Pfiz­er bags Medi­va­tion buy­out with blowout $14B cash of­fer

David Hung, Medi­va­tion CEO

Pfiz­er $PFE has struck a deal to buy Medi­va­tion $MD­VN at a price CEO David Hung has been look­ing for. The two com­pa­nies an­nounced Mon­day morn­ing that the phar­ma gi­ant will pay $81.50 a share — about $14 bil­lion — for Medi­va­tion, all of it in cold, hard cash. That’s far more than the $9.3 bil­lion of­fer Sanofi used to get the auc­tion start­ed.

Medi­va­tion closed Fri­day with a mar­ket cap of $11.1 bil­lion, giv­ing the com­pa­ny a big pre­mi­um to boast about to share­hold­ers. Sanofi $SNY last bid $58 a share in cash and an ex­tra $3 CVR for Medi­va­tion, which has con­sis­tent­ly re­ject­ed the phar­ma com­pa­ny’s of­fers as gross­ly in­ad­e­quate. A swirl of ru­mors has al­so put Mer­ck $MRK, Cel­gene $CELG, Gilead $GILD and oth­ers at the bar­gain­ing ta­ble as well.

Pfiz­er will now beef up its on­col­o­gy port­fo­lio with Medi­va­tion’s share of Xtan­di, part­nered with Astel­las. An­a­lysts have pro­ject­ed that the block­buster sales per­for­mance of Xtan­di—which goes head-to-head against Zyti­ga—will shoot up to close to $5 bil­lion by 2020.

The buy­out al­so adds an ex­per­i­men­tal late-stage PARP in­hibitor called ta­la­zoparib to Pfiz­er’s pipeline. Tak­ing a frag­ment of da­ta, Hung re­cent­ly claimed that ta­la­zoparib was clear­ly the best of all the con­tenders in the pipeline, far sur­pass­ing Tesaro’s ni­ra­parib, Clo­vis’s ru­ca­parib, As­traZeneca’s Lyn­parza (ola­parib) and Ab­b­Vie’s veli­parib. Tesaro, though, has field­ed strong re­sults from its study, help­ing beef up peak sales pro­jec­tions for the class.

Medi­va­tion bought their drug last year from Bio­Marin for $410 mil­lion cash, adding $160 mil­lion on the back end of the deal. And it’s proven to be the wild card in this high-stakes game of biotech M&A.

Pfiz­er’s pre­mi­um sur­prised some bat­tle hard­ened vet­er­ans on Wall Street.

“We have a very dif­fi­cult time get­ting to the ~$80/share price that Pfiz­er (PFE Not Cov­ered) is re­port­ed to be pay­ing based on rea­son­able mod­el­ing as­sump­tions for the com­pa­ny,” not­ed RBC’s Simos Sime­oni­dis just ahead of the of­fi­cial con­fir­ma­tion. “We re­mind in­vestors that Xtan­di is shared with Astel­las. Al­so, me­dia re­ports point to an all-cash trans­ac­tion, which is both sur­pris­ing, giv­en the risk in­volved in sec­ond as­set ta­la­zoparib and a cred­it to MD­VN’s man­age­ment, which may man­age to sell this as­set, with­out any or much of a CVR (if that in­deed ends up be­ing the case), with ta­la­zoparib Phase III da­ta around the cor­ner.”

Ian Read, Pfiz­er CEO

“The pro­posed ac­qui­si­tion of Medi­va­tion is ex­pect­ed to im­me­di­ate­ly ac­cel­er­ate rev­enue growth and dri­ve over­all earn­ings growth po­ten­tial for Pfiz­er,” said Pfiz­er CEO Ian Read. “The ad­di­tion of Medi­va­tion will strength­en Pfiz­er’s In­no­v­a­tive Health busi­ness and ac­cel­er­ate its path­way to a lead­er­ship po­si­tion in on­col­o­gy, one of our key fo­cus ar­eas, which we be­lieve will dri­ve greater growth and scale of that busi­ness over the long-term. This trans­ac­tion is an­oth­er ex­am­ple of how we are ef­fec­tive­ly de­ploy­ing our cap­i­tal to gen­er­ate at­trac­tive re­turns and cre­ate share­hold­er val­ue.”

