Pfizer Inc said on Monday it would buy U.S. cancer drug company Medivation Inc in a deal valued at about $14 billion, adding blockbuster prostate cancer drug Xtandi to its portfolio.
Medivation shares were up 20 per cent at $80.56 in pre-market trade, just shy of the offer price of $81.50 per share in cash.
The offer is at a substantial premium to Sanofi SA’s initial offer to buy Medivation for $52.50 per share in April that pushed the San Francisco-based company to put itself up for sale.
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The deal comes four months after Pfizer and Ireland-based Allergan Plc scrapped their $160 billion merger. Pfizer has since bought Anacor Pharmaceuticals Inc in a $5.2 billion deal to add an eczema gel to its portfolio.
The deals hint at a shift in Pfizer’s M&A strategy from lowering taxes — the rationale behind the failed Allergan deal — to strengthen its drugs portfolio ahead of a decision on selling or spinning off its generic drugs business by late 2016.
Pfizer, whose oncology offerings include breast cancer drug Ibrance and several other promising immuno-oncology products, will now get access to Xtandi as well as Talazoparib, another breast cancer treatment under development.
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Xtandi, which generated U.S. net sales of $330.3 million in the second quarter, has posted double-digit growth, putting Medivation on track to achieve its target of more than 50 per cent in revenue growth for the year.
Japanese drugmaker Astellas Pharma Inc owns the rights to sell Xtandi outside the U.S.
“We believe the combination of Xtandi and talazoparib has the potential to be a uniquely value-added combination in the treatment of prostate cancer and should be closely watched," Leerink analysts wrote in a client note. Reuters had reported that Pfizer, Merck & Co Inc, Celgene Corp and Gilead Sciences Inc had submitted expressions of interest to buy Medivation.
“Given the already very high price being discussed, the difficult public relationship between Medivation and Sanofi ... we see a higher bid as very unlikely, but not impossible,” RBC Capital Partners wrote in a client note ahead of the announcement.
Sanofi said while it recognised the potential strategic benefits of a combination with Medivation, it was a “disciplined acquirer and remained committed to acting in the best interests of Sanofi shareholders.”
Pfizer said it expects to complete the acquisition, which was approved by boards of both companies, in the third or the fourth quarter.