in a note.

Prior to today’s announcement, RBC Capital Partners told its clients in a note, “Given the already very high price being discussed, the difficult public relationship between Medivation and Sanofi … we see a higher bid as very unlikely, but not impossible.”

Apparently Pfizer disagreed.

Under the Pfizer deal, a Pfizer subsidiary will make a cash tender offer to acquire all outstanding shares of Medivation common stock for $81.50 per share. It is expected to close in the third or fourth quarter of 2016.

“The proposed acquisition of Medivation will build upon Pfizer’s success with our Ibrance (palbociclib) launch in HR+/HER2- metastatic breast cancer and with our strong immuno-oncology portfolio, and will transform Pfizer into a leading oncology company,” said Albert Bourla, group president, Pfizer Innovative Health, in a statement. “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.”

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