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Is Sanofi Trying to Acquire Medivation?

What Are the Valuation Drivers for Medivation?

(Continued from Prior Part)

Medivation’s key assets

Medivation’s (MDVN) only commercialized drug, Xtandi, is indicated for prostate cancer. It is currently under various phases of study for indications such as breast cancer and hepatocellular carcinoma. Its pipeline includes talazoparib, pidilizumab, and MDV4463.

The key drug, talazoparib, might prove to be a win for Medivation as it is an effective PARP inhibitor. Medivation focuses on oncology drugs while Roche Holding (RHHBY), Bristol Mayer Squibb (BMY), Sanofi (SNY), and Merck (MRK) are also engaged in the oncology space.

A company such as Medivation can be a good acquisition target for any of these companies, as it would enable these pharmaceutical giants to expand their positions in the oncology segment.

Is Medivation an acquisition target?

Recent news about a takeover approach by Sanofi caused a surge in Medivation’s (MDVN) after-hours session share price on March 12, 2016. Although Medivation didn’t confirm this news, we don’t believe the possibility can be ruled out.

Following patent expiries and pressure to expand the pipeline for sustaining the competition, big pharmaceutical companies are under tremendous pressure. The patent expiries result in lowered revenues from these companies’ blockbuster drugs as generic or biosimilar drugs become available.

To accelerate their sales growth, these companies are attempting to acquire comparatively smaller companies with potential multi-billion drugs in the pipeline. Sanofi’s Jevtana is indicated for prostate cancer and is one of Xtandi’s competitors. This acquisition could enable Sanofi to expand its presence in the oncology space.

Any events specific to a company, industry, or economy can lead to volatility in a stock’s price. To gain exposure to equity while avoiding excessive risk, investors can choose options such as the iShares Russell 1000 Growth ETF (IWF). Medivation comprises 0.07% of IWF’s portfolio.

Browse this series on Market Realist:

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