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Goldman Sachs Talks Pfizer's Acquisition Deal Of Medivation

Goldman Sachs Talks Pfizer's Acquisition Deal Of Medivation - Pfizer, Inc. NYSE:PFE, Medivation, Inc. NASDAQ:MDVN

Pfizer Inc. PFE finalized a deal to acquire Medivation Inc MDVN for $14 billion Monday morning. Goldman Sachs’ Jami Rubin has a 12-month price target of $37 for Pfizer.

Rubin stated that the acquisition would be consistent with Pfizer’s “stated interest in pursuing bolt-ons.” He added that the reported transaction price implied “2017 EV/S of ~11.9x on published GS estimates,” which compares with a 11x median value for SMID biotech deals for 2017 and a 16x mean value for the same.

Comparing To Other Purchases

The acquisition by AbbVie Inc ABBV of Pharmacyclics, Inc. NASDAQPCYC's Imbruvica for $21 billion represented a value of ~18x EV/NTM revenues, Rubin noted.

Imbruvica was partnered similar to Medivation’s Xtandi. Imbruvica’s peak sales were estimated by AbbVie at ~$8 billion, which is significantly higher than the estimate for Xtandi. The peak sales of Xtandi are estimated at $3.2 billion by Goldman Sachs’ Salveen Richter, who expects sales to grow through 2026, driven by earlier lines of therapy.

Rubin added, however, that the market was competitive with Johnson & Johnson JNJ's Zytiga as well as its pipeline asset ARN-509, which it acquired from Aragon Pharma.

“We note there is no value for breast cancer indication in our estimates, and there is room for potential upside if that is successful, and from better penetration from earlier lines of therapy. MDVN’s pipeline has a PARP-trapping cancer drug in Ph3, which we estimate will generate heavily risk adjusted peak sales of $328 million in 2028E,” the analyst mentioned.

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DateFirmActionFromTo
Aug 2016JefferiesMaintainsBuy
Jul 2016JefferiesMaintainsBuy
Jun 2016JefferiesMaintainsBuy

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