In Medivation deal, Pfizer will gain an oncology blockbuster

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Pfizer's existing commercial expertise in oncology and urology could help lift sales of Medivation's prostate cancer drug, Xtandi. Medivation announced Monday that Pfizer will acquire the biotech company in a deal worth approximately $14 billion.

The San Francisco-based drugmaker was reportedly pursued by a number of other pharma heavyweights, including Merck, AstraZeneca, Celgene, Gilead Sciences, and Sanofi, according to media reports.

Xtandi is Medivation's prized asset. It also has two oncology drugs in Phase III trials: pidilizumab, which is being vetted as a treatment for lymphoma, and talazoparib, which is being tested in breast cancer.

See also: As immuno-oncology therapies evolve, so will the marketing

Credit Suisse analyst Muriel Chen said that Pfizer may use its existing oncology sales force as well as its experience in the urology setting — with drugs like Viagra for erectile dysfunction and Toviaz for overactive bladder — to grow sales of Xtandi and create cost savings.

Xtandi was approved in 2012 in the U.S. for use in certain kinds of metastatic prostate cancer. It brought in worldwide sales of $1.9 billion in 2015, and Bernstein analyst Tim Anderson wrote in an investor note that Xtandi could reach sales of $4.6 billion by 2021. The drug has been used to treat 64,000 men to date in the U.S. since its approval.  

Pfizer spokesperson Joan Campion said in an email that the company will “seek to leverage” the expertise and relationships of Medivation's field force, which it sees as complementary to to its own sales organization. Pfizer CEO Ian Read said that Xtandi “is just at the beginning of its growth cycle,” according to Reuters.

Astellas Pharma U.S. and Medivation signed a deal in 2009 to jointly develop and commercialize Xtandi. Medivation receives half of U.S. profits as well as royalties on global sales, according to the terms of the deal.

Astellas and Medivation spent $162 million on ads for Xtandi in 2015 and $29 million in the first three months of 2016, according to data from Kantar Media.

See also: One year on: Inside Bayer's effort to get prostate cancer patients to speak up

While Xtandi will be a large new player to Pfizer's oncology portfolio, the company has already made significant investments in its cancer pipeline with at least nine experimental oncology drugs currently in Phase-III trials.

“Similar to Ibrance in the breast cancer setting, Xtandi is being explored for its potential to move from metastatic prostate cancer to treat earlier stages of non-metastatic prostate cancer,” Albert Bourla, the group president of Pfizer Innovative Health, said in a release.  Pfizer's breast-cancer drug Ibrance was approved to treat advanced breast cancer in postmenopausal women in February 2015. Ibrance beat U.S. consensus sales estimates by $20 million in the first three months of 2016, pulling in $502 million.

Anderson, in the same note, wrote that “while Ibrance is doing great, Pfizer could benefit from more critical mass in oncology.” Chen also noted that Xtandi's PD-L1 “boosting immuno-oncology characteristics” could pave the way for a number of experimental combinations in prostate and breast cancer for Pfizer.

Ten months ago, Pfizer attempted to acquire Allergan for $150 billion — a deal that would have created the largest drug company in the world and significantly lowered Pfizer's U.S. tax exposure through a corporate tax inversion.

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