Shares of Myovant Sciences soared 27% on Monday, after its parent Sumitovant Biopharma announced a deal with Pfizer Inc. to jointly develop treatment for prostate cancer and women’s health in an agreement worth up to $ 4.2 billion in initial and potential payments.
Myovant MYOV,
will receive a $ 650 million down payment to develop and market relugolix, an oral gonadotropin-releasing hormone (GnRH) receptor antagonist once a day, which was approved by the U.S. Food and Drug Administration United in December as a treatment for advanced prostate cancer.
If approved, the two companies will also develop and market combined relugolix tablets (relugolix 40 mg, estradiol 1.0 mg and norethindrone acetate 0.5 mg) aimed at women’s health in the United States and Canada. They will begin promoting the treatment, which will be sold as Orgovyx, as a treatment for prostate cancer in early 2021.
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Companies will equally share benefits and certain costs, while Myovant will record revenue. Myovant will also be responsible for interactions with the regulator and for drug supply and clinical development. The company will be entitled to $ 200 million in possible regulatory milestones for FDA approvals for combined relugolix tablets for women’s health and sales milestones by levels reaching $ 2.5 billion in net sales of prostate cancer and women’s health indications.
“There remains a great unmet need among the millions of women who experience the common and debilitating symptoms associated with uterine fibroids and endometriosis,” said Nick Lagunowich, world president of Pfizer Internal Medicine PFE,
.
Evercore analyst Josh Schimmer said the deal is positive for Myovant.
“After having time to digest it, we like it,” Schimmer wrote in a note to clients. “While it relinquishes half of the relugolix economy (which we had not modeled), this is adequately offset by adding PFE’s business efforts, as well as the billions of milestones we believe are achievable.”
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He reiterated his above-target rating and $ 55 target price, saying the shares are one of his mid-cap options.
“Investors were concerned that Sumitomo’s majority stake in MYOV would limit strategic partners,” he said. “This agreement adds another strong company with potentially valuable synergies.”
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Myovant is one of five companies under the umbrella of Sumitovant.
According to Cancer.net, prostate cancer is one of the most talked about among men, apart from skin cancer. It is estimated that 191,930 men will be diagnosed with the disease this year, approximately 60% of whom will be over 65 years old.
Myovant shares have gained 84% in 2020, while the SPF S&P Biotech ETF XBI,
has gained 57% and the S&P 500 SPX,
has gained 16%.