A Look at the Winners and Losers of Medivation's $14 Billion Pfizer Buyout Deal

A Look at the Winners and Losers of Medivation's $14 Billion Pfizer Buyout Deal August 23, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Now that the Pfizer acquisition of San Francisco’s Medivation for approximately $14 billion has been announced, investors and analysts are evaluating the winners and losers in the deal. Ron Leuty, writing for the San Francisco Business Times, breaks it down.

David Hung, the founder, president and chief executive officer, of Medivation, is clearly the big winner. Some analysts undoubtedly wondered about his reluctance to submit to Sanofi ’s overtures, but the Pfizer offer far exceeded Sanofi’s bid and probably resembled a seduction compared to the hostile assault by Sanofi.

Although Medivation isn’t releasing information about Hung and other executives’ benefits, Leuty calculates, based on Hung having a minimum of 1.7 million shares under his control or his trust, that the payout would start at about $138 million. And according to the company’s April proxy statement, he could also receive $6.2 million from accelerated vesting of stock options and restricted stock units. But that $6.2 million figure was calculated from a share price of $48.34, which is now 75 percent higher, so the figure is probably more like $10.9 million. He’d also get 24 months of base salary, or $1.7 million, if he is terminated without cause or quits with “good reason.”

Pfizer’s also a winner. Not only does it pick up a blockbuster drug, Xtandi for prostate cancer, the company’s talazoparib for breast cancer, is a new class of cancer drugs. PARP inhibitors block enzymes cancer cells utilize for self-repair after chemotherapy or other damage. Leuty also points out that Pfizer is sort of a loser as well, here. The rationale is that five years ago it had a shot at a different PARP inhibitor, which was licensed to Clovis Oncology . Instead of buying the company and the drug, it took equity and “made a separate venture investment.” It’s spent a lot more money for Medivation, but then again, it got Xtandi in the deal.

Less obviously, another winner is BioMarin Pharmaceutical , based in San Rafael, California. In 2015 it sold talazoparib to Medivation for $410 million up front. Leuty writes, “Now that drug will be in the hands of deep-pocketed Pfizer to take the last few steps of the Food and Drug Administration drug-approval process.”

BioMarin is eligible for mid-single digit royalties on sales, and another $160 million in various regulatory and sales milestone payments.

Leuty also reasons that the Pfizer-Medivation deal might have some implications for BioMarin as an acquisition target. BioMarin has been a rumored target for years, so that’s not necessary earth shaking.

And the big loser? Well, Sanofi. Its last offer for Medivation was $20 per share less than Pfizer’s purchase price. Seven years ago it acquired BiPar Pharmaceuticals, which had a potential PARP inhibitor, iniparib (BSI-201), which failed a late-stage trial in 2011.

“What’s more,” Leuty writes, “going public with its offer, going hostile with a bid and essentially calling Medivation’s board a bunch of amateurs that needed to be replaced wasn’t exactly good form.”

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