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August 22, 2016

Pfizer to Acquire Medivation for $14B

  • Pfizer is acquiring Medivation for $14 billion, the companies said today, in a deal that expands the pharma giant’s cancer portfolio—and far exceeds two unsuccessful offers for the San Francisco biotech made over the past 4 months by Sanofi.

    “The addition of Medivation will strengthen Pfizer’s Innovative Health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term,” Pfizer Chairman and CEO Ian Read said in a statement.

    Medivation’s cancer franchise is anchored by its marketed prostate cancer drug Xtandi® (enzalutamide), which has generated approximately $2.2 billion in worldwide net sales over the past four quarters, according to figures by development partner Astellas Pharma. But Medivation has come under criticism over Xtandi because of its high wholesale list price in the U.S. of $129,000 for a year’s course of treatment.

    Medivation’s cancer pipeline includes two additional oncology candidates. One is the Phase III candidate talazoparib (MDV3800), an orally available poly(ADP ribose) polymerase (PARP) inhibitor now in a pivotal trial in patients with germline BRCA (gBRCA) mutated breast cancer.

    The other candidate, pidilizumab (MDV9300), is an antibody with immune-mediated antitumor effects licensed from CureTech. Medivation has said it plans to develop pidilizumab in diffuse large B-cell lymphoma and other hematologic malignancies, such as multiple myeloma.

    The companies said pidilizumab has the potential to be combined with immune-oncology therapies in Pfizer’s portfolio. Among them is avelumab, a PD-L1 checkpoint inhibitor being co-developed through an up-to-$2.85 billion alliance with Merck KGaA, and for which the Phase III JAVELIN Ovarian 100 trial was launched in July. The trial is intended to assess avelumab in combination with, and/or as follow-on (maintenance) treatment to, platinum-based chemotherapy in patients with locally advanced or metastatic disease (Stage III or Stage IV) with previously untreated epithelial ovarian cancer.

    “We believe that Pfizer is the ideal partner to extend the reach of our blockbuster Xtandi franchise and take our promising, late-stage assets—talazoparib and pidiluzimab—to their next stages of development so that they can be made available to patients as quickly as possible,” added David Hung, M.D., Medivation founder, president and CEO.

    At $81.50 a share, Pfizer’s offer marks a 21% premium over Medivation’s Friday closing share price of $67.19, and a 55% premium over Sanofi’s first offer for Medivation of $52.50 a share, or $9.3 billion.

    Medivation rejected Sanofi’s first offer in June, and a month later turned down a sweetened $10 billion offer consisting of $58 per share in cash and a $3 per share contingent value right tied to sales of talazoparib.

    The companies expect their deal to close in the third or fourth quarter, subject to customary closing conditions that include U.S. antitrust clearance and the tender of a majority of the outstanding shares of Medivation common stock.

    Pfizer said it will finance the acquisition with existing cash. The boards of both Pfizer and Medivation have unanimously approved the deal, which is expected to immediately add 5 cents to Pfizer’s adjusted diluted earnings per share (EPS) in the first full year after closing, with additional accretion and growth anticipated thereafter.

    Pfizer said it does not expect the acquisition to impact its current 2016 financial guidance, which the company reaffirmed on August 2. Pfizer has told investors it anticipates adjusted diluted EPS of $2.38 to $2.48 on revenues of between $51 billion to $53 billion.

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