Shares of Myovant Sciences were up 27% Monday, after parent company Sumitovant Biopharma signed an agreement with Pfizer Inc. to jointly develop a treatment for prostate cancer and women’s health in a deal worth $ 4.2 billion in upfront and potential milestone payments.
Myovant MYOV,
receives an upfront payment of $ 650 million to develop and commercialize Relugolix, a once-daily oral gonadotropin-releasing hormone (GnRH) receptor antagonist, which received approval in December from the U.S. Food and Drug Administration as a treatment for advanced prostate cancer.
If approved, the two companies will also develop and market relugolix combination tablets (relugolix 40 mg, estradiol 1.0 mg and norethindrone acetate 0.5 mg) targeting women’s health in the US and Canada. They will start co-promoting the treatment, which will be marketed as Orgovyx in early 2021, as a treatment for prostate cancer.
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The companies will share profits and certain costs proportionally, while Myovant will generate revenue. Myovant will also be responsible for interacting with the regulator and for drug delivery and clinical development. The company is entitled to $ 200 million in potential regulatory milestones for FDA approvals for relugolix combination tablets for women’s health, and stepped sales milestones in reaching $ 2.5 billion in net sales for prostate cancer and women’s health indications.
“There is still a great unmet need among the millions of women who experience the common and disabling symptoms associated with uterine fibroids and endometriosis,” said Nick Lagunowich, global president, Pfizer Internal Medicine PFE,
.
Evercore analyst Josh Schimmer said the deal is positive for Myovant.
“After having some time to process it, we like it,” Schimmer wrote in a note to customers. “While it is quoting half the cost of relugolix (which we hadn’t modeled), that is offset enough by adding PFE’s commercial efforts, as well as the billions of milestones we think are achievable.”
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He reiterated his outperform rating on the stock and its $ 55 price target, saying the stock is one of his stop mid-cap choices.
Investors were concerned that Sumitomo’s majority stake in MYOV could limit strategic partners on the road, he said. “This deal adds another strong business with potentially valuable synergies.”
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Myovant is one of five companies under the Sumitovant umbrella.
According to Cancer.net, prostate cancer is one of the hottest comments among men, aside from skin cancer. An estimated 191,930 men will be diagnosed with the disease this year, of whom about 60% will be over the age of 65.
Myovant shares have gained 84% in 2020, while the SPDR S&P Biotech ETF XBI,
have won 57% and the S&P 500 SPX,
has won 16%.