On April 29, 2016 Medivation, Inc. (NASDAQ: MDVN) reported that its Board of Directors, after consultation with its financial and legal advisors, unanimously determined that the unsolicited proposal from Sanofi to acquire Medivation for $52.50 per share in cash substantially undervalues Medivation and is not in the best interests of the company and its stockholders (Press release, Medivation, APR 29, 2016, View Source [SID:1234511611]).

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"Over the past several years, we have established a world class oncology franchise and a unique, diversified and highly-promising late-stage development pipeline," said David Hung, M.D., Founder, President and Chief Executive Officer of Medivation. "Further, we have a track record of delivering extraordinary value to our stockholders. Sanofi’s opportunistically-timed proposal, which comes during a period of significant market dislocation, and prior to several important near-term events for the company, is designed to seize for Sanofi value that rightly belongs to our stockholders. We believe the continued successful execution of our well-defined strategic plan will deliver greater value to Medivation’s stockholders than Sanofi’s substantially inadequate proposal."

The Medivation Board of Directors’ unanimous conclusion was based on the following:

The proposal substantially undervalues Medivation and its leading oncology franchise.

Medivation has significant scarcity value as one of the few profitable, commercial-stage oncology companies;it has brought a blockbuster product to market and is leveraging its expertise to develop and bring to market additional products.

Medivation has built XTANDI (enzalutamide) capsules into a rapidly-growing, multi-billion dollar oncology product and remains on track to achieve its 2016 U.S. net sales guidance, which implies approximately 28% growth (at the mid-point) for the year.
XTANDI is one of the most successful oncology product launches in history and just surpassed Johnson & Johnson’s Zytiga (abiraterone) in U.S. market share, despite launching sixteen months later.

XTANDI has achieved worldwide annual net sales of $2.2 billion on a run rate basis, less than four years after its initial approval.
XTANDI has significant patent life with 10+ years of remaining exclusivity.

XTANDI is poised to capitalize on a substantial, near-term commercial opportunity in urology, enabling it to serve a larger patient population of men with metastatic castration-resistant prostate cancer (mCRPC) and increasing the duration of therapy.
The PDUFA date for TERRAIN/STRIVE label expansion on October 22, 2016, is rapidly approaching and is anticipated to drive significantly greater adoption by urologists.

In April, the CHMP issued a positive opinion to include findings from the TERRAIN trial in the European label.
Medivation recently expanded its specialty salesforce to create dedicated urology and oncology selling teams that are just starting to have a promotional impact.

XTANDI has multiple opportunities beyond mCRPC, which are not reflected in the company’s current valuation.
Ongoing Phase 3 trials, i.e. PROSPER and EMBARK, are designed to move XTANDI even earlier in the prostate cancer treatment paradigm; PROSPER is on track to complete enrollment of 1,560 patients in mid-2017.

Medivation is pursuing clinical development across three major subtypes of breast cancer, a new and significant market opportunity for XTANDI, and expects to report top-line Phase 2 data in patients with ER/PR+ breast cancer, which represents 50% of all breast cancers, in the second half of 2016.

A Phase 3 trial in Triple Negative Breast Cancer, a significant unmet need, is expected to initiate later in 2016.
The company continues to explore XTANDI in other solid tumor indications and settings, e.g., in hepatocellular carcinoma and in combination with immunotherapy.

Sanofi’s proposal would deny Medivation’s stockholders the value of Medivation’s wholly-owned, innovative late-stage pipeline.

Talazoparib represents another blockbuster opportunity as a potentially best-in-class PARP inhibitor targeting a wide range of oncology indications.

Top-line data from the Phase 3 EMBRACA trial in germline BRCA mutated advanced breast cancer is expected in the first half of 2017.

Recent data reported at AACR (Free AACR Whitepaper) demonstrate talazoparib’s potential in tumors with defects in DNA repair beyond BRCA deficiency and possibly in patients without evidence of homologous recombination deficiency when used in combination with low dose chemotherapy.

The company is preparing to initiate several clinical trials in 2016, including in breast cancer beyond germline BRCA mutations, prostate cancer, ovarian cancer and small cell lung cancer, including potentially registrational trials.
Medivation recently met with the FDA to discuss clinical trial design and a potential accelerated approval pathway in prostate cancer.

Talazoparib is highly synergistic with our existing development and commercial infrastructure.
Additional clinical data demonstrating talazoparib’s potent activity is expected to be presented at a medical meeting later in the year.

Pidilizumab has the potential to be a novel immuno-oncology candidate supported by clinical efficacy and a strong safety profile in several hematological malignancies.

