Medivation's Takeout Price Raised To $68-$78 At Citi

Citi’s Yigal Nochomovitz has raised the takeout range estimate for Medivation Inc MDVN to $68-$78 to reflect the full value of Xtandi.

Nochomovitz upgraded the rating on the company from Neutral to Buy, while raising the price target from $27 to $73.

Takeout Estimate

The analyst explained that the revised takeout estimate included breast cancer revenues, following a reassessment of the market and “and re-applying to our new model a Pharma/Large Biotech-like tax rate range, discount rate, and cost synergies which previously yielded a pot’l takeout range of $54-62 ex breast cancer revs.”

Nochomovitz mentioned that various catalysts in 2016 had led to him revisiting the addressable market for breast cancer, including the Phase 2 data for Her2+/AR+ (Xtandi+Herceptin) and ER/PR+ Her2, expected in 2H16.

The company intends to initiate a Phase 3 trial in TNBC in 2H16. Therefore, “label expansion into breast cancer could come by 2019 with proof-of-concept in all three settings possible this year,” Nochomovitz said.

Sanofi Still Interested

On May 5, Sanofi SA (ADR) SNY sent a letter to Medivation’s board of directors, reaffirming that it was still interested in acquiring the company and stating that it was open to revising its offer or “go hostile if ignored.”

“This follow-up letter comes on the heels of the $52.5/shr bid by Sanofi that was rejected outright,” the analyst stated.

Given the interest expressed by other companies, Nochomovitz believes that there is a high possibility of Medivation being acquired in the near term.