Medi­va­tion to Sanofi (in trans­la­tion): You don't know beans about can­cer drug de­vel­op­ment(!)

At this stage in a hos­tile M&A game, the best de­fense lies in a great of­fense. And Medi­va­tion is out to be as of­fen­sive as pos­si­ble. To be spe­cif­ic, Medi­va­tion’s ex­ec­u­tive team doesn’t think high­ly of Sanofi, its bid for the com­pa­ny, or its abil­i­ty to eval­u­ate and de­vel­op new can­cer drugs.

In a let­ter to share­hold­ers, shared wide­ly with the busi­ness press, Medi­va­tion com­pared and con­trast­ed Sanofi’s po­si­tion, ridi­cul­ing its 50% pre­mi­um of­fer (that came af­ter the Great Bear Mar­ket hit every­one).

Then there’s the X Fac­tor.

“The me­di­an two-year for­ward rev­enue mul­ti­ple of high growth biotech­nol­o­gy and on­col­o­gy trans­ac­tions in the last five years is 10.4×1,” says Medi­va­tion. “Even Sanofi’s ex­am­ple of Pfiz­er’s ac­qui­si­tion of Ana­cor re­flects an im­plied two-year for­ward rev­enue mul­ti­ple of 24.2x, sig­nif­i­cant­ly high­er than the 6.3×2 mul­ti­ple im­plied by Sanofi’s pro­pos­al.

“Phar­ma­cyclics – the most rel­e­vant high-growth on­col­o­gy peer in our view – was ac­quired at a two-year for­ward rev­enue mul­ti­ple of 11.5x.”

All that is sim­ple math and Medi­va­tion wants the best for­mu­la it can get. Where Medi­va­tion gets down and dirty is when the biotech com­pares its record on can­cer drug de­vel­op­ment with Sanofi’s.

Sanofi fa­mous­ly tried to make on­col­o­gy a big part of the pipeline af­ter ex-CEO Chris Viehbach­er took over. But their big drug foundered in the clin­ic, forc­ing a re­or­ga­ni­za­tion and leav­ing be­hind some con­sid­er­able em­bar­rass­ment that Medi­va­tion is play­ing off of now. Sales in on­col­o­gy dropped by al­most half at the phar­ma gi­ant over the last 4 years, says the biotech, while its block­buster rev­enue has been grow­ing.

Says Medi­va­tion: “Sanofi’s lack of in­sight and suc­cess in on­col­o­gy, in our view, ex­plains its re­luc­tance or in­abil­i­ty to as­cribe ap­pro­pri­ate val­ue to our pipeline.”

The com­pa­ny is talk­ing about ta­la­zoparib, Medi­va­tion’s PARP in­hibitor which is tak­ing on some ma­jor league ri­vals, in­clud­ing J&J.

Ta­la­zoparib is a block­buster op­por­tu­ni­ty, with some ev­i­dence to sug­gest it’s the best PARP in­hibitor out there (see be­low). If Sanofi gets ahold of it, Medi­va­tion says, they’ll just screw it up.


“Sanofi has had long-stand­ing in­ter­est in ta­la­zoparib’s mech­a­nism of ac­tion (PARP in­hi­bi­tion) but a poor un­der­stand­ing of it, tout­ing a mol­e­cule it ac­quired from Bi­Par in 2009 as a PARP in­hibitor and a pro­gram key to the re­vi­tal­iza­tion of its can­cer busi­ness. How­ev­er, af­ter two failed phase 3 tri­als, it was dis­cov­ered that the Bi­Par PARP in­hibitor (ini­parib) did not in­hib­it PARP and the pro­gram was dis­con­tin­ued less than 18 months be­fore FDA grant­ed ac­cel­er­at­ed ap­proval to ola­parib (Lyn­parza), the first PARP in­hibitor ap­proved in the U.S.”

Here’s the back sto­ry:

Medi­va­tion ac­quired ta­la­zoparib from Bio­Marin last Au­gust for $410 mil­lion up­front and $160 mil­lion in mile­stones. Just a few months ago, J&J struck back by bag­ging the prostate can­cer rights on Tesaro’s ni­ra­parib, set­ting the stage for a new show­down be­tween Medi­va­tion’s Xtan­di fran­chise and J&J’s Zyti­ga.

As­traZeneca gained a pi­o­neer­ing ap­proval for its PARP in­hibitor, Lyn­parza, at the end of 2014. Clo­vis, mean­while, has ru­ca­parib, which earned the FDA’s break­through drug des­ig­na­tion. And Clo­vis has plen­ty to prove af­ter watch­ing its lead pro­gram im­plode amid some prob­ing ques­tions about how the com­pa­ny had pre­sent­ed, or pos­si­bly mis­rep­re­sent­ed, the da­ta on it.

None of this, though, is re­al­ly about Sanofi’s R&D ex­per­tise. Sanofi and Re­gen­eron are now ad­vanc­ing their fa­mous col­lab­o­ra­tion in­to on­col­o­gy. What it is about is the amount the com­pa­ny is of­fer­ing for the buy­out. If they ever can agree on the mon­ey, or some­one else comes along with a bet­ter of­fer, Medi­va­tion and ta­la­zoparib will sim­ply go to the high­est bid­der.


Paul Hudson, Sanofi CEO (Getty Images)

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About Avance Clinical

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As oncology sponsors look internationally to speed-up trials after unprecedented COVID-19 suspensions and delays, Australia, which has led the world in minimizing the pandemic’s impact, stands out as an attractive destination for early phase trials. This in combination with the streamlined regulatory system and the financial benefits including a very favourable exchange rate and the R & D cash rebate makes Australia the perfect location for accelerating biotech clinical programs.

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Roger Perlmutter, Merck R&D chief (YouTube)

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