Narrower Loss at Medivation - Analyst Blog

Medivation Inc. (MDVN) reported a loss of 16 cents per share in the third quarter of 2010, narrower than the Zacks Consensus Estimate of a loss of 21 cents and the year-ago loss of 42 cents. Lower expenses led to the narrower loss. Revenues for the quarter were $14.4 million, well below the Zacks Consensus Estimate of $16 million. Revenues were $16.3 million in the year-ago period.

Quarter in Detail

Revenues consisted of partial recognition of the non-refundable upfront payment of $225 million received from Pfizer (PFE) in October 2008 and $110 million received from Astellas in late 2009. The upfront payments are being recognized on a straight-line basis, while the Pfizer payment will be recognized through the fourth quarter of 2013, the Astellas payment will be recognized through the fourth quarter of 2014.

Operating expenses declined 23.6% to $21.1 million. Research and development expenses declined 27.4% to $15.6 million primarily due to decreased clinical activity in the Dimebon program. This was partially offset by increased clinical trial activities in the MDV3100 program.

SG&A expenses declined 9.6% to $5.5 million primarily due to the 20% workforce reduction implemented in March 2010, the termination of office leases, and lower intellectual property expenses related to Dimebon. Medivation expects its cash balance to be sufficient to finance operations beyond 2012.

Pipeline Update

Medivation provided an update on its pipeline candidates. The company expects to report top-line results from its phase III HORIZON study in the first half of 2011. The study is being conducted with Dimebon for the treatment of Huntington disease. Medivation will request a pre-New Drug Application (NDA) meeting with the US Food and Drug Administration (FDA) if results are positive.

Meanwhile, Medivation continues to evaluate Dimebon in the CONCERT study, which is being conducted with patients suffering from mild-to-moderate Alzheimer's. Robust results from this study along with data from an earlier study could be enough to support Dimebon's approval for mild-to-moderate Alzheimer's disease.

Medivation and partner Astellas are looking to complete enrolment for the phase III AFFIRM study (advanced prostate cancer) by mid-Nov 2010. The companies initiated another phase III study (PREVAIL), which is being conducted in chemotherapy-naïve advanced prostate cancer patients.

The companies also intend to commence two new studies with MDV3100. While one trial will be a head-to-head phase II study between MDV3100 and AstraZeneca's (AZN) Casodex (bicalutamide), the other study (phase II) will be conducted in hormone-naïve patients. Top-line results from CONCERT and AFFIRM should be out by 2012.

We expect investor focus to remain on the HORIZON study results, which are expected in the first half of 2011.