Medivation (MDVN) Scales New 52-Week High on Pfizer Deal

Shares of Medivation, Inc.MDVN hit a 52-week high of $80.99 on Thursday, Sep 9.

Shares of the biopharmaceutical company have been up more than 20% ever since pharmaceutical giant Pfizer Inc.PFE announced its intention to buy it.



The Deal

On Aug 22, Pfizer and Medivation announced that they have entered into a definitive merger agreement, under which Pfizer will acquire Medivation for $81.50 per share in cash for a total enterprise value of about $14 billion.

How will Medivation Benefit?

We note that Medivation was the topic of acquisition talks for quite a while, with the company first receiving an offer from French drugmaker Sanofi SNY . Sanofi had initially approached Medivation with an offer of $52.50 in cash, which was rejected by the company. Sanofi came back with a sweetened bid of $58.00 per share in cash, plus a Contingent Value Right (CVR) for talazoparib sales, representing a potential payment in 2022 of up to $3.00 per share.

Pfizer's offer price of $81.50 to Medivation represents a huge premium on Sanofi's last offer. The signing of the deal with Pfizer has assigned proper value to Xtandi and Medivation's promising late-stage pipeline candidates, especially talazoparib, which should accelerate growth.

The cash nature deal is a huge boost for the stock as well as Medivation's cash position, thereby delivering significant and immediate value to shareholders.

What about Pfizer?

The Medivation acquisition will strengthen Pfizer's cancer franchise, which currently consists of products like Ibrance and Sutent. Pfizer is also working on strengthening its immuno-oncology pipeline and this buyout will be a strategic fit for the company.

With this takeover, Pfizer will add Medivation's prostate cancer treatment, Xtandi, to its portfolio. Xtandi is currently being evaluated in several studies, including a couple of late-stage studies in non-metastatic prostate cancer, and another phase III study in hormone-sensitive prostate cancer. It is also in mid-stage development for the treatment of advanced breast cancer and hepatocellular carcinoma.

Moreover, Medivation's pipeline candidate talazoparib, an orally-available PARP inhibitor, represents significant potential. Pfizer will also add pidilizumab to its pipeline with this acquisition. Pidilizumab is an immuno-oncology (IO) asset which is being developed for diffuse large B-cell lymphoma and other hematologic malignancies, and which could be combined with IO therapies in Pfizer's portfolio.

Medivation carries a Zacks Rank #5 (Strong Sell). A better-ranked stock in the pharmaceutical sector is Anika Therapeutics Inc. ANIK , which sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today's Zacks #1 Rank stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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