Pfizer is close to an agreement to buy Medivation for about $14 billion, people familiar with the situation said, the latest in a long run of blockbuster deals in the drug and biotechnology industries.
The deal may be announced as early as Monday, said the people, who asked not to be identified because the matter is still private. The biotech company’s shares closed at $67.16 on Friday, giving it a market value of $11.1 billion.
By acquiring Medivation, Pfizer would gain a blockbuster prostate-cancer treatment, Xtandi, that’s already approved for sale in the US and elsewhere, and that analysts project will generate $1.33 billion in annual sales by 2020. Pfizer Chief Executive Officer Ian Read said in May that he was more interested in acquiring late-stage assets because the company already had plenty of early-stage drugs in the works.
Pfizer spokeswoman Joan Campion declined to comment. Medivation representatives didn’t immediately respond to phone calls and e-mails requesting comment.
Pfizer has been relying on new branded treatments, including cancer drugs, to boost revenue, as sales of older medicines have slowed. In August, the New York-based company reported earnings that beat expectations after sales of breast cancer treatment Ibrance were better than analysts’ estimates.
A $14 billion purchase of Medivation would be Pfizer’s biggest deal since buying Hospira for about $17 billion last year, and the company is a rare prize.
As oncology becomes one of the hottest areas in drug development, large drug and biotechnology firms have found only a few mid-sized targets with revenue-generating, approved treatments.
Though Xtandi is a blockbuster, Pfizer will split US sales with Tokyo-based Astellas Pharma, which partnered with Medivation on the drug. Medivation also comes with two experimental products: a drug for breast cancer and another for the blood cancer lymphoma. The breast cancer drug belongs to a class of treatments known as PARP inhibitors, which disrupt cancer cells’ process of DNA repair.
The drug, talazoparib, may well be the most potent medicine in the PARP class, according to Katherine Xu, an analyst at William Blair & Co in New York, who estimates annual peak sales may reach $3 billion.
By spurning Sanofi’s initial offer, valued at about $9 billion, Medivation was able to bring in more potential suitors and drive up the bidding. Gilead Sciences, Celgene and Amgen were among the other drugmakers reported to consider the deal.
Medivation previously rejected French drugmaker Sanofi’s offer of $58 a share, plus a contingent value right valued at a maximum of $3 a share. The Financial Times reported earlier on Sunday that the Pfizer agreement was imminent.
The deal is a blow to Sanofi’s cancer ambitions. It has spent five months both courting and pressuring Medivation to reach a takeover agreement.
Sanofi CEO Olivier Brandicourt may have pushed his case too aggressively. After Sanofi’s initial offer of $52.50 a share was spurned, the Paris-based drugmaker chose to go straight to Medivation investors, seeking their support to oust the board. Medivation warned of a “devil’s bargain” that would usher in new directors who might settle for a takeover price that wasn’t in shareholders’ interest. Sanofi dropped the hostility in July as Medivation agreed to enter into confidentiality agreements.
