AstraZeneca slips on talk of possible £7bn bid for US cancer specialist

AstraZeneca has slipped back following weekend reports it was considering a £7bn bid for San Francisco cancer treatment specialist Medivation.

The US company has already rejected an approach from France’s Sanofi, and is said to have hired advisers to help fend off any hostile move. Analysts believe there is likely to be interest from other pharmaceutical businesses, with AstraZeneca just one possible bidder. Shore Capital’s Dr Tara Raveendran said:

A bid for the company would fit with AstraZeneca’s recent strategic focus on oncology, with durvalumab, Lynparza and Tagrisso expected to collectively earn $12bn per annum in sales by 2023F a significant proportion of the $45bn target set by chief executive Pascal Soriot following the Pfizer-bid.

Alongside combinations of in-house drugs, Astrazeneca have also looked to acquisitions in order to acquire new oncology therapies, including the $4bn acquisition for a 55% stake in Acerta Pharma and their blood cancer candidate acalabrutinib. Medivation markets prostate cancer drug Xtandi in the US, which has come under scrutiny from US politicians who want to see a price reduction, but also has pipeline assets such as the P3 PARP-inhibitor talazoparib in development for patients with locally advanced and/or metastatic breast cancer with BRCA 1/2 mutation.

Whether Astrazeneca will actually make a bid remains unclear. Some have suggested that the company is unlikely to enter a bidding war, which could be significant given the interest of Sanofi and reported interest from other companies such as Roche.

Additionally, 2015 full year results showed the dilutive impact of recent transactions with Mr Soriot stating that further large deals would only occur if they could immediately boost earnings. However, with growth platform Brilinta recently missing its primary endpoint in the Socrates study, there may be pressure on Mr Soriot to deliver a share price reflective of Pfizer’s takeover offer two years ago and we would not rule out a bid at this stage.

Monday 18 April 2016

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