The agreement ends months of bidding for San Francisco’s Medivation, one of the most desired independent biotechs because it sells a leading prostate-cancer drug.
Pfizer will pay $81.50 a share, a 21% premium to Medivation’s closing stock price Friday. Medivation shares moved up nearly 20% to $80.41 in trading on Monday in New York, as Pfizer shares fell 5 cents to $34.86.
Medivation’s drug, Xtandi, already generates about $2 billion in yearly sales and has the potential to more than double, according to analysts.
Pfizer said the deal would add 5 cents to earnings in the first full year after closing and isn’t expected to affect its 2016 financial guidance. Pfizer said it plans to finance the transaction with its cash holdings.
If the acquisition isn’t completed, Medivation could pay Pfizer a $510 million termination fee, according to a regulatory filing.
Pfizer has been seeking to expand its lineup of such oncology treatments. Xtandi would give the New York drug company a beachhead in prostate cancer complementing its breast-cancer treatment Ibrance, which is on track to be a blockbuster.
Medivation’s drugs in development also could complement Pfizer’s efforts to develop combinations of cancer agents with so-called immunotherapies, which deploy the immune system in the fight against cancer.
The acquisition would further Pfizer CEO Ian Read’s efforts to bolster what he refers to as the innovative side of the company’s business. The move “accelerates our strategy in line with our priorities,” he said on a call with analysts Monday.
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