Medivation Inc. (MDVN) reported a loss of 27 cents per share in the second quarter of 2011, a penny wider than the Zacks Consensus loss Estimate of 26 cents and well above the year-ago loss of 21 cents.
Higher expenses led to the wider loss. Revenues for the quarter were $15.8 million, in-line with the Zacks Consensus Estimate and flat from the year-ago period.
The 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 increased 12.9% to $26.2 million. Research and development expenses increased 5% to $19.1 million primarily due to an increase in pre-clinical and other expenses. SG&A expenses increased 41% to $7 million primarily due to higher legal and other expenses.
Maintains 2011 Outlook
Medivation expects operating expenses (after adjusting cost-sharing payments from Pfizer and Astellas) in the range of $100 – $110 million. Medivation, which exited 2010 with a cash and equivalents balance of $207.8 million, expects to be able to fund operations into 2013.
Pipeline Update
Medivation provided an update on its pipeline candidates. Medivation and partner Astellas finished enrolling patients for the phase III AFFIRM study (advanced prostate cancer) in Nov 2010. An interim analysis of this study, which is being conducted in post-chemotherapy patients, will be conducted this year.
The companies initiated another phase III study (PREVAIL), which is being conducted in chemotherapy-naïve advanced prostate cancer patients. A head-to-head phase II study (TERRAIN) between MDV3100 and AstraZeneca’s (AZN) Casodex (bicalutamide) commenced in March 2011. A phase II study in hormone-naïve patients is also being conducted.
Dimebon is currently in the CONCERT study, which is being conducted with patients suffering from mild-to-moderate Alzheimer’s disease. Results from the CONCERT study are expected in the first half of 2012.
Neutral on Medivation
We currently have a Neutral recommendation on Medivation. We are concerned about partner Pfizer’s commitment towards the dimebon collaboration. With dimebon failing in two phase III studies, we expect investor focus to remain on Medivation’s prostate cancer candidate, MDV3100.
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