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Focus: Medivation tug-of-war rumbles on

Published on 06/05/16 at 08:24am

Medivation (NASDAQ: MDVN) has been making all the headlines as a list of suitors’ line up, all vying to secure a multi-billion dollar deal to buy the firm.

Sanofi (Euronext: SAN)’s unsolicited $9.8 billion offer was roundly rejected by the board at Medivation, who indicated that the offer “substantially undervalues” the company. Sanofi remains undeterred, however, as they released a statement shortly describing the proposed takeover as a “compelling strategic and financial opportunity” and that it remains “committed to the combination and looks forward to engaging directly with Medivation shareholders” regarding the proposal.

Sanofi are not alone, however, in their bid to get a hold of Medivation. After the rejection of an initial bid from Sanofi, reports emerged that AstraZeneca were contemplating making an offer for the California-based company.  And, following the collapse of their astronomical $160 billion Allergan merger, Pfizer entered the fray with reports claiming that they, too, were on the verge of making an offer.

All these takeover rumours have been enough to send stocks at Medivation soaring. In the last month, the share price has risen 35%. So why are these Big Pharma behemoths all queuing up to acquire Medivation?

Promising Pipeline

Medivation’s main asset is Xtandi (enzalumatide), which was developed in collaboration with Astellas Pharma. Trial data showed that the drug extended the life of men with castration resistant prostate cancer (CPRC) by up to five months. It has won FDA and EMA approval, and was recommended for use on the NHS by the National Institute for Health and Care Excellence (NICE) in 2014.

A report from GlobalData estimated that the drug could generate annual sales of $3.8 billion by 2023. An analyst commented: “Xtandi’s safety and efficacy garnered a favourable impression from key opinion leaders, and its use in multiple prostate cancer patient segments ensures that it will be the market-leading drug in this therapy area by 2016.” With the other big player in the prostate cancer therapeutics, Janssen’s Zytiga, set to lose patent protection in the US at the end of this year, Xtandi is set to dominate the market.

Already commercialised for metastatic CRPC, late stage trials are also examining its use in non-metastatic CRPC as well as in hormone-sensitive prostate cancer. Phase II trials are also examining Xtandi for other cancers such as hepatocellular carcinoma and specific forms of breast cancer.

With the earning potential of this compound so strong, it is clear why the bigger pharma companies are showing a keen interest.

Medivation recently acquired talazoparib, which is now in Phase III trials for the treatment of breast cancer. It is a highly potent inhibitor of the PARP 1/2 proteins that selectively target tumour cells with specific mutations, such as BRCA2 and PTEN. At the time, Medivation chief executive, David Hung, said: “Talazoparib’s potential to act alone or augment the effects of a wider array of tumour DNA-damaging oncology therapies and its high potency and level of activity in various cancers makes talazoparib a great strategic fit for Medivation’s oncology portfolio.”

According to its entry on the clinical trials site, the EMBRACA trial is set to be completed in June 2016. A positive result in that trial would surely boost the value of the company that bit more.

Another compound in late stage trials is pidilizumab, which is being evaluated in the treatment of relapsed or refractory diffuse large B-cell lymphoma. This immune-mediated anto-tumour compound is set to be examined in the future for other haematologic malignancies, such as multiple myeloma.

Recognising the potential

The use of these drugs is often in combination with immunotherapies, which many see as having great potential in cancer therapeutics in the future. As Sanofi, AZ, Pfizer and now possibly even Amgen all lining up to try and broker a deal with the company, it is clear why the Medivation board intend to play hard ball as they seek a higher price for the company. Sanofi’s latest letter delivered to the Medivation board threatened to have them ousted from their positions if they continued to oppose the move. Are they feeling the pressure and trying to push a deal through before the rest make a direct offer? It could be argued that they’re stepping things up a notch to do exactly that.

Oncology drugs always have the potential to be extremely lucrative once brought to market. With one blockbuster already on the market, and the potential for some more in the future, it would be of no surprise if more of the biggest companies within pharma join the Medivation tug-of-war.

Sean Murray

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