The biggest suc­cess Pfiz­er had ex­pe­ri­enced re­cent­ly has been the ac­cel­er­at­ed ap­proval for Ibrance (pal­bo­ci­clib), a pi­o­neer­ing CDK 4/6 drug that now faces sev­er­al late-stage ri­vals. Pfiz­er paid Mer­ck KGaA $850 mil­lion to part­ner on their PD-L1 check­point drug, and this new deal clear­ly un­der­scores its cen­tral fo­cus on the can­cer are­na.

Pfiz­er has plen­ty of cash avail­able for the buy­out. It made un­suc­cess­ful megabids for As­traZeneca and Al­ler­gan. And Pfiz­er CEO Ian Read has clear­ly been will­ing to dig deep to build the com­pa­ny through ac­qui­si­tions.

Iron­i­cal­ly, Pfiz­er out­li­censed its PARP, PF-01367338, now known as ru­ca­parib, to Clo­vis back in 2011, when it was re­struc­tur­ing its pipeline and slash­ing its R&D bud­get. Now it finds it­self buy­ing a ri­val for a block­buster sum. Pfiz­er gained an eq­ui­ty stake in Clo­vis along with $255 mil­lion in mile­stones in the deal, an amount that is like­ly far ex­ceed­ed by what it’s will­ing to pay Medi­va­tion stock­hold­ers for ta­la­zoparib. In ad­di­tion, Pfiz­er in­di­rect­ly helped fund Xtan­di’s de­vel­op­ment, pay­ing $225 mil­lion to Medi­va­tion to part­ner on dime­bon, which flopped for Alzheimer’s.

The Pfiz­er deal marks an em­bar­rass­ing de­noue­ment for new Sanofi CEO Olivi­er Brandi­court, who had sought to make his mark on the com­pa­ny with a bar­gain deal. Sanofi, and oth­ers in the hunt, will now have to turn their at­ten­tion to oth­er tar­gets of op­por­tu­ni­ty. And they aren’t like­ly to start on the low end.

A deal like this could sig­nal a will­ing­ness by Big Phar­ma to pay top dol­lar for mar­ket­ed and late-stage prod­ucts with re­al po­ten­tial. Over­all, M&A has been drag­ging this year in bio­phar­ma. A few more ac­qui­si­tions like this would bring the num­bers up con­sid­er­ably. Bio­gen, Gilead and oth­ers have in­di­cat­ed a will­ing­ness to snap up new deals to beef up their pipelines as an­a­lysts clam­or for more projects to get ex­cit­ed about.

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

Covid-19 vac­cine boost­ers earn big thumbs up, but Mod­er­na draws ire over world sup­ply; What's next for Mer­ck’s Covid pill?; The C-suite view on biotech; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

You may remember that at the beginning of this year, Endpoints News set a goal to go broader and deeper. We are still working towards that, and are excited to share that Beth Snyder Bulik will be joining us on Monday to cover all things pharma marketing. You can sign up for her weekly Endpoints MarketingRx newsletter in your reader profile.

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No­var­tis de­vel­op­ment chief John Tsai: 'We go deep in the new plat­form­s'

During our recent European Biopharma Summit, I talked with Novartis development chief John Tsai about his experiences over the 3-plus years he’s been at the pharma giant. You can read the transcript below or listen to the exchange in the link above.

John Carroll: I followed your career for quite some time. You’ve had more than 20 years in big pharma R&D and you’ve obviously seen quite a lot. I really was curious about what it was like for you three and a half years ago when you took over as R&D chief at Novartis. Obviously a big move, a lot of changes. You went to work for the former R&D chief of Novartis, Vas Narasimhan, who had his own track record there. So what was the biggest adjustment when you went into this position?

