US cancer drug company Medivation finally allows Sanofi to conduct due diligence

US cancer drug company Medivation Inc yesterday announced that it will allow Sanofi SA to conduct due diligence, ending two months of hostility that saw the French drug giant attempting to replace its target's entire board.

Medivation is reported to have told Sanofi SA to sign a confidentiality agreement after it offered similar arrangements to two other suitors, Pfizer and Celgene.

Medivation said that it would provide each suitor the opportunity to review non-public information and meet with Medivation's management.

Sanofi separately confirmed it was among the parties that had entered into a confidentiality agreement with Medivation, and said that it would withdraw its consent solicitation challenging Medivation's board and also would enter into a six-month conditional standstill.

In May, Medivation rejected an unsolicited $52.50 per share in cash takeover bid from Sanofi saying that the $9.3 billion offer was too low.

Medivation had said that Sanofi's offer failed to value fairly the prospects for Xtandi, as well as two other key products currently in clinical trials-Talazoparib and Pidilizumab, which is being developed for the treatment of blood cancers.

Medivation refused to engage in talks even after Sanofi raised its offer to $58 per share in cash plus $3 per share in the form of a contingent value right (CVR) relating to talazoparib sales

Sanofi later threatened to go directly to shareholders to remove and replace the board of Medivation if it did not enter in takeover talks (See: Sanofi prepares to replace Medivation's board).

Medivation has a blockbuster prostate cancer drug, Xtandi, and also has two additional oncology drugs - Talazoparib and Pidilizumab - in clinical development.

San Francisco-based Medivation acquired Talazoparib last year from Biomarin Pharmaceutical for $570 million and royalty payments based on future sales.

Xtandi is also under evaluation for use in breast cancer patients. Xtandi was approved by the US Food and Drug Administration (FDA) for post-chemotherapy metastatic prostate cancer in 2012 and in 2014 the FDA expanded Xtandi's label to include its use in pre-chemotherapy patients as well.

Since its launch, Xtandi has become the most prescribed prostate cancer drug in these indications, generating annual sales of more than $2 billion and is expected to generate almost $5.7 billion in sales over the next four years.

Medivation expects results of phase 2 trials for Xtandi in the coming 12 months, and if approved for breast cancer, it could treat more than 220,000 patients who are diagnosed with breast cancer every year in the US alone.

While Sanofi's offer reflects a 50-per cent premium to what Medivation's stock had been trading prior to buyout speculations, analysts believe that it is too low for Medivation's board to even entertain talks.