Analyst Conference Summary


conference date: May 7, 2015
for quarter ending: March 31, 2015 (Q1, first quarter 2015)

Note: this is my first set of notes on Medivation. However, I know the prostate cancer field from my prior research on Dendreon (whose assets, including Provenge, were acquired by Valeant (VRX))

Forward-looking statements

Overview: Continues to benefit from ramping Xtandi sales y/y and works to expand the label.

Basic data (GAAP):

Revenue was $129.2 million, up 48% from $87.2 million in the year-earlier period.

Net income was negative $3.1 million, improved from negative $13.7 million year-earlier.

Diluted EPS was negative $0.04, improved from negative $0.18 year-earlier.


For the full year 2015 non-GAAP revenue is expected between $600 and $650 million. Xtandi sales in the U.S. by collaborator Astellas Pharma are expected between $1.05 and $1.125 billion. Operating expenses $410 to $450 million. Interest expense $5 million. GAAP tax rate 36 to 37%, but non-GAAP rate will be lower due to use of NOLs.

Conference Highlights:

U.S. Xtandi sales by Astellas were down sequentially, at $224 million from $230 million, largely due to a higher gross-to-net rate (from the donut hole) and a channel partner inventory build in Q4.

Xtandi Ex-U.S. sales by Astellas were $133 million, up 6% sequentially and up 161% from year-earlier. That is despite an about 9% negative FX effect y/y.

Non-GAAP numbers: net income $13.4 million or $0.17 per diluted share. Collaboration revenue, which excludes upfront and milestone payments, was $127.8 million, up 88% y/y.

Collaboration revenue by source: U.S. sales $112.0 million; ex-U.S. sales $15.8 million; upfront and milestone $1.4 million.

Xtandi (enzalutamide) pipeline developments:

Phase 2 STRIVE trial achieved its primary endpoint of PFS (progression free survival) for non-metastatic or metastatic castrate-resistant prostate cancer, compared to bicalutamide. Median PFS was 19.4 months vs. 5.7 months in the control arm. These results exceeded Medivation's expectation.

Phase 2 TERRAIN trial achieved its primary endpoint of PFS (progression free survival) for metastatic castrate-resistant prostate cancer, compared to bicalutamide. Median PFS was 15.7 months vs. 5.8 months in the control arm. However, serious adverse events were reported in 31.1% of Xtandi patients vs. just 23.3% of bicalutamide patients.

In January the first patient was enrolled in the Phase 3 EMBARK trial for enzalutamide alone or in combination with androgen deprivation for high-risk, hormone-sensitive, non-metastatic prostate cancer that has biochemically recurred following definitive local therapy with radical prostatectomy and/or radiation. The primary endpoint of the trial is metastasis-free survival. The trial will have three arms, including a combination arm.

In breast cancer, completed enrollment in the Phase 2 trail of enzalutamide with exemestane for advanced breast cancer that is ER+ and PgR+ but HER2 normal.

On June 1 the data from the Phase 2 triple-negative breast cancer trial will be presented.

Cash balance ended at $568.6 million. Convertible note debt $225 million. Contingent consideration debt $100 million.

GAAP operating expenses were $128.6 million, consisting of $44.7 million for research and development and $83.9 million for selling, general and administrative expenses. Leaving income from operations of $0.6 million. Interest and other expense was $5.5 million. Income tax benefit $1.8 million.


STRIVE and TERRAIN, what determines doctors writing scripts? We are extremely excited about these studies, they will be presented at the AUA meeting. We will submit to the NCCN after the presentation. The patients are already within the label and payers are reimbursing.

Q1 sequential revenue drop, main cause? Growth was driven by more prescriptions being written.

Strategy for differentiating your antibody MDB-9300 (pidilizumab)? It has already had clinical activity published, with Phase 2 results in. So we will go to Phase 3 in at least one indication, in 2016. This is a PD-1 CPM (check point modulator) licensed from CureTech that has been tested for follicular lymphoma and relapsed refractory large B cell lymphoma.

Non-metastatic Xtandi use so far? We don't follow that.

There are over 600,000 scripts written annually in the U.S. by urologists for bicalutamide. So the data to be presented soon could have a major effect.

Duration of treatment, STRIVE and TERRAIN? That number shifts over time. Duration likely less than in the Phase 3 PREVAIL trial is likely because they are Phase 2 trials. We believe that if the drug is well-tolerated patients should stay on it as long as possible.

April 2 price increase? Astellas manages the price increase. We do not believe the increase was announced in advance [so it likely did not result in buying ahead].

In the next seven months we will be announcing at least one new internal development program. We don't generally discuss our preclinical programs. We are also looking for possible external therapies to acquire.

Off the shelf prostate assays were not efficient at finding androgen receptors in the breast. We optimized assays for breast cancer, and are seeing a higher percentage of women with the receptors.

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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is investment journalism, not financial advice.

Copyright 2015 William P. Meyers