Sanofi may add milestones to sweeten its $9.3B Medivation bid: Bloomberg


Medivation hasn’t been happy with Sanofi’s $9.3 billion offer for the company. But now that Sanofi’s hostile quest has begun, the pharma giant is wondering whether it can sway investors by tossing in future payments.

Sanofi is weighing upping its bid through the use of future handouts--known as contingent value rights--that it’ll dole out if the California biotech hits certain benchmarks, Bloomberg reports, citing sources. Sanofi’s execs have held recent talks with Medivation shareholders to discuss the prospect as part of a sweetened proposal.

Including CVRs might defuse some of Medivation's protests against about the bid, which it has called "opportunistic," given its timing. Sanofi “approached us during a period of significant market dislocation for biotech” and before a number of “other important inflection points” for its lead med and pipeline that could have taken shares higher and expanded sales, CEO David Hung said in May.

Sanofi's current offer undervalues Medivation's star cancer drug Xtandi and a follow-up cancer candidate, the company says, arguing that shareholders would be better off waiting for Xtandi's growth and new launches to pay off. CVRs would offer a mechanism for investors to do just that.

If Sanofi did throw in CVRs, it wouldn’t be the first time it did so at the dealmaking table, and under similar circumstances. In 2011, Genzyme shareholders balked at Sanofi's takeover attempts, saying the French drugmaker's bid didn't fully account for the multiple sclerosis drug candidate Lemtrada and its blockbuster prospects. To sew up the deal, Sanofi offered Genzyme investors an extra $14 per share if Lemtrada hit certain targets--including FDA approval.

But Lemtrada didn't hit all those milestones, and some investors have since hit back. Last November, a trustee for CVR holders hit Sanofi with a lawsuit accusing the company of stalling Lemtrada's development to avoid shelling out at least $708 million in milestone payments. Sanofi deliberately took a "slow path" to bringing the product--turned down once by the FDA--to market, despite a promise to make "diligent efforts" to meet its goals, according to the claims.

Sanofi reportedly has much more competition for a Medivation deal than it did with its Genzyme pursuit--and it reportedly has some other buyout candidates on its list, too. Rumors have listed a who’s who of Big Pharma and Big Biotech as other potential Medivation suitors, including Pfizer, Novartis, Amgen and Gilead. And last week, shares of San Rafael, California-based BioMarin climbed on buzz that it could be Sanofi’s backup buy if its hostile pursuit comes up empty.

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