Medivation Inc. (MDVN) posted earnings of 96 cents per share in the third quarter of 2014, turning around the year-ago loss of 18 cents per share but falling short of the Zacks Consensus Estimate of $1.11 per share.
Revenues came in at $200.5 million, up 233.9% from the year-ago period, but missing the Zacks Consensus Estimate of $203 million.
The Quarter in Detail
Xtandi delivered U.S. net sales of $181.4 million, as reported by Astellas (ALPMY), in the third quarter, up 26.2% sequentially. The company attributed about one-third of the sequential improvement to demand, half to a price increase in July and a favorable gross-to-net change and the balance to a small increase in channel partner inventory level.
Awareness about Xtandi among oncologists and urologists continues to be high. Ex-U.S. net sales were $119.6 million, well above $83.3 million in the second quarter. Uptake in Japan remained strong.
Xtandi is approved for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC) who have previously received docetaxel. The product label was recently expanded in the U.S. to include the chemo-naïve population.
Medivation's collaboration revenues in the third quarter were $200.5 million consisting of U.S. collaboration revenues of $90.7 million (up 67.3% from the year-ago period), ex-U.S. collaboration revenues of $15.5 million (compared to $1.6 million in the year-ago period) and upfront and development milestone payments accounting for the remaining $94.2 million. This included a milestone payment of $90 million related to Xtandi’s label expansion in the U.S.
Operating expenses increased 60% to $108.6 million. Research and development expenses increased 58.1% to $45.4 million. SG&A expenses increased 60.8% to $63.2 million. The higher expenses reflect the company’s investment in the launch of Xtandi for the new indication, its label expansion efforts, a milestone payment to UCLA, the expansion of the U.S. field sales force and additional expense related to a recent government ruling impacting the timing of the recognition of the Branded Prescription Drug Fee.
2014 Outlook
Medivation expects U.S. net sales of Xtandi to come in towards the higher end of the previously provided guidance range of $600 million to $640 million or slightly above it.
Total collaboration revenues are expected at the high end of or slightly above the previously provided guidance range of $615–$640 million. This includes the assumption that collaboration revenue related to U.S. net sales of Xtandi will be at the high end or just above the previously-guided range of $300 million – $320 million, and collaboration revenue related to upfront and milestone payments will be about $279 million.
This includes about $17 million of upfront and milestone amortization, $212 million of development milestones (including $45 million related to the label revision in Japan that has already occurred in October), and $50 million of sales milestones (related to Xtandi worldwide net sales coming in at $800 million in 2014).
Medivation expects Xtandi’s label expansion in the EU for the pre-chemo population to occur in Jan 2015, which means a $45 million milestone payment will be triggered at that point of time. However, this may occur earlier, potentially in late December.
Operating expenses (after adjusting cost-sharing payments) are expected towards the lower half of the previously provided guidance range of $400 million to $430 million. While SG&A spend will account for slightly more than 50% of total operating expenses, the balance will be spent on R&D.
Medivation is working on expanding Xtandi’s label. Medivation and Astellas are currently looking to start a phase III study that will evaluate Xtandi’s safety and efficacy in patients with high-risk, hormone sensitive, non-metastatic prostate cancer that has biochemically recurred (rising prostate-specific antigen or PSA level) following surgery and/or radiation. The study will evaluate Xtandi’s ability to delay or prevent the development of metastatic prostate cancer in high-risk men with a rapidly rising PSA with the primary endpoint being metastasis-free survival.
Meanwhile, some of the ongoing studies on Xtandi include the phase III PROSPER study (high-risk subgroup of pre-chemotherapy non-metastatic CRPC patients who are progressing despite androgen deprivation therapy and are asymptomatic), the phase II TERRAIN and STRIVE studies (designed to compare the effect of Xtandi head-to-head versus Casodex (bicalutamide), the most commonly used anti-androgen) and three phase II breast cancer studies.
While results from TERRAIN should be out in early 2015, STRIVE results should be out shortly thereafter.
Our Take
Although Medivation missed earnings and revenue estimates in the third quarter of 2014, Xtandi’s performance remains strong with the product recording year-over-year as well as sequential growth. With Xtandi gaining approval for the pre-chemo population, increased usage among urologists should drive sales further.
Medivation is a Zacks Rank #2 (Buy) stock. Some better-ranked biotech stocks include Biogen (BIIB) and Cytokinetics (CYTK). Both are Zacks Rank #1 (Strong Buy) stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment