Shares of Medivation (MDVN) are rallying after Bloomberg reported the company is working with advisers to defend itself against a potential takeover. The company's stock has come under pressure following March-in requests from U.S. representatives in an open letter to the National Institutes of Health.
INTEREST FROM POTENTIAL BUYERS: Medivation is working with advisers to defend against a potential takeover after receiving preliminary interest from possible buyers, Bloomberg reported yesterday, citing people familiar with the matter. The company has no current plans to sell, people told the publication. Other sources told Bloomberg that Sanofi (SNY - Get Report) has Medivation on its list of potential takeovers. However, it is not clear whether the French company will pursue a deal, the report noted.
ACQUISITION SCENARIO: Credit Suisse analyst Kennen MacKay commented on reports that Medivation has hired bankers to defend from an acquisition, saying the company has become vulnerable to a takeover following the pullback in shares. However, conversations with management suggest they are not interested in selling, the analyst told investors in a research note. MacKay's analysis suggests Medivation could be worth $54-$59 per share on operational synergies, and $60-$75 per share with leveraged tax benefits to potential suitors Sanofi, AstraZeneca (AZN - Get Report) , and Roche (RHHBY) , who have expressed interest in acquiring U.S. oncology companies. The analyst raised his price target on Medivation to $49 from $48 and reiterated an Outperform rating on the name.
NO MATERIAL IMPACT: Leerink analyst Geoffrey Porges points out that Medivation's stock has come under significant pressure following an open letter from several U.S. representatives calling for the National Institutes of Health to exercise its "march-in" rights to mandatorily lower the price of Xtandi, the company's prostate cancer drug. However, the analyst believes the letter will have "virtually no chance" of any material change in the realized price for the drug, adding that he sees no reason to change his outlook for Xtandi, or Medivation. Porges reiterated a Market perform rating and $39 price target on Medivation shares.
MARCH-IN REQUESTS: A group of twelve congressmen, including presidential candidate Bernie Sanders, issued a letter to the National Institutes of Health strongly encouraging the use of its "march-in" authority and hold a public hearing on the pricing of Xtandi, a prostate cancer drug jointly developed by Medivation and Astellas (ALPMY) . Although march-in rights have never been used, they theoretically allow the government to distribute a company's patent to its competitors in order to protect public interest. American patients are being charged $129,000 for Xtandi, significantly more than the $30,000 being asked of Canadian patients or the $39,000 charged in Japan and Sweden, the lawmakers said.
PRICE ACTION: Shares of Medivation are up 13%, or $4.73, to $42.12 in early trading.
Reporting done by Jessica de Sa-Mota.