Coverage: Pfizer buying Medivation for $14 billion

Pfizer Inc., beating out numerous other bidders, said Monday that it agreed to buy U.S. drug company Medivation Inc. for $14 billion, expanding its prostate cancer drug business.

Ransdell Pierson and Ankur Banerjee of Reuters had the news:

Medivation shares jumped nearly 20 percent to close at $80.42, just shy of the offer price of $81.50 per share. Shares of Pfizer, the largest U.S. drugmaker, were down 0.4 percent at $34.84.

The offer is a 55-percent premium to Sanofi SA’s initial bid to buy Medivation for $52.50 per share in April, which pushed the San Francisco-based company to put itself up for sale. It represents a 118-percent increase since Reuters reported on March 30 that Medivation had hired JP Morgan to handle interest from companies in a potential acquisition.

The planned purchase of Medivation, with its $2.2 billion-a-year Xtandi, is the latest in a number of deals by large drugmakers willing to pay top dollar for cancer drugs that are more effective than standard, older treatments. Perhaps the most notable example is AbbVie Inc’s $21 billion purchase last year of Pharmacyclics. The deal gave AbbVie shared ownership with Johnson & Johnson in the blockbuster leukemia drug Imbruvica.

Analysts predicted the deal would not raise antitrust concerns because Pfizer does not currently sell a prostate cancer drug aside from generics.

Jonathan Rockoff of The Wall Street Journal reports how Pfizer has been expanding its portfolio:

Pfizer has been seeking to expand its lineup of such oncology treatments. Xtandi would give the New York drug company a beachhead in prostate cancer complementing its breast-cancer treatment Ibrance, which is on track to be a blockbuster.

Medivation’s drugs in development also could complement Pfizer’s efforts to develop combinations of cancer agents with so-called immunotherapies, which deploy the immune system in the fight against cancer.

The acquisition would further Pfizer CEO Ian Read’s efforts to bolster what he refers to as the innovative side of the company’s business. The move “accelerates our strategy in line with our priorities,” he said on a call with analysts Monday.

The deal is expected to close in the third or fourth quarter of 2016 and is subject to customary closing conditions and U.S. antitrust clearance.

Pfizer agreed to take overAllergan PLC late last year in a $150 billion deal, but the two companies parted ways in April after the Obama administration targeted the proposed combination with new rules.

Jim Puzzanghera of the Los Angeles Times writes how Xtandi was discovered at UCLA:

Adding to the attraction of Medivation was a decision in June by federal officials rejecting an effort to allow other companies to sell Xtandi for lower prices.

Two nonprofit groups had made the request, arguing that the federal government could allow lower-priced competition because UCLA scientists had used taxpayer-funded grants in their research.

Xtandi, also known by the generic name enzalutamide, was patented by UCLA in 2005 and licensed to Medivation.

The San Francisco company has about 600 employees and posted a $404-million loss on $206 million in revenue in the second quarter of this year. Medivation said the loss was related to expenses from its purchase last year of all worldwide rights to talazoparib from BioMarin Pharamaceuticals Inc. of San Rafael.

Medivation reported a $245 million profit last year on $943 million in revenue. All the revenue came from Xtandi, the company’s only federally approved drug.

Net sales of Xtandi in the U.S. increased 69% last year from 2014, and nearly doubled worldwide.