Despite a growing outcry over the rising cost of cancer
treatments, drugmakers are placing multibillion-dollar bets on new
medicines they expect will command premium prices and generate big
sales.
France's Sanofi SA said Thursday it made an unsolicited, $9.3
billion offer to purchase San Francisco-based Medivation Inc.,
which sells a prostate-cancer drug that recently drew criticism
from members of Congress over its price tag. It is Sanofi's latest
effort to expand its cancer-treatment business as sales of its
older drugs decline. Medivation's board was scheduled to meet
Thursday to review the offer.
Separately, AbbVie Inc. of North Chicago, Ill., agreed to pay
$5.8 billion to acquire a privately held cancer-drug developer,
Stemcentrx Inc., of South San Francisco, Calif., continuing
AbbVie's aggressive push to build an oncology business.
Stemcentrx's investors include a venture-capital fund founded by
Peter Thiel, a co-founder of PayPal Holdings Inc. and an early
investor in Facebook Inc.
The flurry of deal activity surrounding cancer drugs comes as
politicians, doctors and health-insurance companies blast the
pharmaceutical industry for its pricing—particularly for new cancer
treatments with monthly costs that commonly exceed $10,000 a
patient.
Such scrutiny recently turned to Medivation's Xtandi, a
prostate-cancer drug introduced in 2012 that costs about $129,000 a
patient annually in the U.S. and had sales of $1.9 billion last
year. In March, several members of Congress sent a letter to the
U.S. Department of Health and Human Services, saying the drug's
"unreasonably high cost" was limiting patient access.
The lawmakers asked HHS to invoke a provision of a 1980 law to
order Medivation to license patents for Xtandi to third parties to
enable them to sell lower-priced copies. The lawmakers said the
government has the power to exercise such "march-in rights" if
research underpinning a drug has received federal funding and the
drug isn't available to the public on reasonable terms.
Medivation, which co-markets Xtandi with Astellas Pharma Inc. of
Japan, said the 1980 law didn't intend for march-in rights to be
used as a form of price control. It added that Xtandi is "widely
available to patients."
Yet the backlash against prices hasn't curbed big drugmakers'
interest in cancer drugs. AbbVie said Thursday it expects a
lung-cancer drug being developed by Stemcentrx to eventually
generate up to $5 billion in annual sales if it is cleared for
marketing by regulators.
"Big pharma is confident in its ability to command premium
pricing for the right assets," RBC Capital analyst Simos Simeonidis
said in an interview. "I think all these premiums they pay for
companies signify they feel confident in their ability to get the
pricing they want."
Underscoring the sales potential in oncology, Bristol-Myers
Squibb Co. said Thursday that sales of its new immune-stimulating
drug Opdivo jumped to $704 million for the first quarter of 2016,
from $40 million a year earlier. The drug, launched in late 2014,
costs $12,500 a month per patient, on average.
Sanofi said it decided to go public with its offer after
Medivation rebuffed a recent takeover approach.
Sanofi CEO Olivier Brandicourt called the $52.50-a-share offer—a
50% premium to Medivation's average share price for the two months
before takeover speculation emerged—"very attractive."
It is, however, lower than Medivation's current share price,
which has been buoyed by takeover speculation. Medivation shares
rose 7.9% to $56.17 on Thursday.
Medivation confirmed it had received "a private letter from
Sanofi making an indicative, nonbinding proposal," and it expected
to provide an update after its board met Thursday.
Analysts said Medivation could draw interest from other
companies, which they said could push offer prices close to $70 a
share. Sanofi rivals such as Roche Holding AG and AstraZeneca PLC
also have been expanding their oncology portfolios. Spokespeople
for AstraZeneca and Roche declined to comment.
AbbVie said Stemcentrx's lung-cancer treatment, dubbed Rova-T,
is promising based on clinical trials showing it shrank lung tumors
in a significant portion of patients receiving it.
Stemcentrx is a privately held company founded in 2008 in South
San Francisco, Calif. It specializes in designing drugs to target
cancer stem cells, which cause cancer to spread throughout the
body.
Last year, Stemcentrx completed a nearly $250 million financing
that valued the company at $5 billion, The Wall Street Journal
reported. Stemcentrx investors include Artis Ventures and Founders
Fund, the venture-capital firm founded by Mr. Thiel.
Founders Fund has backed other notable technology companies,
including Airbnb Inc. and Palantir Technologies Inc. But its
investment in Stemcentrx is the largest in the firm's history,
according to a person familiar with the matter.
It is the latest in a series of oncology deals AbbVie has struck
to try to reduce its heavy dependence on the anti-inflammatory drug
Humira, which faces potential competition from copycat drugs in
coming years.
Denise Roland contributed to this article.
Write to Peter Loftus at peter.loftus@wsj.com, Noemie Bisserbe
at noemie.bisserbe@wsj.com and Nick Kostov at
Nick.Kostov@wsj.com
(END) Dow Jones Newswires
April 28, 2016 17:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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