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How Much Could Medivation Sell For? Wall Street Speculates

Shares of drugmaker Medivation ( MDVN ) soared more than 20% Thursday to a nearly three-month high on rumors that the company is fending off suitors, leading Wall Street to speculate on how much the company might go for. Late Wednesday, Bloomberg — citing anonymous sources — reported that Medivation hired bankers to defend against takeover interest. Reuters, also citing anonymous sources, said that Medivation had been working with JPMorgan ( JPM ). Medivation stock was up 23% in afternoon trading on the stock market today , near 46. Bloomberg mentioned Sanofi ( SNY ) as a possible buyer. Credit Suisse analyst Vamil Divan wrote in a research note that Sanofi made sense as a buyer, since Medivation’s prostate-cancer treatment Xtandi and its pipeline of other cancer treatments would fit Sanofi’s existing cancer franchise. “We model Medivation worth $55 (per share) to Sanofi ($65 with Sanofi’s 23% tax rate),” Divan wrote. “We see Sanofi’s Taxotere sales force potentially increasing Medivation sales 2% and assume a 20% reduction in Medivation’s R&D and 40% reduction in Medivation’s SG&A (sales, general & administrative expenses). We note a 12% tax-rate benefit over Medivation (23% vs 35%).” Divan added that the greatest synergies would actually come with AstraZeneca ( AZN ), given its market-leading sales force for its prostate-cancer drug Casodex. He estimated that Medivation would be worth $59 a share to AstraZeneca, or $75 with its 16% tax rate. Roche ( RHHBY ), which has a cancer franchise but not in prostate, would do well to pay $54 to $60 a share. Jefferies analyst Biren Amin made a similar calculation and came up with a $51-a-share price for Sanofi, and the same for a hypothetical buyout by Bayer ( BAYRY ). He also considered big biotech Amgen ( AMGN ) as a possible buyer, calculating a $54-a-share value to that company. However, Amin also wrote that if the companies adopt a “rose-colored glasses” view of Medivation’s potential, with U.S. Xtandi sales peaking at $5.5 billion, it could be worth $71 a share to Sanofi and Bayer, and $75 to Amgen. Shares of Amgen and Bayer were up a fraction Thursday afternoon, while Sanofi stock was down 1%.

Novo Nordisk Pops As Diabetes Drug Cuts Heart Disease Deaths

Shares of diabetes giant Novo Nordisk ( NVO ) jumped Friday after the company said its drug Victoza reduced heart attacks and strokes. Novo released few details about the results of the study, which it’s saving for the next American Diabetes Association meeting in June. However, it did say that there was a statistically significant reduction in all three of its metrics — heart attack, stroke and death from all cardiovascular causes — among the 9,000 patients taking the diabetes drug over five years, compared to the placebo group. The subjects were all over age 50 and either had cardiovascular disease or multiple risk factors. Novo Nordisk’s stock was up about 8% in afternoon trading on the stock market today , near 57. It’s the highest-rated stock in the low-rated Medical-Ethical Drugs group, with a Composite Rating of 82. The effect of diabetes drugs on cardiovascular health has been the subject of several studies lately, notably from Eli Lilly ( LLY ), whose drug Jardiance reduced deaths from heart failure by 32% in a similar large, long-term study reported last September. On the other hand, Merck ‘s ( MRK ) Januvia showed no effect either good or bad in its outcomes trial reported a few months earlier. A similarly neutral result was reported for an outcomes trial of the Sanofi ( SNY ) drug Elixa, which is noteworthy because Elixa is in the same class as Victoza. Both are glucagon-like peptide-1 (GLP-1) analogs, similar to Bydureon from AstraZeneca ( AZN ) and Lilly’s Trulicity, while Jardiance is an sglt2 inhibitor, in the same class as Invokana from Johnson & Johnson ( JNJ ) and Farxiga from AstraZeneca. Merck’s Januvia belongs to another class, called DPP-4 inhibitors. On a conference call with analysts Friday, Novo’s Chief Scientific Officer Mads Thomsen said that the different results may have come from subtle differences between the drugs, which he thinks extend to Victoza’s planned successor, semaglutide. “It’s not only the question of being a member of the given class of GLP-1 agonist,” said Thomsen. “It’s also a part of the kinetics, dynamics, distribution, half-life, and so on. And as we got semaglutide, we have done rather detailed investigations. . . . There is nothing from the animal pharmacology to negate the notion that semaglutide should do at least as well on cardiovascular performance.”

Incyte Plummets After Stopping Trial Of Jakafi In Pancreatic Cancer

Biotech Incyte ( INCY ) tumbled to a 15-month low Thursday after it ended a trial of its lead drug in pancreatic cancer, though its Q4 earnings beat Wall Street estimates. Incyte said that it’s ending a phase-three trial of its drug Jakafi, or ruxolitinib, along with capecitabine (also known as Roche ’s ( RHHBY ) Xeloda) as a second-line treatment for advanced metastatic pancreatic cancer, after an interim analysis showed that it would be futile. Jakafi is sold for the blood cancers myelofibrosis and polycythemia vera, but Incyte is studying it in various solid tumors, including lung, breast and colorectal cancer, in combination with Merck ’s ( MRK ) Keytruda (pembrolizumab) and AstraZeneca ’s ( AZN ) Tagrisso (osimertinib), among other things. Incyte said that it will continue these studies despite the trial failure. Incyte also said that its Q4 revenue, which came from a combination of Jakafi sales, royalties and contract revenue, jumped 97% over the year-earlier quarter to $243.9 million. That’s about $18 million above analysts’ consensus, according to Thomson Reuters. Net income was 29 cents a share, reversing a year-earlier loss and soundly beating consensus of 9 cents. The company did not offer revenue or EPS guidance for this year but said that Jakafi sales should be $800 million to $815 million, up from $601 million last year. It forecast R&D expenses of $620 million to $640 million, plus selling, general and administrative expenses of $255 million to $270 million. Incyte stock was near 56, down nearly 23% in morning trading on the stock market today .