Medivation Takeover Saga Takes Another Turn, Rumored to Open Books to Amgen and Pfizer

May 10, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Rumors are spreading that San Francisco-based Medivation , which is the target of a takeover attempt by Paris-based Sanofi , has agreed to open its books to Pfizer and Amgen .

In late March and early April, Sanofi’s chief executive officer, Olivier Brandicourt, approached Medivation’s founder, president and chief executive officer, David Hung, about a possible acquisition. Hung and the Medivation board indicated they had no interest in a deal.

Undeterred, Sanofi sent a written proposal on April 15, which Medivation ignored. On April 28, Sanofi went public in its offer, attempting to pressure the board and shareholders into at least considering the deal.

In the deal, Sanofi offered $52.50 per share, which was a 50 percent premium to Medivation’s average share price the two months before the offer.

On May 5, Sanofi responded to Medivation’s continued lack of interest by threatening a hostile takeover in a letter. The letter, in part, said, “You should know that an acquisition of Medivation is a priority for Sanofi and we are committed to effecting it. If you are not prepared to engage with us, we have no choice but to go directly to your shareholders. As you know, your shareholders have the ability to act at any time by written consent to remove and replace the Board. If the Medivation Board of Directors continues to refuse to engage with us, then we intend to commence a process to remove and replace members of the Board.”

Only two days earlier, on May 3, insiders told Reuters that Pfizer (PFE) had contacted Medivation about an acquisition. Then on May 6, there were reports that Amgen (AMGN) was interested.

The interest is generated by Medivation’s prostate cancer drug, Xtandi. With its marketing partner, Astellas Pharma , Xtandi sales grew 73 percent in the U.S. in 2015 and 116 percent globally. The company also has at least two more oncology drugs in its pipeline, pidilizumab for B-cell lymphoma and other blood cancers, and talazoparib for breast cancer. Talazoparib is viewed as a possible blockbuster drug, capable of bringing in over $1 billion in sales annually.

Medivation has indicated that Sanofi’s $52.50 per share cash offer undervalued the company. Sanofi, on its part, has indicated it might raise the offering price as long as Medivation agrees to negotiations. Of course, they say that while threatening a hostile takeover and overthrowing the board.

None of the companies are currently publically commenting, and it’s unclear if Pfizer or Amgen will actually make bids.

On Friday, April 29, Medivation amended its bylaws in a way that would give the board of directors more leverage in negotiations. The first change indicated that written consent actions from stockholders could be independently reviewed and would not go into effect until an independent inspection was performed. The second provision required that any claims against the company by stockholders had to be done in the Court of Chancery of the State of Delaware.

Yang Huang and Yigal Nochomovitz of Citigroup, said of the first provision, that the “goal is to draw out timelines. In the event activists shareholders attempt to influence the makeup of the Board via written consent (i.e. add themselves to the Board or remove an existing Board member), the process can be drawn out by bringing in independent inspectors to review the validity of the consent, and no consent becomes effective until the review is complete.”

The Delaware provision primarily signaled that Medivation viewed a hostile takeover attempt as inevitable.

Medivation has been on the rise, and was prior to the original Sanofi bid. Shares traded a year ago on May 29, 2015, for $66.02. They dropped to $27.32 on Feb. 8, 2016, but are currently trading for $62.49.