Potential buyers are circling Medivation ($MDVN), the cancer-focused drugmaker that recently brought Xtandi to market. But the San Francisco-based company isn't interested, Reuters says--and it has hired investment bankers at JPMorgan Chase to help fend off a deal.
There's no shortage of potential buyers. Big Pharmas such as Sanofi ($SNY) and AstraZeneca ($AZN) are on the hunt, and a deal with an immediate financial payoff could help them answer criticism from shareholders. AZ chief Pascal Soriot said earlier this year that he's eyeing buys that are immediately accretive, rather than long-term pipeline plays.
That's one reason why Medivation is a perennial favorite on market watchers' lists of buyout targets. With Xtandi on a path to blockbuster land, Medivation would give any buyer an immediate sales boost. The company will share the Xtandi wealth with marketing partner Astellas, but EvaluatePharma projects sales of $1.87 billion this year rising to $4.78 billion in 2020--plenty to go around.
Medivation would also bring along a number of other potential cancer treatments in late-stage development to help beef up an acquirer's pipeline. A bladder cancer drug and a multiple myeloma therapy are among them.
Plus, antiviral-focused Gilead Sciences ($GILD) is in the market; with multibillion-dollar cash flows from its hep C and HIV meds, it has the money to spend, and the company would like to move deeper into oncology. Its first marketed cancer drug, Zydelig, recently took a blow when Gilead halted a half-dozen studies combining the leukemia and lymphoma med with a variety of other treatments.
Sources tell Reuters that some would-be buyers have approached Medivation, several since the first of the year. Bloomberg says bankers have been pitching the deal to Sanofi.
One sticking point for a deal could be price. As biotech shares took a dive last year, Medivation's stock price dropped from a high of about $66 market cap to a low of about $26, though it's recovered since; shares closed Wednesday at around $43. The company's management and shareholders might want to hold out for more share gains, to shoot for a higher offer.
In fact, that's one dealmaking hurdle cited by pharma executives in recent quarters. Values have dropped, but expectations haven't.
Sanofi CEO Olivier Brandicourt--who's actively looking for M&A, even as he negotiates a unit swap with Boehringer Ingelheim--said in January that biotech valuations have dropped, but "we're not sure that the expectation of boards and shareholders … may actually be realistic even after recent price falls." And Amgen ($AMGN) EVP Tony Hooper said much the same in November: "We think obviously that the valuations in the sector are probably more favorable now … than they were a year ago," but it could be a while before asking prices decline as much.
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