Medivation Inc. (MDVN) reported a loss of 21 cents per share in the second quarter of 2010, narrower than the Zacks Consensus Estimate of a loss of 36 cents and the year-ago loss of 29 cents. Lower expenses led to the narrower loss.
Revenues for the quarter were $15.8 million, well below the Zacks Consensus Estimate of $17 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 second quarter of 2013, the Astellas payment will be recognized through the fourth quarter of 2014.
Operating expenses declined 3.8% to $23.2 million. Research and development expenses increased 4.0% to $18.3 million, primarily due to expanded clinical activity. SG&A expenses declined 24.8% to $5.0 million, primarily due to the 20% workforce reduction implemented in March 2010, the termination of office leases and decreased intellectual property expenses related to dimebon.
Pipeline Update
Medivation provided an update on its pipeline candidates. The company said that it has finished enrolling patients (n=403) for its phase III HORIZON study that is being conducted with Dimebon for the treatment of Huntington's disease. Top-line results from this study should be out in the first half of 2011. The company will request a pre-New Drug Application (NDA) meeting with the US Food and Drug Administration (FDA) if results are positive.
Meanwhile, the company said that it received a feedback from the FDA regarding the development of Dimebon for Alzheimer’s disease. Following the release of disappointing results on Dimebon from a pivotal phase III study (CONNECTION), Medivation has decided to streamline its development plans for Dimebon and is focusing on those trials which look more promising.
The agency has informed Medivation that robust results from the company’s ongoing CONCERT study along with data from an earlier study could be enough to support Dimebon’s approval for mild-to-moderate Alzheimer's disease.
Meanwhile, Medivation and partner Astellas are looking to complete enrolment for the phase III AFFIRM study (advanced prostate cancer) in 2010. The companies also intend to commence three new studies with MDV3100. While one study (phase III - PREVAIL) will be conducted in men with chemotherapy-naive castration-resistant prostate cancer, the second will be a head-to-head phase II study between MDV3100 and AstraZeneca’s (AZN) Casodex (bicalutamide). The third study (phase II) will be conducted in hormone-naïve patients. Top-line results from CONCERT and AFFIRM should be out by 2012.
Guidance Revised
Medivation updated its guidance for 2010. The company now expects total operating expenses, net of cost-sharing payments from Pfizer and Astellas, in the range of $95 - $105 million, down from its earlier guidance of $105 - $115 million.
The company also expects to receive a milestone payment of $10 million related to the initiation of the PREVAIL study with MDV3100. Medivation said that its cash balance should be sufficient to finance operations beyond 2012.
Our Take
We currently have a Zacks #4 Rank (Sell) on Medivation. Medivation suffered a major setback earlier this year with its lead pipeline candidate Dimebon failing to achieve both its primary and secondary endpoints in a phase III study. The results were a huge disappointment for the company. Although Medivation is continuing with the development of the candidate, we remain concerned that additional development setbacks would have a major impact on the stock.
Moreover, we are concerned about Pfizer’s commitment towards the Dimebon collaboration. We note that Pfizer already has another Alzheimer’s candidate, bapineuzumab, in its portfolio that is being developed with Johnson & Johnson (JNJ). As such, Pfizer may decide to focus its efforts towards the development of bapineuzumab.
Longer-term, we are Neutral on Medivation. We are positive on Medivation’s collaboration agreement with Astellas Pharma for its second pipeline candidate, MDV3100. Not only has this agreement brought in cash, but also Astellas’ strong presence in the urology market should be a major boon once MDV3100 is launched.
ASTRAZENECA PLC (AZN): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
MEDIVATION INC (MDVN): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
Zacks Investment Research
Market News and Data brought to you by Benzinga APIsRevenues for the quarter were $15.8 million, well below the Zacks Consensus Estimate of $17 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 second quarter of 2013, the Astellas payment will be recognized through the fourth quarter of 2014.
Operating expenses declined 3.8% to $23.2 million. Research and development expenses increased 4.0% to $18.3 million, primarily due to expanded clinical activity. SG&A expenses declined 24.8% to $5.0 million, primarily due to the 20% workforce reduction implemented in March 2010, the termination of office leases and decreased intellectual property expenses related to dimebon.
Pipeline Update
Medivation provided an update on its pipeline candidates. The company said that it has finished enrolling patients (n=403) for its phase III HORIZON study that is being conducted with Dimebon for the treatment of Huntington's disease. Top-line results from this study should be out in the first half of 2011. The company will request a pre-New Drug Application (NDA) meeting with the US Food and Drug Administration (FDA) if results are positive.
Meanwhile, the company said that it received a feedback from the FDA regarding the development of Dimebon for Alzheimer’s disease. Following the release of disappointing results on Dimebon from a pivotal phase III study (CONNECTION), Medivation has decided to streamline its development plans for Dimebon and is focusing on those trials which look more promising.
The agency has informed Medivation that robust results from the company’s ongoing CONCERT study along with data from an earlier study could be enough to support Dimebon’s approval for mild-to-moderate Alzheimer's disease.
Meanwhile, Medivation and partner Astellas are looking to complete enrolment for the phase III AFFIRM study (advanced prostate cancer) in 2010. The companies also intend to commence three new studies with MDV3100. While one study (phase III - PREVAIL) will be conducted in men with chemotherapy-naive castration-resistant prostate cancer, the second will be a head-to-head phase II study between MDV3100 and AstraZeneca’s (AZN) Casodex (bicalutamide). The third study (phase II) will be conducted in hormone-naïve patients. Top-line results from CONCERT and AFFIRM should be out by 2012.
Guidance Revised
Medivation updated its guidance for 2010. The company now expects total operating expenses, net of cost-sharing payments from Pfizer and Astellas, in the range of $95 - $105 million, down from its earlier guidance of $105 - $115 million.
The company also expects to receive a milestone payment of $10 million related to the initiation of the PREVAIL study with MDV3100. Medivation said that its cash balance should be sufficient to finance operations beyond 2012.
Our Take
We currently have a Zacks #4 Rank (Sell) on Medivation. Medivation suffered a major setback earlier this year with its lead pipeline candidate Dimebon failing to achieve both its primary and secondary endpoints in a phase III study. The results were a huge disappointment for the company. Although Medivation is continuing with the development of the candidate, we remain concerned that additional development setbacks would have a major impact on the stock.
Moreover, we are concerned about Pfizer’s commitment towards the Dimebon collaboration. We note that Pfizer already has another Alzheimer’s candidate, bapineuzumab, in its portfolio that is being developed with Johnson & Johnson (JNJ). As such, Pfizer may decide to focus its efforts towards the development of bapineuzumab.
Longer-term, we are Neutral on Medivation. We are positive on Medivation’s collaboration agreement with Astellas Pharma for its second pipeline candidate, MDV3100. Not only has this agreement brought in cash, but also Astellas’ strong presence in the urology market should be a major boon once MDV3100 is launched.
ASTRAZENECA PLC (AZN): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
MEDIVATION INC (MDVN): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
Zacks Investment Research
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