Myovant Sciences shares rose 27% on Monday after its parent company Sumitovant Biopharma revealed an agreement with Pfizer Inc. to jointly develop a treatment for prostate cancer and women’s health in a deal up to $ 4.2 billions in initial and potential payments.
Myovant MYOV,
will receive an initial payment of US $ 650 million to develop and commercialize relugolix, an oral gonadotropin releasing hormone (GnRH) antagonist once a day, which obtained approval from the US Food and Drug Administration in December as treatment for advanced prostate cancer.
If approved, the two companies will also develop and market the combined relugolix tablet (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 start co-promoting the treatment, which will be sold as Orgovyx, as a treatment for prostate cancer in early 2021.
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Companies will share profits and certain costs equally, while Myovant will record revenue. Myovant will also be responsible for interactions with the regulator and for the provision of drugs and clinical development. The company will be entitled to $ 200 million in potential regulatory milestones for FDA approvals for combined relugolix tablets in women’s health and differentiated sales milestones by reaching up to $ 2.5 billion in net sales of prostate cancer and women’s health indications .
“There remains a huge unmet need among the millions of women who experience the common and debilitating symptoms associated with uterine fibroids and endometriosis,” said Nick Lagunowich, global president of Pfizer Internal Medicine PFE,
.
Evercore analyst Josh Schimmer said the deal was positive for Myovant.
“After some time to digest, we like it,” wrote Schimmer in a note to customers. “Although I give up half of the economy of relugolix (which we had not modeled), this is adequately compensated by the addition of PFE’s commercial efforts, as well as the billions of milestones we consider achievable.”
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He reiterated his superior performance rating for the stock and $ 55 target price, saying the stock is one of his mid-cap choices.
“Investors feared that Sumitomo’s majority stake in MYOV could limit strategic partners in the future,” he said. “This deal adds another strong company with potentially valuable synergies.”
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Myovant is one of five companies under the umbrella of Sumitovant.
Prostate cancer is one of the most talked about among men, in addition to skin cancer, according to Cancer.net. It is estimated that 191,930 men will be diagnosed with the disease this year, about 60% of whom will be over 65 years old.
Myovant shares gained 84% in 2020, while SPDR S&P Biotech ETF XBI,
gained 57% and the S&P 500 SPX,
gained 16%.