Medivation slams Sanofi’s ‘misleading’ claims as merger saga continues

David Hung Medivation CEO
David Hung, Medivation CEO

The increasingly drawn-out play from Sanofi ($SNY) to buy cancer biotech Medivation ($MDVN) shows no signs of being settled soon as the biotech’s management continues to push back against the French Big Pharma.

Today, Medivation sent a letter to stockholders providing new information to “correct the misleading claims” Sanofi has made as part of its “coercive efforts” to acquire Medivation, at what the biotech has maintained is an “opportunistic, low price that substantially undervalues Medivation.”

Sanofi has offered around $9.3 billion to buy the biotech, a figure seen as too low by the firm and many analysts. A number of other suitors, including Pfizer ($PFE) and AstraZeneca ($AZN), are rumored to also be interested in becoming Medivation’s white knight.

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Struggling BioMarin ($BMRN) was said last week to be a new interest for Sanofi, but a well-placed source told FierceBiotech that this was nonsense, and that Sanofi was all in for Medivation.

But while Medivation is playing hardball, Sanofi is becoming more aggressive, and has a strong history of getting what it wants M&A-wise. Just ask Genzyme, which it bought after a contracted battle back in 2011.

The French company is now seeking to go hostile and wants to replace Medivation’s board with a slate of hand-picked nominees who, in the words of Medivation, have “minimal biotechnology industry experience.”

In the letter, Medivation has appealed to its stockholders to “reject Sanofi’s solicitation efforts.”

Back in March when rumors first began to circulate, Jefferies analyst Biren Amin said that a fair value for acquirers would be in the range of $51 to $54 a share. This would represent a fairly substantial premium to Medivation's premerger speculation price of $37 and comes as the company has a current market capitalization of $6.1 billion.

But in a more bullish scenario, for example, where its pipeline drugs meet or beat expectations, Amin estimated that valuation could be $71 to $75 a share, although this would all depend on the buyer.

The proxy advisory firm Glass, Lewis & Co., recommends that shareholders allow Medivation’s block of Sanofi. The firm said: “At this point, it appears to us that investors generally agree with the company’s board that the initial Sanofi proposal undervalues the company, as evidenced by the fact that the company’s shares have traded well above Sanofi’s offer price of $52.50 per Medivation share ever since the initial announcement of such proposal. We also believe that the company is not in any sort of significant dire financial straits at this time that would warrant accepting a low-ball takeover offer.”

It said that shareholders should “continue supporting the current Medivation board at this time.” It added: “In our view, Sanofi’s proposed shakeup to the company’s board composition would likely be more disruptive than beneficial to the company’s shareholders.”

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

Sanofi currently has a small group of cancer drugs on the market but is far behind its Big Pharma rivals in the latest classes of oncology R&D. In its Q1 results, its 6 marketed cancer drugs collectively made just $407 million, with none being market-leading.

It has been looking to rectify this in recent months, however, with a $1.8 billion cancer deal with Regeneron ($REGN) signed last summer and a host of deals with several oncology-focused biotechs also being penned at the start of the year.

Medivation has an attractive blockbuster in its prostate cancer drug Xtandi (that it co-markets with Astellas), 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.

- check out Medivation’s letter

Related Articles:
Confident Sanofi files pre-merger notification for Medivation
Can Medivation's CEO get a bidding war started?

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