Pfizer To Buy Prostate-cancer Drug Maker Medivation For $14 Bln

(RTTNews) - Drug major Pfizer Inc. (PFE) announced Monday that it has entered into a definitive merger agreement to acquire Medivation, Inc. (MDVN), the developer of blockbuster prostate-cancer drug Xtandi, for $81.50 a share in cash, for a total enterprise value of approximately $14 billion. Pfizer expects the proposed acquisition would build upon the success of its breast cancer drug IBRANCE and with its strong immuno-oncology portfolio.

In pre-market activity on Nasdaq, Medivation shares were gaining 20 percent to trade at $80.57, while Pfizer is down 0.23 percent.

Pfizer Chairman and Chief Executive Officer Ian Read said, "The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer. The addition of Medivation will strengthen Pfizer's Innovative Health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas. .."

The deal is expected to be immediately accretive to Pfizer's adjusted earnings per share upon closing, approximately $0.05 accretive in the first full year after close with additional accretion and growth anticipated thereafter. Pfizer does not expect the transaction to impact its current 2016 financial guidance.

Under the terms of the merger agreement, Pfizer's unit will commence a cash tender offer to purchase all shares of Medivation. The closing of the tender offer is subject to customary closing conditions, including U.S. antitrust clearance.

The Boards of Directors of both companies have unanimously approved the merger, and Pfizer expects to complete the acquisition in the third- or fourth-quarter 2016. Pfizer expects to finance the transaction with existing cash.

David Hung, founder, president and CEO of Medivation, stated that the compelling transaction will deliver significant and immediate value to the stockholders.

Previously, French drug company Sanofi SA had made an unsolicited proposal, which the biotech rejected in April, saying the offer substantially undervalued the company.

Medivation is a biopharmaceutical company focused on developing and commercializing small molecules for oncology. Medivation's portfolio includes XTANDI (enzalutamide), an androgen receptor inhibitor, which has generated approximately $2.2 billion in worldwide net sales over the past four quarters. Medivation entered an agreement in 2009 with Astellas Pharma Inc., to develop XTANDI globally and commercialize jointly in the U.S.

Since its approval for advanced metastatic prostate cancer by the U.S. Food and Drug Administration in 2012, XTANDI has treated 64,000 men to date in the U.S. alone. The drug is also being further developed in Phase 2 studies for the potential treatment of advanced breast cancer and hepatocellular carcinoma.

In addition, Medivation has a promising, wholly-owned, late-stage oncology pipeline, which includes two development-stage oncology assets, talazoparib and pidilizumab.

Albert Bourla, Group President, Pfizer Innovative Health, said, "IBRANCE and XTANDI are anchor brands in breast and prostate cancer respectively, giving Pfizer leadership in two hormone-driven cancers... Medivation's portfolio within prostate cancer and across diverse tumors will complement Pfizer's broad IO portfolio."

According to the American Cancer Society, breast cancer and prostate cancer are among the top three cancers by annual incidence in the U.S.