Pfizer Near $14 Billion Deal for Biotech -- WSJ

Medivation, which makes a leading prostate-cancer drug, is much-desired firm

By Jonathan D. Rockoff 

Pfizer Inc. is nearing agreement to buy biotech Medivation Inc. in a move that would add one of the crown jewels of the multibillion-dollar market for cancer drugs to Pfizer's portfolio, according to people familiar with the matter.

The $14 billion all-cash deal could be announced as early as Monday, one of the people said. It would end months of bidding for San Francisco's Medivation, one of the most desired independent biotechs because it sells a leading prostate-cancer drug.

Medivation's drug, Xtandi, already generates about $2 billion in yearly sales and has potential to more than double, according to analysts.

Pfizer has been seeking to expand its lineup of such oncology treatments. Xtandi would give the New York drug company a beachhead in prostate cancer complementing its breast-cancer treatment Ibrance, which is on track to be a blockbuster.

Medivation's drugs in development could also complement Pfizer's efforts to develop combinations of cancer agents with so-called immunotherapies, which deploy the immune system in the fight against cancer.

The acquisition would also further Pfizer CEO Ian Read's efforts to bolster what he refers to as the innovative side of the company's business.

Mr. Read has said Pfizer would decide by year's end whether to split into two, with one company selling fast-growing brand-name drugs like Ibrance and another selling drugs that have lost patent protection.

Wall Street expected Pfizer would break up when it agreed to take over Allergan PLC in a $150 billion deal, but the two companies parted ways in April, after the Obama administration targeted the proposed combination with new rules.

After the breakup, some analysts said Pfizer needed to do more deals to add patent-protected drugs if that side of the company was to develop the critical mass of revenue it would need to function on its own.

The news of Pfizer's potential deal for Medivation was reported earlier by the Financial Times.

Cancer is one of the pharmaceutical industry's biggest markets with world-wide sales amounting to roughly $80 billion a year and growing more than 10% annually, according to EvaluatePharma.

Despite charging high prices often surpassing $100,000 a year per patient, companies haven't faced the challenges securing reimbursement that have limited sales of new drugs for other diseases.

Medivation is one of the few independent biotechs left with a cancer treatment that is already approved and selling well. CEO David Hung says he decided to found the company after watching a 28-year-old breast-cancer patient die during his oncology fellowship.

Xtandi has held its own against a rival prostate-cancer treatment from Johnson & Johnson called Zytiga. Xtandi, which Astellas Pharma Inc. also sells, could be one of the top-selling cancer drugs by 2020, according to EvaluatePharma.

But J&J is developing a new prostate-cancer drug that could pose a threat to Xtandi, according to analysts.

Medivation was put in play after French drug company Sanofi SA made an unsolicited proposal of $52.50 a share in cash, which the biotech rejected in April, saying the offer substantially undervalued the company.

A bidding war resulted. If Pfizer's offer wins, Medivation would fetch more than double the $6 billion it was valued earlier in the year.

Write to Jonathan D. Rockoff at [e-mail]

(END) Dow Jones Newswires

August 22, 2016 02:48 ET (06:48 GMT)

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