Analyst Conference Summary


conference date: November 5, 2015 @ 1:30 PM Pacific Time
for quarter ending: September 31, 2015 (Q3, third quarter 2015)

Forward-looking statements

Overview: Strong Xtandi sales growth.

Basic data (GAAP):

Revenue was $260.7 million, up 48% sequentially from $175.7 million, and up 102% from $129.2 million in the year-earlier period.

Net income was $79.5 million, up 208% sequentially from $25.8 million, and up 2% from $78.0 million year-earlier.

Diluted EPS was $0.47, up 52% sequentially from $0.31, but down 2% from $0.48 year-earlier.


Full year Xtandi sales $1.14 to $1.18 billion, resulting in non-GAAP collaboration revenue of $670 to $700 million. Non-GAAP R&D expense $180 to $200 million; SG&A expense $230 to $250 million. Other non-GAAP expense $2 million, tax rate 36% to 37% (unless R&D tax credit is reinstated).

In Q4 and beyond R&D expense will increase from the talazoparib program, which is included above.

Conference Highlights:

The stock had split 2 for one on August 13.

Xtandi sales were strong.

"In October, we successfully completed the acquisition for the late stage asset talazoparib, a highly-potent, orally-available poly ADP ribose polymerase (PARP) inhibitor. With the acquisition of talazoparib, we now have further diversified our late-stage pipeline beyond XTANDI and pidilizumab to complement our early development programs, providing significant opportunities for growth." This was from Biomarin for a $410 million up front payment, plus possible milestone and royalty payments. Medivation believes talazoparib presents a very large cancer opportunity, and designated it MDV3800.

U.S. Xtandi sales by Astellas were $313.0 million, up 5% sequentially from $298.4 million and up 73% y/y.

Xtandi ex-U.S. sales by Astellas were $205 million, up 9% sequentially from $188 million and up 71% from year-earlier.

Total global sales by Astellas were $518 million, up 6% sequentially from $487 million.

Non-GAAP numbers: net income $58.4 million, up 20% sequentially from $48.7 million, and up from $16.3 million year earlier. EPS $0.35, up 21% sequentially from $0.29 (adjusted for the split), and up from $0.05 year-earlier. Collaboration revenue, which excludes upfront and milestone payments, was $260.7 million, up 49% sequentially from $174.8 million.

Xtandi (enzalutamide) pipeline developments:

An improved label could be available for Xtandi in late 2016 based on new trial data. Two Phase 3 trials in earlier stage prostate cancer are enrolling.

Enzalutamide in triple-negative, androgen-receptor positive, breast cancer Phase 2 trial in Europe showed positive results. 10.5 month longer median survival was shown. Medivation is in discussions about the design for a pivotal Phase 3 study. Two other Phase 2 trials are underway for different patient types.

Hepatocellular carcinoma Phase 2 trial of enzalutamide should enroll its first patient this quarter.

MDV 9300 (pidilizumab) is being considered as an immuno-oncology agent. It is a PD-1 inhibitor. A B-cell lymphoma study should start this year.

SREVP pathway small molecule Phase 1 trial of healthy volunteers is underway.

Cash balance ended at $490 million, down sequentially from $497.5 million. Convertible note debt extinguished in quarter using $168 million cash. $75 million revolving debt. Contingent consideration debt $103 million. After the quarter ended $75 million was borrowed on a new credit facility as part of a $300 million facility and $410 million was used to buy talazoparib.

An additional $277 million is receivable from Astellas.

GAAP operating expenses were $121.7 million, consisting of $45.9 million for research and development and $75.8 million for selling, general and administrative expenses. Leaving income from operations of $139.0 million. Interest and other expense was $14.1 million. Income tax expense $45.3 million.


Pre-chemo vs. post-chemo split of patients? 20% in urology, 80% oncology. We don't report on chemo status. Duration should grow as we enroll earlier patients.

AR+ definition in breast cancer? We will be using the gene expression assay we developed.

Phase 2 readout timelines in breast cancer? They are event driven, so we can't predict the timing. Recruitment to the trials is going well.

Treating to PSA progression or radiographic progression with urologists? They look at both. Our studies used radiographic. We are working with urologists to get the right duration for patients.

Xtandi label extension plan? STRIVE and TRAIN data are important, we are discussing with FDA and EMA. The data from these studies are final.

We have three late-stage oncology assets now, so combinations are possible. We will outline a program in early 2016. Xtandi shows some immuno-stimilating activity. The other agents have different mechanism profiles.

Was there an increase in discontinuations this quarter? Can you get to the lower end of your guidance? Gross to net effects should be taken out of Q3 numbers. Our guidance if off that, low single digit growth sequentially. This was off very strong growth in Q2. We know we can support more Xtandi growth with an expanded sales force, which positions us well for growth in the future, and in addition the potential label change.

Are a majority of urologists unfamiliar with Xtandi, are they not aware of results vs. other therapies? We can increase prescriptions with more education. They like the data when they see it. But our focus has to remain on oncology, which is the larger piece of our business. Our label is currently in the metastatic setting. We want to help the urology community identify metastatic patients. With the label change we can go to pre-metastatic.

Holiday stocking of Xtandi, is it in guidance? The Astellas team plans a year-end shutdown, so we only have a tiny bit of stocking in the plan.

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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