Merck, Pfizer and Gilead all interested in Medivation buy-out

No fewer than five major pharmaceutical companies expressed an interest in buying cancer drug specialist Medivation earlier this month, it has emerged.

Sanofi has been in pursuit of the San Francisco-based company since April when it made an unsolicited takeover offer of $9.3 billion, but since then other big firms have been drawn in.

Reuters reports that sources close to the matter say Pfizer, Celgene, Gilead and Merck all formally expressed interest in a bid earlier this month.

Medivation is now expected to have further conversations with potential buyers in the coming weeks – with a bidding war between the interested parties now a virtual certainty.

The company has one established blockbuster oncology treatment, prostate cancer drug Xtandi (enzalutamide), but has also been talking up its pipeline in recent weeks.

The most promising of its late-stage assets is talazoparib in breast cancer, with phase 3 trials suggesting it will be a major earner once approved.

The interest in Medivation reflects demand for new engines of growth in big pharma, and the scarcity of robust, fast-growing mid-sized biotechs to acquire.

The company has already rejected two offers from Sanofi, the latest for $58 per share in cash and $3 per share in the form of a contingent value right. This relates to the forecast sales performance of talazoparib, but the conclusion to the saga looks to be drawing near.

Sanofi needs a remedy to its flagging revenues, most particularly its core diabetes franchise, which is being battered by biosimilar competition and US pricing controls.

For Merck, buying the company would bolster its existing cancer portfolio, currently centred around immunotherapy star Keytruda, which is forecast to hit revenues in excess of $5 billion.

Pfizer, Celgene and Gilead are similarly motivated to answer the demands of their shareholders, hungry for new sources of growth. However it’s not clear if these companies are still interested after expressing their interest earlier this month.

Medivation has just reported Q2 results which showed Xtandi maintaining double digit growth, helping the company to forecast more than 50% top line growth in 2016.

The company’s shares rose on the news of the Reuters story, lifting its market capitalisation to $11 billion. Medivation’s board will look to attract an offer at a premium to this figure. This is likely to make it the second biggest pharma M&A deal in the sector this year, after Shire’s $32 billion takeover of Baxalta in January.