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Susan Galbraith, Executive VP, Oncology R&D, AstraZeneca

As­traZeneca on­col­o­gy R&D chief Su­san Gal­braith: 'Y­ou're go­ing to need or­thog­o­nal com­bi­na­tion­s'

 

Earlier in the week we broadcast our 4th annual European Biopharma Summit with a great lineup of top execs. One of the one-on-one conversations I set up was with Susan Galbraith, the oncology research chief at AstraZeneca. In a wide-ranging discussion, Galbraith reviewed the cancer drug pipeline and key trends influencing development work at the pharma giant. You can watch the video, above, or stick with the script below. — JC

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Amit Etkin, Alto Neuroscience CEO (Alto via Vimeo)

A star Stan­ford pro­fes­sor leaves his lab for a start­up out to re­make psy­chi­a­try

About five years ago, Amit Etkin had a breakthrough.

The Stanford neurologist, a soft-spoken demi-prodigy who became a professor while still a resident, had been obsessed for a decade with how to better define psychiatric disorders. Drugs for depression or bipolar disorder didn’t work for many patients with the conditions, and he suspected the reason was how traditional diagnoses didn’t actually get at the heart of what was going on in a patient’s brain.

Roche's Tecen­triq cross­es the fin­ish line first in ad­ju­vant lung can­cer, po­ten­tial­ly kick­ing off gold rush

While falling behind the biggest PD-(L)1 drugs in terms of sales, Roche has looked to carve out a space for its Tecentriq with a growing expertise in lung cancer. The drug will now take an early lead in the sought-after adjuvant setting — but competitors are on the way.

The FDA on Friday approved Tecentriq as an adjuvant therapy for patients with Stage II-IIIA non small cell lung cancer with PD-(L)1 scores greater than or equal to 1, making it the first drug of its kind approved in an early setting that covers around 40% of all NSCLC patients.

Susan Galbraith speaking at Endpoints News' virtual EUBIO21 summit

Imfinzi/treme­li­mum­ab com­bo scores As­traZeneca an­oth­er OS win — this time in liv­er can­cer

Is the tide turning on AstraZeneca’s battered PD-L1/CTLA4 combo?

A single priming dose of the experimental tremelimumab, followed by Imfinzi every four weeks, beat Nexavar (sorafenib) in helping a group of liver cancer patients live longer in a Phase III study, the company reported, meeting the primary endpoint.

Specifically, the two drugs extended overall survival for patients with unresectable hepatocellular carcinoma who had not received prior systemic therapy and were not eligible for localized treatment.

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FDA ad­comm votes unan­i­mous­ly in sup­port of a J&J Covid-19 boost­er two months af­ter one-dose shot

The FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) on Friday voted 19-0 in favor of authorizing a second shot of J&J’s Covid-19 vaccine to follow at least two months after the initial dose.

Regulators don’t have to follow VRBPAC’s recommendation, but they almost always do. Considering that the CDC’s advisory committee has already been set to review the expanded EUA, VRBPAC’s recommendation is likely to be adopted.

FDA+ roundup: Marks on Wood­cock­'s tenure as act­ing com­mis­sion­er; FDA lead­ers of­fer per­spec­tive on bar­ri­ers to di­ver­si­ty in re­search

CBER director Peter Marks praised Janet Woodcock’s work as acting FDA commissioner, and while noting that Biden needs to nominate someone to fill the role permanently by Nov. 16, he said he has “no idea” when that actually might occur.

“Dr. Woodcock has been at the agency for over three decades and she, during that time, has proven herself to be a remarkably capable manager,” Marks said at the Alliance for Regenerative Medicine’s meeting Tuesday. “And she’s been managing as if she’s commissioner, unlike some previous acting [commissioners] who are afraid to actually do things. She doesn’t appear to be afraid to do things. I have not felt any different now from when we had a commissioner in place,” he added.

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