Stifel Lays Out 3 Scenarios For Medivation Takeover

Stifel analyst Thomas Shrader laid out three scenarios for Medivation Inc (NASDAQ: MDVN) takeover after the biopharma company rejected Sanofi SA (ADR) (NYSE: SNY)'s $52.50 acquisition bid.

Shrader raised his target price on the stock by $14 to $66, which is also his minimum takeover price for Medivation.

"Overall, we think the ability of a company to enter the growing arena of metastatic castrate-resistant prostate cancer (mCRPC) with a drug as good as Xtandi is relatively unique and we expect any deal to get done at a minimum of about $66 per share with an additional conditional payout for Talazoparib," Shrader wrote in a note.

Related Link: Jefferies Lifts Target On Medivation To $52 From $39

Shrader, who has a Buy rating on the stock, laid out the following three scenarios that could fetch as much as $85 for Medivation.

Scenario 1: An acquirer might consider the value of Medivation to be $69 (from $66 above) with no improvement on the analyst's Talazoparib estimates (currently $149 million in 2018 based only on Breast Cancer).

Scenario 2: An acquirer may pay $69 if it could improve on the analyst's Talazoparib estimates by 25 percent.

Scenario 3: Finally, an acquirer might be willing to pay $85 if it accepts Medivation's arguments that Talazoparib is as valuable as Xtandi and models the two drugs with similar growth ramps, offset for year of introduction.

Last week, Goldman Sachs said it expects potential takeout value of Medivation near $70 a share.

At time of writing, shares of Medivation were down 0.62 percent to $57.44.