With Jobs at Stake, Medivation Inks Confidentiality Deals With Sanofi, Pfizer and Celgene

With Jobs At Stake, Medivation Inks Confidentiality Deals With Sanofi, Pfizer and Celgene July 6, 2016
By Mark Terry, BioSpace.com Breaking News Staff

San Francisco’s Medivation yesterday signed confidentiality agreements with several pharmaceutical companies, including Paris-based Sanofi . In March, Sanofi started an acquisition bid of Medivation, which was spurned, leading to a hostile takeover attempt.

Although Medivation hasn’t specifically stated it, at least two of the other companies, according to Reuters, are Pfizer and Celgene . As part of the confidentiality agreement with Sanofi, the French company has agreed to pull its consent solicitation that challenged Medivation’s board, and will enter into a six-month conditional standstill.

“Medivation has significant scarcity value as one of the only profitable, commercial-stage oncology companies, and management has been successfully executing a strategy that is generating outstanding returns for our stockholders,” said Kim Blickenstaff, chairman of Medivation’s board of directors, in a statement. “At the same time, our board remains committed to objectively considering all avenues that may enhance our ability to deliver superior value. Our decision to enter into these agreements is consistent with our focus on stockholder interests, and will allow interested parties to fully understand the significant value of our XTANDI franchise and the enormous potential of our pipeline, including talazoparib, our promising, potential best-in-class PARP inhibitor.”

Although talazoparib is undoubtedly part of Medivation’s appeal, the real interest focuses on Xtandi, which was approved in 2012 for late-stage prostate cancer. In 2015, Xtandi sales exceeded $1 billion in the U.S. It is also being evaluated in a form of difficult-to- treat breast cancer and in an earlier stage of prostate cancer. The drug has an annual price tag of more than $100,000 before discounts and rebates.

Aside from talazoparib, Medivation also has pidiluzumab, which is in mid-stage trials for blood cancers. So although it has a heavy hitter in Xtandi, its bench is not particularly deep, although both drugs have potential for a number of different cancer indications. Medivation argues that talazoparib has a potential $30 billion market, although analysts are skeptical.

Sanofi has increased its original offer of $52.50 per share to $58 per share in cash and $3 per share as a contingent value right tied to talazoparib sales. Medivation has declined that offer, too. Medivation is currently trading for $61.76.

As the potential—and likely—acquisition of Medivation slowly grinds on, both Medivation and Sanofi employees contemplate job cuts, which are common in any merger, as overlapping and redundant jobs are eliminated. Although not much has been said about job losses on the part of Medivation—likely because until this most recent news, the company has seemed adamantly opposed to the merger—Sanofi has been cutting jobs since late last year.

In January, there were rumors that Sanofi would be cutting jobs in the U.S., and in November 2015, Olivier Brandicourt, the company’s chief executive officer, announced the company’s new strategy, which included restructuring and streamlining. Part of that strategy is to slash $1.63 billion in costs over the next five years. The company employs about 110,000 people worldwide, with approximately 17,000 in the U.S. It already laid off some workers in Massachusetts and several hundred in France.

Writing for FX News Call, Neha Gupta wrote, “The agreement paves the way for the cancer drug maker to share some of its confidential data, not available to the public, as it also continues to talk to other suitors. However, talks could hit a snag given that Medivation chairperson Kim Blickenstaff maintains they wish to pursue growth as an independent company. The same should be good for Sanofi careers given that the French company will not have to pursue layoffs as one of the ways of reducing its wage bill.”

Apparently happy to take any conciliatory movement on Medivation’s part as surrender, Brandicourt said in a statement, “We are pleased to have the opportunity to engage with Medivation. Our willingness to increase our offer is driven by our in-depth analysis of the benefits and value creation potential of a combination.”

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