Pfizer nears $14bn takeover of Medivation

A worker tests a liquid chemical inside of a laboratory at the Pfizer Inc. research and development facility in Cambridge, Massachusetts, U.S., on Monday, Oct. 26, 2015. Pfizer is expected to report quarterly earnings on October 27. Photographer: Scott Eisen/Bloomberg©Bloomberg

Pfizer is nearing a deal worth about $ 14bn to acquire California biotechnology company Medivation, beating out a handful of its biggest rivals to win the auction for the sought-after cancer drugmaker.

People close to the talks said a deal between Pfizer, the world’s second largest drugmaker, and Medivation could be announced as early as Monday, though they cautioned that the two sides were in the process of finalising their agreement.

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Pfizer, which has a market value of $ 212bn, is planning to pay a premium of about one-third to Medivation’s closing share price of $ 67.16 at the end of last week, valuing the company’s equity at more than $ 14bn.

Pfizer defeated a number of suitors for Medivation including Celgene, Gilead and French drugmaker Sanofi, which had been pursuing the company for months.

Pfizer declined to comment and Medivation, which is being advised by JPMorgan Chase and Evercore, could not immediately be reached for comment.

San Francisco-based Medivation makes the world’s best-selling prostate cancer drug, Xtandi, which is forecast to generate $ 5.7bn in annual revenues by 2020. It is also developing an experimental drug called Talazoparib, known as a “parp inhibitor”, which is designed to stop tumour cells from multiplying by damaging their DNA.

Founded in 2004, Medivation became the subject of takeover talk after Sanofi tabled a $ 9.3bn offer at the end of April and then began a hostile pursuit of the company, which lasted two months. In July, Medivation rejected an improved offer from Sanofi, worth $ 58 a share or roughly $ 10bn, but agreed to sign confidentiality agreements with the French drugmaker and other interested buyers.

Shares in Medivation have already more than doubled in the last six months and are up 105 per cent over that period.

The deal would mark the return of Pfizer to big ticket deal making after its attempt to buy Dublin-based Allergan for $ 150bn was thwarted by the Obama administration, which wanted to stop the company moving its headquarters to low-tax Ireland.

Pfizer has historically been an also-ran in the race to develop new cancer drugs, but in recent years it has begun efforts to build a leading oncology franchise, buoyed by the success of its blockbuster breast cancer drug, Ibrance.

The purchase of Medivation will be one of its biggest deals in the oncology field, after it lost in the race to buy Pharmacyclics last year, which was eventually taken over by AbbVie for $ 21bn.

The company is also trying to catch up with rivals such as Merck and Bristol-Myers Squibb, which are selling new immunotherapy drugs that turn the body into a weapon against cancer, described by doctors as the most significant development in tackling the disease since chemotherapy.

Pfizer has signed a deal with Merck of Germany to develop similar medicines and believes it can gain lost ground by combining them with two or three more experimental drugs to achieve better results for patients.

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