Pfizer Shells Out $14B to Win Medivation Sweepstakes

Xconomy San Francisco — 

Pfizer has just won the sweepstakes for San Francisco Bay Area cancer drugmaker Medivation, with a buyout made official early Monday morning.

The Financial Times first reported late Sunday that Pfizer (NYSE: PFE) was close to finalizing a $14 billion deal for Medivation (NASDAQ: MDVN), whose shares closed on Friday at $67.16 apiece. On Monday morning, Pfizer confirmed that it would pay $81.50 a share in cash for the company.

Pfizer’s buyout ends a several month-long auction process for Medivation that included a hostile bid from Sanofi and reported interest from several large companies, among them Merck, Celgene, and Gilead Sciences. The winning bid values Medivation at almost $5 billion more than Sanofi’s $9.3 billion, $52.50 per share hostile offer, a deal Medivation publicly rejected.

Pfizer, of course, has been known throughout its history for large buyouts, using mega-deals for entities like Wyeth, Warner-Lambert, and Pharmacia to become one of the largest drugmakers in the world. Just last year it paid $17 billion for Hospira; a $14 billion Medivation deal is Pfizer’s largest since. The New York pharma giant is also very familiar with Medivation, having inked a $725 million licensing deal for an experimental Alzheimer’s drug, dimebon, from the company back in 2008. Pfizer paid $225 million up front for the Alzheimer’s drug, but later had to write off its investment when the drug failed to live up to expectations.

Though the dimebon failure was a big setback for Medivation, the Pfizer alliance helped fuel the development of a prostate cancer drug known as enzalutamide (Xtandi). Medivation won FDA approval of enzalutamide in 2012, and the drug, which is approved for prostate cancer patients both before and after chemotherapy, generated close to $2 billion in sales in 2015 and $595 million last quarter. Sales are ultimately expected to top out much higher than that, though Medivation shares enzalutamide profits with Astellas Pharma via a 2009 partnership. Medivation and Astellas are also testing enzalutamide in breast and liver cancer.

Medivation is also one of several companies developing what is known as a “PARP” inhibitor. PARP blockers are cancer drugs that target poly ADP-ribose polymerase, enzymes that help cells respond to DNA damage and repair themselves. PARPs have become a popular target because blocking their activity is a method of potentially stopping tumor cells from preparing the damage done by chemotherapy.

Though a PARP drug from Sanofi failed in 2011, the field has since rebounded. AstraZeneca won FDA approval of the first PARP-blocking drug, olaparib (Lynparza), for certain forms of ovarian cancer in 2014. Two months ago, Tesaro (NASDAQ: TSRO) followed with positive Phase 3 data for its own PARP-blocking drug, niraparib, in ovarian cancer.

Several companies are trying to expand the reach of these drugs into other cancers as well, among them Medivation, whose talazoparib will soon produce some critically important data. The drug is currently in a Phase 3 trial in breast cancer, a study expected to wrap up in early 2017. Medivation bought talazoparib from BioMarin Pharmaceutical (NASDAQ: BMRN) for $410 million last year. Medivation also has a third experimental cancer drug, pidilizumab, being tested in various blood cancers. Pfizer said in its statement that drug could be combined with other cancer immunotherapy drugs in its portfolio.

“We believe the combination with Pfizer is the right next step in our growth trajectory and is a testament to the passion and dedication by which the Medivation team has delivered on our mission to profoundly transform patients’ lives through medically innovative therapies,” said Medivation founder, president, and CEO David Hung, in the statement.

Pfizer will hold a conference call later this morning to discuss the deal.