Pfizer steps up to the bargaining table and considers a Medivation bid

Ian Read
Breaking

Now it’s Pfizer’s turn to ponder stepping into the spotlight and taking a crack at a Medivation buyout. Reuters reported early Wednesday that the pharma giant--twice thwarted in its industry-shaking attempts to complete a megabuyout/tax inversion--has made an overture to Medivation execs to explore a possible bid.

As Reuters makes clear, there’s no guarantee that Pfizer ($PFE) will follow through with an offer, but it underscores the bidding war that Medivation ($MDVN) wants to spur in order to win a top price for the company. Sanofi ($SNY) got this game started by taking its $9.3 billion bid--$52.50 a share--for Medivation public. And analysts are left wondering whether AstraZeneca ($AZN) and even Novartis ($NVS) may jump in as well.

Where’s it headed? That’s a question that analysts love to ponder. If Pfizer steps in, the speculation hovers at a minimum of $65 per share, though Geoffrey Porges at Leerink thinks it will take $70 to get the job done.

That would make for a big premium for a biotech known primarily for its blockbuster prostate cancer drug Xtandi, partnered with Astellas and competing against Johnson & Johnson’s ($JNJ) Zytiga. But Medivation has also attracted attention for its experimental PARP inhibitor--the Phase III drug talazoparib, recently acquired from BioMarin ($BMRN) for $410 million upfront--and Big Pharma players have been pouring billions of dollars into the hot cancer drug market, staking out first-in-class drugs in the fast-changing arena.

For Pfizer, a buyout would help bolster the company after its latest quest for Allergan ($AGN) was terminated by new M&A rules from the Obama administration. Long plagued by poor R&D productivity, Pfizer has been pouring resources into oncology, which it spotlighted with a record $850 million upfront to partner with Merck KGaA on a checkpoint inhibitor.

Medivation CEO David Hung has a reputation as a top dealmaker in biotech, winning rich partnerships on the long road to making Xtandi a major new entry in oncology. Keeping the buzz on new bids while keeping Sanofi on hold is one likely way to keep the price moving north.

The stock closed yesterday at $57.52. So far so good.

- here's the report from Reuters

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