Could AstraZeneca be Medivation’s white knight after Sanofi knockback?


The rumor mill keeps turning as interest in the oncology biotech Medivation ($MDVN) heats up--with AstraZeneca ($AZN) now being linked to a $10 billion bid.

The California biotech, which owns U.S. marketing rights to blockbuster prostate cancer drug Xtandi (also sold by Astellas), is said to be the subject of AstraZeneca’s affections after the Anglo-Swedish drugmaker made a £7 billion ($9.9 billion) bid over the weekend.  

This is according to sources speaking with the U.K. newspaper the Sunday Times. The biotech has been valued at being worth $8.7 billion (£6 billion) at the top end of estimates.

This comes after Reuters, quoting people “familiar with the matter”, said last week that Sanofi ($SNY) had been rebuffed by Medivation and may now be considering going hostile. The anonymous sources told the news wire that Sanofi had not offered enough, and Medivation was holding out for a higher bid.

Other Big Pharma names said to be interested include Roche ($RHHBY), Amgen ($AMGN) and Gilead ($GILD). None of the drugmakers are commenting on the rumors.

A deal could make sense for AstraZeneca given the slew of late-stage failures it has suffered in its pipeline over the years, and the promise from CEO Pascal Soriot to double its revenue by the end of the decade.

It already has a biotech unit in the form of MedImmune, which it acquired 10 years ago for nearly $16 billion--although many analysts still question the value of that deal given how little has emerged out of its pipeline. AstraZeneca also received a blow when Sanofi poached the unit’s former head of research Dr. Yong-Jun Liu earlier this month.

Sanofi itself is also going through a second evolution of its pipeline as, after trimming its oncology research last year and outsourcing more its R&D, the French pharma and its biotech arm Genzyme have signed string of deals in the last few months, signaling an about face in the oncology area.  

The addition of Dr. Liu and the rumored deal for Medivation suggest cancer may become a bigger part of its research focus once again.

Meanwhile, AstraZeneca has already splashed $2.7 billion on ZS Pharma in a deal reached last year, seeing it gain access to its lead blood disorder hyperkalemia drug ZS-9--which could be a major blockbuster. AstraZeneca beat out major competition from Actelion to clinch the deal.

The drugmaker is also no stranger to major M&A deals given that it was nearly snapped up by Pfizer ($PFE) for $118 billion in 2014, before the politics of tax inversions and its desire to stay independent scuppered any takeover.  

Medivation has an attractive blockbuster in Xtandi, which would give any purchaser an immediate return, and a pipeline that could yield longer term prospects. This consists of the late-stage breast cancer drug talazoparib, which is projected to make $200 million in peak sales, and the blood cancer drug pidilizumab, which is in a Phase II trial. A candidate for bladder cancer and a multiple myeloma therapy are also in its early-stage pipeline.

But it does come with its problems--most immediate of which is the ongoing pricing debate in the U.S., which has seen Medivation come under the spotlight for its $129,000 price tag for Xtandi. Presidential hopeful Bernie Sanders wants to nullify the drug’s patent in order to allow cheaper generics to flood the market.

This is unlikely to happen, but the political pressure has seen Medivation’s shares have dropped consistently over the past year, leaving it open to a potential acquisition.  

There have also been some hiccoughs in the biotech’s pipeline, with a midstage trial for pidilizumab being partially suspended by the FDA when Medivation discovered it may not work as originally expected.

Medivation was up nearly 4% at the end of play of Friday as deal speculation grows, while Sanofi was down nearly 1% and AstraZeneca up slightly at a quarter of a percent. 

- see The Daily Telegraph’s take