Medivation plans a bidding war as it rejects Sanofi’s sweetened bid

David Hung, Medivation CEO
David Hung, Medivation CEO

Taking a look back at its Genzyme acquisition handbook, Sanofi ($SNY) has turned to CVRs as its new ploy to buy out its highly desired biotech target Medivation ($MDVN)--but it will have to get in line as the company opens itself up to other suitors.

Sanofi confirmed late yesterday that it had sweetened its initial low-ball offer, made back in March, to buy Medivation for $52.50 a share--or around $9.3 billion--to $58 a share in cash and an extra $3 per share by 2022 in the form of a contingent value right (CVR) for its late-stage PARP inhibitor talazoparib, which is based on how well it does should it gain approval.

The use of a CVR is straight out of its Genzyme playbook, which after many months of wrangling over the CVR, it managed to acquire back in 2011 for just over $20 billion.

This also all comes after the success of Tesaro ($TSRO) and its recent, deeply impressive top-line results for its PARP inhibitor niraparib, which boosted the whole experimental class and saw Medivation’s shares jump by over 5% on the news.

Given this, Medivation was swift and brutal in the rejection of this new Sanofi offer. The biotech has however now opened its books to Sanofi, as well as other suitors, which are reported to include Pfizer ($PFE) and Celgene ($CELG), according to sources speaking to Reuters.

This allows these companies the ability to see confidential information about Medivation, as they weigh up new bids. This process can go on for up to 6 months, so things might just quieten down for the rest of the year.

Kim Blickenstaff, chairman of Medivation’s board, said: “Medivation has significant scarcity value as one of the only profitable, commercial-stage oncology companies, and management has been successfully executing a strategy that is generating outstanding returns for our stockholders. At the same time, our board remains committed to objectively considering all avenues that may enhance our ability to deliver superior value.

“Our decision to enter into these agreements is consistent with our focus on stockholder interests, and will allow interested parties to fully understand the significant value of our [blockbuster prostate cancer drug] Xtandi franchise and the enormous potential of our pipeline, including talazoparib, our promising, potential best-in-class PARP inhibitor.”

Sanofi had been going hostile, trying to push its own board members into Medivation to stage a coup, but it seems the PARP data, and Medivation’s resolve, has dampened Sanofi’s aggressive tactics as it has now dropped its efforts to oust the company’s directors. 

The new and swiftly rejected bid would have been worth around $11 billion, but analysts have long said that Medivation is likely worth at the top end around $70 to $75 a share, meaning that anyone who wants the biotech will in the light of recent events now have to pay top dollar.

Sanofi said in a statement that it “has entered into a confidentiality agreement with Medivation under which it will be provided due diligence access and confidential information.”

It also confirmed that it has been given “the same opportunity as others” to participate in a process relating to a possible deal. The French Big Pharma, which is seeking to boost its own bare cancer pipeline, added that a “dataroom will be opened and management meetings scheduled in the near term” with the biotech.

“We are pleased to have the opportunity to engage with Medivation,” said Olivier Brandicourt, CEO of Sanofi. "Our willingness to increase our offer is driven by our in-depth analysis of the benefits and value creation potential of a combination. We look forward to discussions with Medivation on a combination which we believe is the most value creating transaction for both companies’ shareholders, and would provide Medivation and its employees with an outstanding platform to further grow its oncology franchise.”

- see Medivation’s rejection
- check out Sanofi’s reply  

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