Pfizer Inc. Walks a Tight Rope with its Latest Buy
The firm talked at length about its oncology push during an analyst and investor call to review oncology business and ASCO data presentations , a couple of months ago as well. Now, as far as Medivation goes, the management is having a much lower expected benefit to the share price. However, Pfizer Inc. paid a price that doesn’t seem likely to move the needle much, as per some analysts. One way to drive shareholder value would be to re-lever the firm back to its current capital structure allocation post-transaction. This can happen through further buybacks or accretive debt issuance.
San Francisco-based Medivation was brought in a $14 bn all-cash deal. This is another move that confirms Pfizer’s strategy to add a high-growth leg to its oncology portfolio. Medivation has been on the M&A radar for the most part of the year. It has lots of potential with respect to small-molecule oncology treatments. It even went so far as to hire JP Morgan back in March to handle the abundance of takeover interest. French drug firm Sanofi SA made a play for the firm back in April with a $52.50 per share bid. That was rejected, with the board looking for a better offer.
Pfizer Adds More Feathers to its Cap
Medivation is most sought for Xtandi. It is a prostate cancer drug which works to inhibit the androgen receptor signaling pathway within the tumor cell. Xtandi is made and sold jointly with Japan-based Astellas Pharma, Inc. It has accrued about $2.2 bn in global net sales in the past four quarters. Since FDA approval in 2012, the drug has treated 64,000 patients in the U.S. alone. Xtandi is also in Phase III of two studies about non-metastatic prostate cancer. There is also one going on in hormone-sensitive prostate cancer. The drug is also in a Phase II study with respect to treatments for malignant hepatoma and advanced breast cancer.
“As we still keep reshaping our Essential Health portfolio, we are focusing on areas that further address global public health needs. We are committed to looking for ways to enhance our portfolio around the world where we offer patients and healthcare workers access to more than 60 anti-infective and anti-fungal medicines. This deal will also enhance our global expertise and offerings in this increasingly important area of therapeutics. Apart from that, it will give a chance for near-term revenue growth,” said John Young, group president, Pfizer Essential Health.