Aegis Capital Believes Seragon Deal Underscores Value In Medivation


In a report published Wednesday, Aegis Capital Corp. analyst Raghuram Selvaraju reiterated a Buy rating and $125.00 price target on Medivation (NASDAQ: MDVN).

In the report, Aegis Capital Corp. noted, “Early this morning, the Swiss pharmaceutical giant Roche (ROG/VTX, Not Rated) announced a massive deal for Seragon Pharmaceuticals. Seragon is the ‘other half' of Aragon Pharmaceuticals, founded by - among others - Dr. Michael Jung, a medicinal chemist from UCLA who played a pivotal role in the discovery of Medivation's prostate cancer drug XTANDI™ (enzalutamide).

"Aragon was acquired last year by Johnson & Johnson (JNJ/NYSE, Not Rated) for $650mm plus up to $350mm in milestones. Roche paid a staggering $725mm upfront for Seragon, with an additional $1bn payable in milestones alone upon achievement of pre-specified development- and sales-related thresholds. Seragon is developing androgen receptor antagonists in hormone receptor-positive breast cancer and endometrial cancer. Its lead candidate, ARN-810, is currently only in Phase 1 testing. XTANDI™, in contrast, is not only an approved agent but is also in Phase 2 testing for breast cancer in at least four different studies. The drug is also being tested in patients with ovarian, primary peritoneal or fallopian tube cancer.

"Accordingly, we believe the high price set by Roche on Seragon dramatically underscores the value of XTANDI™ in breast cancer, and we expect XTANDI™ to be a first-in-class drug in this indication. Roche might need to conduct head-to-head studies against XTANDI™ just to win approval of ARN-810.”

Medivation closed on Tuesday at $78.44.

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