Pfizer on Monday said it will acquire Medivation for $14 billion in a move the pharmaceutical giant said will bolster its position as a leader in cancer medication.
The company will pay $81.50 per share for Medivation, using existing cash on hand to finance the deal. It is expected to close in the third or fourth quarter of this year.
"The addition of Medivation will strengthen Pfizer's Innovative Health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term." CEO Ian Read said in a statement. "This transaction is another example of how we are effectively deploying our capital to generate attractive returns and create shareholder value."
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Medivation owns cancer drug XTANDI, a hormone therapy that targets cancer tumor cells. It has been used to treat 64,000 men with prostate cancer to date and has generated $2.2 billion in sales.
According to recently-released Medicare Part D spending data, the federal government spent $447 million on XTANDI claims in 2014.
Medivation also has two cancer drugs in late-stage trials. Talazoparib is being tested for treating BRCA-mutated breast cancer, while Pidilizumab, an immuno-oncology drug, is being tested for treating large B-cell lymphoma. According to Pfizer, Pidilizumab has the potential to be combined with other immuno-oncology drugs owned by Pfizer.
"We believe that Pfizer is the ideal partner to extend the reach of our blockbuster XTANDI franchise and take our promising, late-stage assets – talazoparib and pidiluzimab – to their next stages of development so that they can be made available to patients as quickly as possible," Medivation CEO David Hung said in a statement.
News of the acquisition pushed Medivation's stock price up nearly 20 percent on Monday morning, with shares trading around $80 a share, close to the pfizer offer price. The stock had closed on Friday at $67.16 a share.
Pfizer said it expects the deal will add about 5 cents per share to its value for the first full year after the deal closes.