- Pfizer wins the bidding war for Medivation that has been going on the better part of the summer with an offer that is worth $14 billion, beating out Sanofi, as well as other suitors.
- Pfizer is paying $81.50 per share for Medivation, which has a market capitalization of more $11 billion.
- The big pharma is paying for the deal with cash on hand and expects the acquisition will be immediately accretive to earnings. The deal is expected to close in the third or fourth quarter of this year after Pfizer completes a tender offer for all shares.
After rumors surfaced Sunday night that Pfizer had won the ongoing negotiations for cancer drug developer Medivation, the big pharma confirmed the acquisition Monday morning. Pfizer beat out Sanofi's public bid of more than $9 billion, and several other companies were rumored to be bidding including Merck & Co. and Amgen.
The main draw for Pfizer – and several other big pharmas and biotechs – is Medivation's market-leading prostate cancer drug Xtandi (enzalutamide), which brings more than $2 billion in sales annually.
Beyond that, Medivation has a strong pipeline full of oncology assets, including the Phase 3 PARP inhibitor talazoparib, being developed for BRCA-mutated breast cancer. The biotech also has an immune-oncology asset in development for diffuse large B-cell lymphoma and other hematological cancers.
Pfizer has been trying to set itself apart from competitors with its oncology pipeline, but has been lagging behind companies like Merck & Co. and Bristol-Myers Squibb, which are dominating the immune-oncology landscape.
Pfizer Chairman Ian Read said on call with investors Monday morning that it expects to take advantage of the Medivation portfolio by creating combination therapies.
The pharma's Ibrance (palbociclib) is a first-in-class CDK 4/6 inhibitor that has had strong supportive data and is on track to be a blockbuster this year. Yet, the drug faces potential best-in-class competition from Eli Lilly & Co. and Novartis.
"We see Medivation as a logical fit for Pfizer as it continues to build its presence in oncology through Ibrance, Sutent, Inlyta, Xalkori and its immuno-oncology pipeline," wrote Jefferies analyst Jeffrey Holford in a same day note to investors. "In addition, the transaction should help bridge earnings growth though the next few years as Prevnar-13 sales plateau and the company faces revenue pressure from loss of exclusivities for Viagra (2018) and Lyrica (2019)."
Pfizer noted during the call with analysts that the acquisition would not affect the timing of its decision to split, and that it still intends to inform investors if it will split up the company by year-end.