Medivation, Inc. (MDVN) shares rallied almost 3% to $61.76 after announcing they have entered into confidentiality agreements, including Sanofi. The confidentiality agreements are with a number of parties that have expressed interest in exploring a potential transaction and demonstrated that interest to the Board of Directors' satisfaction. Medivation also confirmed that it entered into a confidentiality agreement with Sanofi and that Sanofi agreed to terminate its consent solicitation. Before entering into the confidentiality agreement with Sanofi, Medivation received from Sanofi, and Medivation's Board of Directors unanimously rejected as not in the best interests of the company and its stockholders, a new unsolicited proposal to acquire Medivation. The proposal, which was conditional upon the execution of a confidentiality agreement and the receipt of information, was for $58.00 per share in cash plus a Contingent Value Right for talazoparib sales representing a potential payment in 2022 of a maximum of $3.00 per share.
Price action on the MDVN daily chart shows that price is finding tentative resistance from the $62.94 high made on May 10th. If we see this level taken out, price may target the $70 region. It is around that area that price could form a bearish ABCD pattern. Point D is targeted with the 200.0% Fibonacci expansion level of the B to C move and additional resistance is targeted by the March 2015 high of $70.79. If valid, we could see some profit taking support a move back towards the $60 region.
If the bullish move continues key resistance will come from the $75.00 level.
The Trade: Sell MDVN at $69.50, with a stop loss at $70.50 and a take profit at $65.50. The Risk/Reward Ratio is 1:5