October 3, 2022
BIOINVEST NEWS: Myovant (MYOV)
Good To See Someone Realizes The Value
Last night, MTSL Recommendation MYOV announced that its board gracefully declined a $2.4 billion takeover offer from Sumitovant Biopharma, a unit of Japan-based Sumitomo Pharma. Sumitovant owns 52% of MYOV shares and offered $22.75, a price that we find to be way too low. MYOV said that a special committee of the board rejected the buyout deal as the offer was not in the best interests of the company or its minority shareholders, and it “significantly undervalues” the business. Below we explain why there is a lot more to go in the story of relugolix, and this takeover attempt is an opportunistic attempt to get MYOV on the cheap. As a reminder, Pfizer is MYOV’s marketing partner in the U.S. and we can only imagine that PFE would like to have a say in the current negotiations. BUY
But Market Turmoil Aside, MYOV Worth Much More
As we’ve written many times over the past several years, the relugolix franchise is extremely valuable and growing rapidly. With Orgovyx in prostate cancer and Myfembree for female reproductive health (uterine fibroids, endometriosis), it’s one of the cleanest entries into these blockbuster markets.
Orgovyx was just approved in December 2020 – right in the heart of the COVID pandemic while most countries were in the midst of stay at home. Nonetheless, it is on its way to becoming one of the leading prostate cancer drugs on the market. Current sales are annualizing at roughly $200 million, a little over a year after launch. The leading prostate cancer drugs with 2021 sales are listed below — a multi-billion market for sure. With many advantages of the Orgovyx profile, in our view the drug is well on its way to at least $500 million to $1 billion status. There is no question that the initial COVID pandemic disrupted a lot of global businesses, and we believe that recent sales trends suggest Orgovyx is heading to a leadership position in prostate cancer.
2021 Prostate Cancer Drug Sales
Myfembree
Approved in May 2021 (still COVID times) and then August 2022 for both uterine fibroid and endometriosis, respectively, Myfembree is starting it’s launch just now. It is currently taking the majority of new prescriptions in UF and the endometriosis launch is now underway. As a reminder, PFE’s woman’s health business is driven by Premarin and Myfembree is now a new growth driver there, too. Myfembree has several advantages over market leader ABBV’s Orlissa – another GnRH antagonist – is expected to achieve more than $200 million in sales in 2022 – as both have recently been launched in endometriosis. European launches are beginning as well.
We See A Much Higher Price
We have been around blockbuster drugs and buyouts for more than 30 years. Recent takeovers of MTSL recommendations included PCYC by ABBV ($21 billion), FPRX by AMGN ($2 billion) and MDCO by Novartis ($10 billion). Based on many different metrics – but mostly sales – we believe the final number for MYOV will be over $30 a share. Our guess is that this will happen relatively quickly, but it will be fun to watch as PFE gets involved. One other note – Goldman Sachs is MYOV’s banker. We see maximum value for this one. (While we also think the majority of our recommendations are potential takeovers, we see CLDX and MDGL as two clinical stage winners and likely to get bought over the next few years.) While the stock is trading above the $22.75 deal price, we agree with the MYOV Special Committee that says the price “significantly undervalues” the Company.