Pfizer-Medivation Close To Signing $14B Acquisition Deal?

According to a Financial Times article, Pfizer Inc. (NYSE:PFE) and Medivation, Inc. (NASDAQ:MDVN) are close to signing a deal under which Pfizer will acquire Medivation for more than $80 per share (approximately $14 billion).

Medivation has been a part of acquisition talks for quite a while with the company first receiving an offer from French drugmaker Sanofi (NYSE:SNY) . Sanofi had initially approached Medivation with an offer of $52.50 in cash which was rejected by the company.

Last month, Medivation announced that it is open to acquisition talks and entered into confidentiality agreements with several firms that had expressed an interest in exploring a potential transaction. The company also confirmed that it had rejected a sweetened bid from Sanofi under which Sanofi offered $58.00 per share in cash plus a Contingent Value Right (CVR) for talazoparib sales representing a potential payment in 2022 of up to $3.00 per share.

Pfizer’s rumored offer of more than $80 per share represents a huge premium compared to Sanofi’s last offer. Medivation's shares are up 42.3% so far in 2016.

MEDIVATION INC Price

Why Medivation?

Medivation is a biopharma company that is focused on cancer treatments. The company currently has one marketed product, prostate cancer treatment, Xtandi. Xtandi, a blockbuster drug, has the potential to be approved for several additional indications as well as patient populations.

Moreover, pipeline candidate talazoparib, an orally-available PARP inhibitor, represents significant upside potential. PARP inhibitors are currently being considered to be the next major class of therapeutics in oncology. Interest in this area has increased considerably following the announcement of impressive late-stage data on another company’s PARP inhibitor, niraparib, in Jun 2016. Top-line results from Medivation’s first talazoparib registrational study, EMBRACA, in germline-BRCA mutated breast cancer are expected in the first half of 2017.

According to Medivation, the addressable patient population for talazoparib in the U.S. and Europe is about 760k including 10k for the EMBRACA population, while the addressable market opportunity is more than $30 billion.

The Medivation acquisition, if it goes through, will strengthen Pfizer’s cancer franchise which currently consists of products like Ibrance, Xarelto and Sutent. Pfizer is also working on strengthening its immune-oncology pipeline and the Medivation acquisition would be a good strategic fit for the company.

Pfizer is a Zacks Rank #3 (Hold) stock while Medivation is a Zacks Rank #5 (Strong Sell) stock. Actelion Ltd. (OTC:ALIOF) is a better-ranked stock in the health care sector with a Zacks Rank #1 (Strong Buy).

PFIZER INC Price