Pfizer's $14B Medivation deal's now a cautionary M&A tale, thanks to ASCO: analyst

Pfizer
Pfizer forked over $14 billion for Medivation last year, partly for its prostate cancer med Xtandi, but some new trial data has prompted analysts to question the wisdom of that deal.

The annual ASCO meeting often throws new light on old drugs—and old dealmaking. This year, it’s last summer’s most ballyhooed M&A deal—Pfizer’s $14 billion buyout of Medivation—that doesn’t look so impressive anymore, thanks to data rolled out over the weekend.

Big pharma and big biotech bidders swarmed on Medivation back then, partly because of its pipeline med talazoparib, a PARP inhibitor then-Medivation chief David Hung touted as a best-in-class med. The other big draw was Xtandi, the blockbuster-to-be prostate cancer drug, and its present-day cash flow. The two together added up to offers from Pfizer and Sanofi, plus a range of other bidders rumored to include Amgen and Gilead Sciences.

Thing is, Xtandi competes head-to-head with Johnson & Johnson’s Zytiga, and while Xtandi put up disappointing data in a study that might have helped grow sales, Zytiga racked up a couple of study wins at ASCO that analysts now say could help the J&J med zoom ahead on the indication front.

In the Latitude trial, Zytiga cut death risk by 38% in newly diagnosed, high-risk patients who hadn’t yet been treated with standard androgen deprivation therapy (ADT). The combo held off cancer progression for a median 33 months, compared with 14.8 months in the ADT-only study arm. The trial pitted Zytiga and hormone therapy against a combination of hormone therapy and placebo.

A different trial, dubbed Stampede, added Zytiga (abiraterone) to standard therapy in newly diagnosed, low-risk patients. The three-year overall survival rate was 83% in the Zytiga group versus 76% in the standard-therapy group, and Zytiga lowered the relative chance of treatment failure by 71% compared with the standard treatment protocol. And as Leerink Partners analyst Geoffrey Porges pointed out, the survival advantage increased over time. The new studies could put many more patients in line for Zytiga treatment.

“This study result, with the huge overall survival benefit and improvement in failure-free survival and time to skeletal events, establishes the Zytiga-plus-ADT combination as the new standard of care for men starting long-term ADT for metastatic or recurrent prostate cancer,” Porges said.

Meanwhile, in a test of longer-term therapy with Xtandi—the Plato trial—didn’t pan out. Continuing Xtandi alongside Zytiga in patients who’d progressed on Xtandi alone offered no additional benefit to switching to Zytiga by itself. The combo held off cancer progression for a median 5.7 months, compared with 5.6 months for patients who took Zytiga alone. Side effects were significantly worse on the combo, too.

Porges figures that the new Zytiga data will likely prompt “immediate filing” for a new indication and trigger changes in treatment guidelines—and as soon as reimbursement deals are made, a quick change to Zytiga-plus-ADT will lead to the combo being “almost universally used” in patients who can tolerate it.

And that, in turn, will push Xtandi to “the back of the bus” in terms of treatment sequence, Porges noted.

The ASCO presentations follow a first-quarter decline in sales for Xtandi, which Pfizer blamed on increasing use of patient-assistance programs. The company says it expects that effect to moderate as the year wears on, and pointed out that Zytiga itself slid in the period for similar reasons. But as Pfizer oncology chief Albert Bourla acknowledged during the company’s earnings call with analysts, “Today, Xtandi is performing below our expectations in the U.S.”

The top-line Xtandi data released in December, along with those numbers, had already prompted investors to question the wisdom of paying $14 billion for Medivation. Now that these data have been rolled out in detail, those questions are multiplying. And that, in turn, could prompt other drugmakers to count to 10—or 100—before becoming overwhelmed with enthusiasm for a cash-flow-plus-pipeline-asset deal.

“These trials are important not just for the main drugs involved in this shift (J&J’s Zytiga and Pfizer/Astellas' Xtandi) but also for overall sentiment about M&A in the industry,” Porges wrote. “Medivation has gone from being a coveted asset, with multiple high-premium bids, to an exemplar of the dangers of competitive auctions and overpriced acquisitions.”