Medivation (MDVN): Goldman Sachs Sees Nice Setup in Q2
8:53 AM ET, 07/22/2014 - Street Insider
"Goldman Sachs maintained a Buy rating on Medivation (NASDAQ: MDVN) with a price target of $88. Analyst Navdeep Singh sees a nice setup into Q2. "MDVN s partner on Xtandi, Astellas, is expected to announce earnings results on Aug 1. In our view, Xtandi should be able to post a solid Q2 due to: (1) carry-over of Q/Q end-user demand growth of ~10% in Q1, (2) publication of PREVAIL data in NEJM during ASCO in June and (3) PREVAIL presentation at ASCO GU in January. Hence, we are raising our Xtandi US sales estimates for Q2/2014 to $133mn/$574mn from $126mn/$560mn. We are also updating Xtandi milestone payments to MDVN from Astellas. As a result, our 2014 diluted GAAP EPS goes to $1.61 from $1.29," said Singh. For an analyst ratings summary and ratings history on Medivation click here. For more ratings news on Medivation click here. Shares of Medivation closed at $72.58 yesterday."
Once the FDA approves for pre-chemo by Sept 18, MDVN will take off. Until then we might get some bad news between Astellas' earnings July 31 and MDVN's August 7 because JNJ's Zytiga numbers in US were up 35% so off label use of Xtandi might not as high as hoped.
I hope i'm wrong. Either way, if MDVN drops a bit after earnings I will add to my 2500 shares.
Sentiment: Strong Buy
Picked up 500 as an initial position. Praying for a pull back to add more. The way biotech has been exploding on news of approvals, this is a safe bet! This is a smaller pharma co. than VRTX etc... I expect some irrational exuberance and a 25-50 point move in September! As a physician, the initial data is compelling.
I wouldn't count on that 25-50 point move, Doc. I'd be happy with 2 points on the 2nd quarter sales data, then maybe 5 more when it gets pre-chemo approval from the FDA. The real upside here, of course, is the possibility of Astellas buying us out.
Remember there is a big time difference with Japan. Depending on the time of day they release over there it could be available here on the 31st.
I wonder how much approval is already built into the price considering it seems like a sure bet.
It seems that Xtandi might have a big future in breast cancer treatment. The Phase II study has a primary endpoint of May, 2015, just in time for the June cancer seminars per clinicaltrials.gov http://tinyurl.com/pwfxpzn
And some interesting early results here:
And the webpage of the researchers at Memorial Sloan Kettering Cancer Center.
If this trial has positive results next year then this stock will go much higher.
My replies aren't showing up, so I'll do one with no links.
David Miller is the Portfolio Manager for hedge fund Alpine BioVentures and says, "On July 30, 2013, JNJ secured a new patent for the combination use of Zytiga and prednisone in the treatment of prostate cancer. This extends Zytiga's patent life well into the late 2020s and pretty much erases the threat of generic Zytiga in 2016."
Search for it on the net and you can find the info.
Here's what I found -
Q1 2015 Astellas Pharma Inc Earnings Release - 12:00AM EDT - Aug 1, 2014
Q1 2015 Astellas Pharma Inc Earnings Call - 2:00AM EDT - Aug 1, 2014
Anyone remember the Vapors?????? :-)
Just looking over Astellas report. Sales of Xtandi were 23.4B Yen. WOW! Why do I say wow? A couple reasons:
1. If you multiply that by 4 that gives you 93.6B yen. But Astellas had been providing guidance that F14 sales would be 82.6B yen. So, if they just stayed flat for the rest of the year you would be looking at a 13.3% increase over what they had been forecasting.
2. If you convert the 23.4B yen to dollars that's $223.3M USD. In one quarter. In the last conference call MDVN said sales for Q1 were $172.3M and also forecast that for the year sales would be between $540 and $575M. But if I add the $223.3M from this current quarter to last quarters $172.3M I come up with $399.6M. They are only $175M away from the high end of their goal then?
Either they really killed it this quarter or my calculation is off for some reason.
Thoughtful commentary appreciated.
Sentiment: Strong Buy
At the Astellas website, investors relations under supplemental documents it shows Xtandi worldwide sales up 174.6%, US sales up 80.4% over same quarter last year. If you just look at US sales that was 14.7 billion yen for April to June 2014, or 142 million dollars. And international is just starting, Xtandi just got approved in Britain and was recently named their award winning drug of choice by their Nat. Inst. of Health. It's clear that Xtandi is gaining fast on Zytiga. Let's hope the FDA gives us good news in Sept., if so then sales will jump even more.