Medivation CEO to buyers: You'll pay top dollar for our 'best-in-class' PARP med

David Hung

When Medivation CEO David Hung talked up his company’s cancer candidate talazoparib Wednesday, he was aiming to persuade investors--and potential buyers--that the PARP inhibitor is worth a nice premium.

The message was clear for the Big Pharmas and Big Biotechs eyeing a Medivation bid: If you want to buy this company, you’ll have to pad your offer with some faith-based talazoparib value.

Hung didn’t talk about the bidders who’ve come to Medivation’s table during the Wednesday conference call. But if the commentary after Hung’s investor call is any indication, his underlying message might just bear fruit. 

In an investor note Thursday morning, Leerink Partners analyst Geoffrey Porges hiked his price estimate for a potential deal by up to $12 per share, with a best-case value of $76 per share. That’s a long way from Sanofi’s latest (rejected) bid of $58 per share, plus up to $3 per share contingent on talazoparib’s performance down the road.

Though Hung has touted talazoparib as a “best-in-class” PARP inhibitor for some time--and hit that idea hard as Medivation scrambled to fend off Sanofi’s hostile approach--it’s some well-timed data from rival biotech Tesaro that’s triggering the current buzz. Tesaro’s PARP inhibitor niraparib put up impressive ovarian cancer data last week, fueling hopes for the entire class, including talazoparib.

That, in turn, translated into higher expectations for a talazoparib payoff for Medivation shareholders entertaining buyout bids, with big names such as Pfizer, AstraZeneca, Amgen, Celgene and Novartis said to be in the hunt. “A number” of those interested parties have signed confidentiality agreements to get access to the company’s books. And of course there’s Sanofi, which dropped its hostile fight and came to the table, too.

As Tesaro’s shares rose rapidly after the data hit, its market cap gains suggested a dollar value for talazoparib’s contribution to Medivation’s own prospects, Porges figures.

“Now that value in Tesaro has increased to $4 billion, it seems reasonable for Medivation investors to expect more than the $6 per share we previously allowed for talazoparib in our sum of the parts analysis,” Porges wrote in Thursday’s note. “For the time being, this value seems likely to be in the $12- to $18-per-share range, after the validation from Tesaro’s data and Dr. Hung’s presentation.”

And that puts the price of a successful bid into the high $60s per share at least, to the mid $70s at best, Porges notes.

Hung’s presentation delved deeply into Medivation’s talazoparib plans--trial dates and designs, comparisons among trials testing talazoparib and its potential competitors--as well as the drug’s specific methods of action, its response rate and potential side effects. He cited data from other PARP inhibitor trials as indicators for talazoparib’s own success. And he talked up pre-clinical data showing his drug’s “greater potency” than other PARP drugs and its superior ability to “trap” PARP, a mechanism that is more effective at killing cancer cells than inhibiting PARP enzymes is, Hung said.

PARP inhibitors work by doing both, but the individual drugs may be better at one than the other--and Hung says talazoparib beats its rivals on both counts. And he suggested that the PARP trapping effects could allow the drug to be given at lower doses down the line, which would help to reduce side effects.

Hung’s presentation also dangled the prospect of an earlier-than-expected approval. Its pivotal EMBRACA trial, scheduled to finish enrollment this year and report during the first half of next year, might just read out early.

All that would be good news to a potential buyer looking for a cancer revenue boost sooner rather than later. Medivation has Xtandi, of course, which can deliver sales from the get-go.

Related Articles:
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Pay up, Sanofi: Tesaro's PARP data give Medivation deal expectations a boost
Pfizer, Amgen most likely to bid for Medivation: analysts
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Sanofi may add milestones to sweeten its $9.3B Medivation bid: Bloomberg
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Medivation opens books to Pfizer, Amgen as bidders circle: Reuters