Pfizer to pay $14 billion for Medivation
Mon., Aug. 22, 2016
WASHINGTON – Pharmaceutical giant Pfizer Inc. is paying $14 billion to buy Medivation Inc., a San Francisco biotech company that sells a high-priced prostate cancer medication discovered by UCLA.
A year’s worth of the drug, Xtandi, sells for about $129,000, and the medicine has generated about $2.2 billion in net sales worldwide over the last year, the companies said Monday in announcing the deal.
“We believe that Pfizer is the ideal partner to extend the reach of our blockbuster Xtandi franchise and take our promising, late-stage assets – talazoparib and pidilizumab – to their next stages of development so that they can be made available to patients as quickly as possible,” said Dr. David Hung, Medivation’s founder and chief executive.
Talazoparib is a breast cancer drug that is in phase 3 clinical trials. Pidilizumab is being developed to treat lymphoma and other blood-related diseases.
New York-based Pfizer has agreed to pay $81.50 in cash for each share of Medivation, a 21 percent premium over Friday’s closing price of $67.16.
Medivation stock was up about 20 percent in midsession trading Monday. Pfizer shares were down slightly.
Xtandi, which Medivation sells in partnership with Japan’s Astellas Pharma Inc., was the big attraction for Pfizer, said David Nierengarten, managing director and head of health care equity research at Wedbush Securities.
“They get a share of the best prostate cancer drug on the market,” he said.
Medivation also has been looking to expand the use of Xtandi into breast cancer treatment, which would boost its value, Nierengarten said.
With a highly desirable drug already on the market, Medivation was in strong demand. The company rebuffed a $9.3 billion bid from French pharmaceutical company Sanofi this year.
Adding to the attraction of Medivation was a decision in June by federal officials rejecting an effort to allow other companies to sell Xtandi for lower prices.
Two nonprofit groups had made the request, arguing that the federal government could allow lower-priced competition because UCLA scientists had used taxpayer-funded grants in their research.
Xtandi, also known by the generic name enzalutamide, was patented by UCLA in 2005 and licensed to Medivation. The San Francisco company has about 600 employees and posted a $404 million loss on $206 million in revenue in the second quarter of this year.
Xtandi generated $33.3 million in royalties and other income for the University of California last year, more than any other UC-developed drug.
In March, Royalty Pharma, a pharmaceutical investment company, paid $1.14 billion to acquire the royalty rights to Xtandi in the largest-ever technology transfer deal involving a UC invention. UCLA received $520 million of the money for its 43.9 percent ownership stake in the drug.
UCLA put the money in a portfolio that was expected to generate $60 million a year until 2027, when major patents on the drug expire. UCLA said it would use the money to pay for research, undergraduate scholarships and graduate student fellowships.
The university opted for the lump-sum payment on Xtandi rather than annual royalties.
“I’m sure UCLA saw a potential use for that lump-sum payment that is greater than waiting around for that stream of royalty payments,” Nierengarten said.
The Pfizer-Medivation deal is subject to antitrust review, and the companies said they expect it to close by the end of the year. Each company’s board of directors unanimously approved the deal. If the deal is not completed, Medivation will have to pay a $510 million termination fee, according to a regulatory filing.
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