The execution of Medivation’s business plan will deliver value to its stockholders that is far superior to Sanofi’s proposal.

Medivation has an exceptional track record for execution.

XTANDI has achieved all development and sales milestones under Medivation’s collaboration with Astellas.

Medivation’s track record for delivering value to our stockholders is exemplified by XTANDI, which was in-licensed as a pre-clinical asset in 2005, received full FDA approval in seven years (better than industry average), and achieved $2.2 billion in worldwide annual net sales on a run rate basis in less than four years.

The company has generated a 1,440%+ total shareholder return for its stockholders since 2009.

Medivation has already achieved two years of profitability, despite only launching XTANDI in late 2012, and the company has pursued minimal, dilutive capital raises.
Sanofi’s timing is designed to benefit Sanofi – not Medivation’s stockholders.

Sanofi approached Medivation following a period of significant market dislocation in biotech and just as the market was beginning to recover.
The "private offer" was submitted to Medivation when the NBI index was almost 30% below its July 2015 high.
The proposal offer price is:
21% below Medivation’s 52-week trading high of $66.40
Less than a 14% premium to Medivation’s 12-month volume weighted average price, or VWAP
Only a 9% premium to Medivation’s VWAP over the last month
Medivation will provide additional information on its financial performance, XTANDI’s utilization and the company’s clinical development plans for talazoparib on next week’s earnings call.

Kim D. Blickenstaff, Chairman of Medivation’s Board of Directors, notes that "Medivation has a long history of producing superior growth and generating significant value for its stockholders. Since the launch of XTANDI, Medivation has achieved revenues of nearly $1 billion in just over three years. There are several exciting pipeline opportunities that will drive significant growth. The Board is determined to continue to aggressively focus on working for, and delivering value to, Medivation’s stockholders."

On April 29, 2016 ImmunoGen, Inc. (Nasdaq: IMGN), a biotechnology company developing targeted cancer therapeutics using its proprietary ADC technology, reported financial results for the three-month period ended March 31, 2016 – the third quarter of the Company’s 2016 fiscal year (Press release, ImmunoGen, APR 29, 2016, View Source [SID:1234511596]). ImmunoGen also provided an update on the Company’s lead program, mirvetuximab soravtansine, and other wholly owned clinical-stage product candidates.

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"We are making important progress with our key product programs," commented Daniel Junius, President and CEO. "In early June, expanded Phase 1 findings with mirvetuximab soravtansine will be presented at ASCO (Free ASCO Whitepaper). Based on these data, we are modifying the design of our FORWARD I trial to be a Phase 3 study intended to support full marketing approval. Patient enrollment is proceeding well in our Phase 1b/2 FORWARD II trial that is assessing this novel ADC in combination regimens, and patient dosing has begun in Phase 1 testing of IMGN779, the first ADC utilizing one of our new DNA-alkylating cancer-killing agents."

Mr. Junius continued, "Our partners are also making progress. Takeda has reported preclinical information on a GCC-targeting ADC it is developing utilizing our DNA-alkylating technology, and Novartis and Sanofi recently presented preclinical data on product candidates with our maytansinoid technology. Phase 1 clinical data with Bayer’s anetumab ravtansine and Sanofi’s SAR566658 are scheduled for poster discussion at ASCO (Free ASCO Whitepaper), with data also being presented on Sanofi’s isatuximab."

ImmunoGen Product Program Updates

Mirvetuximab soravtansine – First FRα-targeting ADC; potential new treatment for FRα-positive ovarian cancer.

Data will be presented at ASCO (Free ASCO Whitepaper) from a 46-patient Phase 1 expansion cohort assessing this ADC as monotherapy for FRα-positive platinum-resistant ovarian cancer (abstract #5567). This cohort was increased from 20 patients to provide additional experience in the patient population to better inform the design of ImmunoGen’s FORWARD I trial. The data presented will be updated from the 20-patient data reported previously and from that available at the time of abstract submission.
Based on the expanded findings, ImmunoGen is modifying its FORWARD I trial from a two-stage, Phase 2 trial with response rate as the primary endpoint to a single-stage, Phase 3 trial with progression-free survival as the primary endpoint. Patients with FRα-positive (medium or high) platinum-resistant ovarian cancer treated with up to three prior regimens will be eligible for enrollment.
Patient enrollment is ongoing in the FORWARD II trial assessing mirvetuximab soravtansine in combination regimens. A cohort is being added to assess this novel ADC in combination with Merck’s anti-PD1, pembrolizumab.
IMGN779 – First-in-class CD33-targeting ADC utilizing a DNA-alkylating cancer-killing agent from ImmunoGen’s new family called IGNs.

