Merck joins Pfizer, Sanofi in high-stakes hunt for Medivation

Xtandi

Merck & Co. wants Medivation, too. Not content to let another Big Pharma snap up the cancer-focused biotech unchallenged, Merck has joined the fight for a prize valued at more than $10 billion.

Reuters reports that Merck is one of the companies that officially expressed interest when Medivation opened up a sales process last month. Pfizer, Celgene and Gilead Sciences also lined up, as well as Sanofi, which had been pursuing a hostile takeover.

Other companies might be involved as well; Amgen and AstraZeneca are among those said to be circling the hot M&A prospect.

For Merck, bringing Medivation into the fold would beef up an oncology business that is currently on the rise. Its PD-1 immunotherapy Keytruda, already on its way to blockbuster status, recently got a boost as Bristol-Myers Squibb's Opdivo failed a key lung cancer trial. That disappointment for BMS translated into big increases in peak sales expectations for Keytruda, now pegged with $7.8 billion in sales by 2025.

Plus, Keytruda could well be a companion drug for Medivation's PARP inhibitor prospect, talazoparib. Medivation CEO David Hung suggested the PD-1-plus-PARP combo during his company's Q2 earnings call.

Medivation and its deal dance have been closely watched, with the biggest names in the industry on the list of potential bidders. Practically every Big Biopharma company is on the prowl for deals, and Medivation boasts a rare combination of current blockbuster sales--from its prostate cancer med Xtandi--and promising pipeline drugs.

Apart from Sanofi, Medivation has not identified any of the companies that struck confidentiality agreements in return for access to its books.

Sanofi’s first offer of $52.50 per share, rejected as far too low, would have been worth about $9.4 billion. The French drugmaker’s most recent offer--also spurned--stood at $58 per share plus a potential milestone follow-up of $3 per. The competition among potential bidders could ratchet up Medivation’s price considerably.

The Xtandi developer also sees a price boost from some recent data on Tesaro’s PARP inhibitor drug niraparib, which would compete against Medivation’s own talazoparib. The Tesaro med delivered better-than-expected results from a late-stage study, and Medivation believes talazoparib is better. CEO David Hung calls talazoparib a potential “best-in-class” med, and in a recent investor presentation, made clear that any buyer would have to be prepared to pay top dollar for that prospect.

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, he said.

All that would be good news to a potential buyer looking for a cancer revenue boost sooner rather than later. In addition to its solo sales, talazoparib could theoretically be used alongside Xtandi in a cancer-fighting cocktail, helping to boost Xtandi’s sales as well.

After the Tesaro data appeared and Hung made his pitch, Leerink Partners analyst Geoffrey Porges estimated a successful bid for Medivation in the mid-$60s at the least, and in the mid-$70s in a best-case scenario. RBC Capital Markets analyst Simos Simeonedis also sees Medivation yielding a per-share price of $65 to $75, a recent investor report noted.

The sale process could extend into 2017, Simeonedis says. But in any case, Bernstein analyst Tim Anderson says, a deal is now inevitable. “There aren't many quality assets like Medivation in oncology,” Anderson said in a Thursday investor note. “With the deal likely to be accretive in anyone's hands, it is just a matter of price now.”

- read the Reuters news

Special Report: Top 15 Drug Launch Superstars - Xtandi - Medivation and Astellas Pharma

Related Articles:
Merck's Keytruda fortunes look even better as doctors digest Opdivo's lung cancer failure
After Medivation? Alexion, BioMarin, Incyte could be Big Pharma's next M&A targets: Analysts
Medivation CEO to buyers: You'll pay top dollar for our 'best-in-class' PARP med
AZ could jump into the Medivation fray with $10B bid: Report​​​​​​​
Medivation eyes PARP-PD-1 cocktail; still no word on pidilizumab future​​​​​​​
Medivation opens its books to would-be buyers, including the formerly hostile Sanofi
Pay up, Sanofi: Tesaro's PARP data give Medivation deal expectations a boost​​​​​​​