$354M exit package in hand, Medivation CEO David Hung completes a master class in biotech auctions
Now that Medivation CEO David Hung has completed the deal of a lifetime with a stratospheric buyout, he’s grabbing a $35 million golden parachute that is scheduled to burst open in about a month and carry him back down to earth in style. And that’s part of a $354 million package of stock and options he can now cash out of.
The details on the golden parachute — along with a blow-by-blow account of the bidding process that led up to Pfizer’s $14 billion winner — were all included in an SEC filing on Tuesday. And it makes for required reading for any biotech exec looking to make the big score some sunny day.
The game got started in late March, when new Sanofi CEO Olivier Brandicourt contacted Hung and asked for a call. Days later, the story was leaked to the business press, and Medivation was in play.
The review of what followed over the next few months includes some interesting details on Medivation’s response to Sanofi’s initial lowball offer. Never happy with the opening bid, Medivation had an ace in the hole: Pfizer execs almost immediately began to eagerly volunteer their interest to get into the auction. And determined to get top dollar, Medivation invited more companies to join Pfizer and Sanofi at the bargaining table.
To keep them engaged as the numbers raced higher, Medivation drew up a set of long range financial forecasts for three different scenarios involving Xtandi, its approved cancer drug, as well as its PARP inhibitor talazoparib and another mystery drug in the pipeline called pidilizumab, a cancer treatment that Medivation initially thought was a checkpoint therapy until it was forced to conclude it wasn’t sure exactly what the mechanism of action was. By the time the offers began to fly, though, it barely warranted a mention.
Under Medivation’s three scenarios, the company projected that its expected 2016 revenue of $922 million could peak at between $5.7 billion and $8.5 billion in 2027, a little more than a decade away. And meanwhile, he and the Medivation team conducted a public campaign to persuade the industry that talazoparib was a certain blockbuster-to-be, capable of generating more revenue than Xtandi itself.
It was all wildly over the top, but Hung was pulling out all the stops.
Nearing the close of the auction, Medivation set an August 20 deadline for all final offers, netting Pfizer’s winning $81.50 bid along with two others for $80.25 and $80. For the master dealmaker, known for bagging major league collaborations that didn’t always pan out, it was an unmistakable win.
For Pfizer, there are still years of explaining ahead as it attempts to justify paying a price many analysts thought was way too high.