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Medivation Loss Narrower Than Expected

Zacks Equity Research

Medivation Inc. (MDVN) reported a first-quarter loss of 36 cents per share, narrower than the Zacks Consensus Estimate of a loss of 41 cents per share. However, the company recorded earnings of 1 cent in the year-ago quarter.

Revenues came in at $46.2 million, above the Zacks Consensus Estimate of $38 million and the year-ago revenues of $36.8 million.

The Quarter in Detail

Xtandi delivered net sales of $75.4 million in the first quarter, $18 million above the last quarter of 2012. Revenues were driven by higher volumes and a favorable gross to net adjustment of about $4.4 million taken by Astellas (ALPMY).

Xtandi is approved for the treatment of patients with metastatic castration-resistant prostate cancer who have previously received docetaxel. Xtandi is currently under regulatory review in the EU (positive opinion gained in Apr 2013) with a decision expected in the June-July timeframe. EU approval would trigger a $15 million milestone payment from Astellas.

Operating expenses increased 91.9% to $68.5 million. Research and development expenses increased 24.4% to $24.9 million. SG&A expenses increased 177.7% to $43.6 million.

2013 Outlook Maintained

Medivation still expects operating expenses (after adjusting cost-sharing payments) in the range of $285–$300 million.

Medivation is working on expanding Xtandi’s label. Interim results from the phase III PREVAIL study on pre-chemo patients should be out later this year. The company also intends to start a phase III trial in patients with non-metastatic castration-resistant prostate cancer this year.

Xtandi is being evaluated in other studies as well, including a breast cancer study.

Our Take

We are encouraged by Xtandi’s performance. Xtandi, which was launched in the US in Sep 2012, could very well be a game-changer for Medivation. The prostate cancer market represents huge commercial potential and Xtandi is already off to a strong start. Medivation has consistently presented impressive data on Xtandi. Based on the data we have seen so far, we believe the product has blockbuster potential. Xtandi is currently in several studies including studies for the pre-chemo setting. Expansion into the pre-chemo setting would be a major positive for the stock.

Medivation is currently a Zacks Rank #3 (Hold) stock. At present, companies like Athersys, Inc. (ATHX) and Cytori Therapeutics, Inc. (CYTX) look well-positioned. Both are Zacks Rank #1 (Strong Buy) stocks.

Read the Full Research Report on CYTX

Read the Full Research Report on MDVN

Read the Full Research Report on ALPMY

Read the Full Research Report on ATHX

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