- Medivation said Tuesday it had entered into confidentiality agreements to discuss a potential sale with Sanofi and a number of other interested parties, while also revealing it had rejected a sweetened offer from the French drugmaker.
- According to statements issued by the companies, Sanofi raised its bid to $58 per share on June 27, upping its original offer of $52.50 per share after Medivation repeatedly refused to enter talks. But Medivation's board of directors rejected that proposal as well.
- Medivation will now provide Sanofi, along with other unnamed firms, with due diligence access and confidential information. In return, Sanofi agreed to terminate its attempt to replace Medivation's board.
After weeks of threatening, Sanofi will finally get to the negotiating table with Medivation. Stung by what it argued was a "substantially inadequate" initial proposal, Medivation has hit back with repeated assertions of its standalone value.
In rebuffing Sanofi previously, Medivation CEO David Hung and other board members have pointed to the strong sales growth for Xtandi, which the company co-markets with Astellas, and the promise of Medivation's pipeline.
Headlined by the experimental breast cancer drug talazoparib, that pipeline got a major boost when another drug in the same class as talazoparib reported notably positive results in late June. Tesaro's niraparib, also a so-called PARP inhibitor, helped extend progression-free survival by nearly 16 months in some patients, according to the latest Phase 3 data.
Those results have boosted analyst's confidence in PARP inhibitors more broadly, leading to higher hopes for Medivation's talazoparib.
New bid, same result
In its new (and now rejected) offer, Sanofi gave talazoparib's value more weight. The unsolicited second proposal raised Sanofi's bid to $58 per share plus contingent value rights for sales of talazoparib. Those rights represented a potential payment in 2022 of up to $3 per share, according to Medivation.
Analysts at Barclays peg talazoparib's value much higher, at $8 per share.
Despite agreeing to talks, Medivation doesn't appear willing to sell itself short. The company's board of directors unanimously rejected Sanofi's new offer and is engaging in discussions with other companies as well. Medivation has also strongly defended its value as a standalone company.
That said, Kim Blickenstaff, Medivation's board chairman, showed more willingness to engage than in other previous statements, opening the door a crack to a potential acquisition (whether from Sanofi or others).
"Medivation has significant scarcity value as one of the only profitable, commercial-stage oncology companies...At the same time, our Board remains committed to objectively considering all avenues that may enhance our ability to deliver superior value," Blickenstaff said.
Best foot forward
Under the confidentiality agreements, Sanofi and other interested companies will have a chance to examine Medivation's books and prepare better-informed offers.
Medivation said the confidentiality agreements include six-month standstill provisions and provide the companies opportunities to review non-public information and meet with management.
For its part, Sanofi continues to argue its case that its offer represents the best value.
"We look forward to discussions with Medivation on a combination which we believe is the most value creating transaction for both companies’ shareholders, and would provide Medivation and its employees with an outstanding platform to further grow its oncology franchise," said Sanofi CEO Olivier Brandicourt.
Sanofi has previously said it believes its bid has the "overwhelming support" of shareholders and, up until Tuesday, was asking shareholder approval to replace all eight members of Medivation's board.
As part of the agreement, Sanofi withdrew its attempt to oust the board.
Three's a crowd
Although Sanofi has won a chance to negotiate with Medivation, it may still lose out in the end. In previous arguments against Sanofi's lower offer, Medivation has suggested it values itself much higher - pointing to Pharmacylics as its "most relevant high-growth oncology peer." Unfortunately for Sanofi, AbbVie paid $21 billion to acquire Pharmacylics last year, roughly double Sanofi's current bid for Medivation.
And Medivation has heavily criticized Sanofi's track record in oncology, saying Sanofi's past failures raise "serious concerns about its understanding of the value of Medivation's business." This may just be boilerplate aimed at driving up its price. But with other suitors lining up - Reuters reported earlier on Tuesday that Pfizer and Celgene were in similar talks - Medivation and its shareholders may look more favorably on another offer.