As Big Pharma circles, Medivation makes case for independence
- Backed by strong first quarter sales, oncology company Medivation on Thursday forcefully laid out its case for rebuffing Sanofi's $9.3 billion takeover bid. Sanofi has threatened to take its proposal directly to shareholders if Medivation continues to refuse discussions.
- Medivation CEO David Hung argued Sanofi's offer significantly undervalued the company, particularly as revenue from its leading prostate cancer drug Xtandi continued to climb in 2016.
- Meanwhile, other big pharma suitors are circling. Pfizer, AstraZeneca, Novartis, and now Amgen have all reportedly weighed making an offer for Medivation.
First quarter earnings data reported by Medivation on Thursday only served to underscore why Sanofi and others are interested in a takeover. Global revenues for Xtandi increased by 53% year over year to $547 million and the drug surpassed rival Zytiga in total prescription share of the hormonal therapy prostate cancer market.
U.S. revenue declined from the fourth quarter, however, dropping to $308 million in the first quarter from $316 million a quarter previous. Medivation attributed the fall to a decrease in inventory at channel partners.
Medivation comarkets Xtandi with Astellas, splitting revenues in the U.S. and earning a royalty on sales abroad. Collaboration revenue in Q1 increased to $183 million, compared to $128 million a year ago. Revenue from royalties on ex-U.S. sales fell, due to a reset in the percentage Medivation earns on net sales of Xtandi abroad.
At the same time, CEO Hung laid out Medivation's plan to further expand Xtandi's reach in urology, and eventually into breast cancer. In March, the company expanded its sales force by 40 people and split sales operations into dedicated oncology and urology teams. As the new representatives didn't hit the ground until the end of the quarter, any impact from the expansion would likely be seen in the coming months.
Over 20% of Xtandi's business is now in urology and has boosted the number of new patients starts for the drug, according to the company.
With further late-stage studies ongoing in triple negative breast cancer and ER/PgR+ breast cancer, Medivation hopes to win new indications by 2019 and 2020.
All of this optimism from the company underpins its stiff resistance to Sanofi's offer. Sanofi proposed a price of $52.50 per share, which it says is represents a 50% premium to the average share price before takeover news boosted the stock. Medivation now trades around $60, close to the highs seen last summer.
In Medivation's presentation to investors on Thursday, the company argued Xtandi and its late-stage pipeline of two other oncology assets represented a greater value than other recent deals struck in the industry (such as AbbVie's $9.8 billion dollar for Stemcentrx).
Sanofi believes it has the "overwhelming support" of Medivation shareholders for its proposed takeover. But Xtandi's growth and potential for new indications with larger patient populations likely will strengthen Medivation's resolve fight back, or hold out for a higher price.
Sanofi has hinted it could raise its offer. And with interest from other big pharma firms, Medivation could wind up in a position to bid up its asking price.
- Wall Street Journal Sanofi Says It Will Try to Oust Medivation Board Members if Deal Talks Don’t Start
- BioPharma Dive Sanofi threatens Medivation board with hostile bid
Follow Ned Pagliarulo on Twitter