Patient enrollment has started in the Phase 1 trial assessing this ADC for the treatment of acute myeloid leukemia.
IMGN529 and coltuximab ravtansine – CD37- and CD19-targeting, respectively, ADCs for diffuse large B-cell lymphoma (DLBCL).

Patient enrollment is expected to open shortly in a Phase 2 trial assessing IMGN529 in combination with rituximab and in 1H2017 for coltuximab ravtansine in a combination regimen.
Update on Partner Programs

Phase 1 findings with Sanofi’s SAR566658 and Bayer’s anetumab ravtansine ADCs with ImmunoGen technology have been accepted for poster discussion at ASCO (Free ASCO Whitepaper), with data also being presented on Sanofi’s isatuximab (SAR650984).
ImmunoGen, Novartis, and Sanofi had multiple ADC-related presentations at the American Association of Cancer Research (AACR) (Free AACR Whitepaper) annual meeting earlier this month. Those by ImmunoGen scientists featured new, novel technologies while those by Novartis and Sanofi related to cadherin6- and LAMP1-targeting ADCs, respectively, utilizing ImmunoGen maytansinoid ADC technology.
Takeda reported data at a scientific conference on a GCC-targeting ADC the company is developing utilizing one of ImmunoGen’s new IGN agents.
Financial Results

For the Company’s quarter ended March 31, 2016 (3QFY2016), ImmunoGen reported a net loss of $31.9 million, or $0.37 per basic and diluted share, compared to a net loss of $21.6 million, or $0.25 per basic and diluted share, for the same quarter last year (3QFY2015).

Revenues for 3QFY2016 were $19.7 million, compared to $11.4 million for 3QFY2015. The current period includes a $10 million milestone earned from Bayer with the advancement of anetumab ravtansine into a Phase 2 clinical trial designed to support product registration. License and milestone fees for the prior year period include a $5 million milestone earned from Novartis with its initiation of LOP628 Phase 1 clinical testing. Revenues in 3QFY2016 include $7.4 million of non-cash royalty revenues, compared with $5.1 million in cash royalty revenues for the prior year period. Revenues for 3QFY2016 also include $1.2 million of clinical materials revenue and $1.1 million of research and development support fees, compared with $0.7 million and $0.5 million, respectively, in the prior year period.

Operating expenses in 3QFY2016 were $47.3 million, compared to $32.7 million in 3QFY2015. Operating expenses in 3QFY2016 include research and development expenses of $36.1 million, compared to $25.7 million in 3QFY2015. This change is primarily due to increased third-party costs related to the advancement of our wholly owned product candidates, increased clinical trial costs, primarily related to our expansion of the mirvetuximab soravtansine development program, and increased personnel expenses, principally due to recent hiring. Operating expenses include general and administrative expenses of $11.2 million in 3QFY2016, compared to $7 million in 3QFY2015. This increase is primarily due to a non-cash stock compensation charge resulting from the CEO transition, as well as increased personnel expenses and professional services.

ImmunoGen had approximately $182.9 million in cash and cash equivalents as of March 31, 2016, compared with $278.1 million as of June 30, 2015, and had no debt outstanding in either period. Cash used in operations was $91.6 million in the first nine months of FY2016, compared with $26.8 million in the same period in FY2015. The prior year period benefited from $25 million in upfront payments received including $20 million in connection with the execution of the right-to-test agreement with Takeda in March 2015, as well as lower operating expenses. Capital expenditures were $8.6 million and $4.5 million for the first nine months of FY2016 and FY2015, respectively.

Financial Guidance for Fiscal Year 2016

ImmunoGen has updated its guidance for its fiscal year ending June 30, 2016. Expected revenues are now projected to be between $60 million and $70 million, compared with previous guidance of between $70 million and $80 million. The change is primarily due to changes in the expected timing of partner events and is mainly non-cash. Operating expenses are now projected to be between $180 million and $185 million, compared with previous guidance of between $175 million and $180 million. The change is primarily related to greater clinical trial costs and non-cash stock compensation charges. The Company’s guidance for its net loss is now expected to be between $135 million and $140 million, compared to its previous estimate of $120 million and $125 million with most of this change being non-cash related.

ImmunoGen now projects cash and cash equivalents at June 30, 2016 to be between $155 million and $160 million, compared to previous guidance of $165 million to $170 million. This change reflects the cash impact of less partner upfront and milestone payments. The Company’s guidance for cash used in operations is now projected to be between $110 million and $115 million, which had previously been $100 million and $105 million. The Company’s guidance for capital expenditures remains unchanged, which is between $13 million and $15 million.