Medivation Inc. (MDVN) reported a loss of 29 cents per share in the third quarter of 2011, narrower than the Zacks Consensus loss Estimate of 32 cents but well above the year-ago loss of 16 cents.
Higher expenses led to the higher loss. Revenues for the quarter were $14.9 million, 4.1% above the year-ago period but below the Zacks Consensus Estimate of $16 million.
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 25.1% to $26.4 million. Research and development expenses increased 19.7% to $18.7 million primarily due to higher headcount and bonus expense, consulting expenses associated with increased workload on the AFFIRM and PREVAIL trials, and preclinical expenses associated with new programs. This was partially offset by lower clinical expenses due to reduced dimebon development activities.
SG&A expenses increased 41.6% to $7.7 million primarily due to higher payroll-related expenses and 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.
Pipeline Update
Medivation received a huge boost earlier this month when it reported positive survival data on its phase III prostate cancer candidate, MDV3100, which is being developed in collaboration with Astellas Pharma.
The phase III randomized, double-blind, placebo-controlled study, AFFIRM, was conducted in men with advanced prostate cancer previously treated with docetaxel-based chemotherapy. The interim data was impressive with MDV3100 showing a 4.8-month advantage in median overall survival compared to placebo (18.4 months versus 13.6 months).
A 37% reduction in risk of death was observed in the MDV3100 arm compared to placebo. Medivation reported that the US Food and Drug Administration (FDA) recently granted fast track status for the post-chemotherapy indication.
Based on the encouraging interim data, Medivation said that it has decided to exercise its co-promotion option for MDV3100 in the US. Once MDV3100 is approved, Medivation will provide 50% of the US sales and medical affairs field forces for the product.
Medivation and Astellas intend to conduct a pre-NDA meeting with the FDA early next year. We expect to gain more visibility on the regulatory path for the candidate on the conclusion of this meeting. Medivation stands to receive a $10 million milestone payment from Astellas on the acceptance of the NDA for the post-chemotherapy indication.
As far as dimebon is concerned, Medivation remains on track to announce top-line results from the CONCERT study, which is being conducted in patients suffering from mild-to-moderate Alzheimer’s disease. Results will be out the first half of 2012.
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