) reported first quarter earnings of 1 cent per share, well below
the Zacks Consensus Estimate of $1.13. The company, however, had
posted a loss of 24 cents in the year-ago period. The company swung
to a profit in the first quarter of 2012 due to the accelerated
recognition of deferred revenues under the
Revenues came in at $36.8 million, missing the Zacks Consensus
Estimate of $67 million. Revenues, however, increased 150.4% from
the year-ago quarter.
The Quarter in Detail
Revenues consisted of partial recognition of the non-refundable
upfront payment of $225 million received from its former partner
Pfizer in October 2008 and $110 million received from Astellas in
late 2009. The upfront payments are being recognized on a
With Pfizer exercising its right to terminate its collaboration
agreement in Jan 2012, the remaining deferred revenue balance under
the Pfizer collaboration will be recognized through 2012. While
Medivation recognized $30.9 million of deferred revenue under the
Pfizer collaboration in the first quarter of 2012, $35.6 million
will be recognized in the second quarter of 2012. The balance $5.5
million will be recognized in the third quarter of 2012.
As far as revenue under the Astellas collaboration is concerned,
about $65.3 million deferred revenue remains from this
collaboration. Medivation intends to recognize the same at the rate
of $5.9 million per quarter.
Operating expenses increased 50% to $35.7 million. Research and
development expenses increased 13.7% to $20 million.
SG&A expenses increased 154.8% to $15.7 million. The
increase in SG&A spend was expected as the company is working
on building out its corporate infrastructure in anticipation of the
potential launch of enzalutamide in the U.S. in 2012. Medivation
said that it has recruited its sales management team and medical
affairs field force, and is now recruiting the sales force.
Once enzalutamide is approved, Medivation will provide 50% of
the U.S. sales and medical affairs field forces for the
Medivation expects operating expenses (after adjusting
cost-sharing payments from Astellas) in the range of $155 - $170
million. The company could receive milestone payments of about $45
million related to the regulatory filing ($10 million and $5
million on the acceptance of the U.S. and E.U. filings,
respectively) and potential U.S. approval ($30 million) of
enzalutamide (formerly known as MDV3100).
The company expects capex of about $15 million, especially
connected with its new headquarters.
Medivation along with its partner Astellas Pharma intends to
file for U.S. approval for their prostate cancer candidate,
enzalutamide, in the second quarter of 2012. The companies will be
seeking priority review for the candidate. The E.U. filing is also
slated for 2012.
Meanwhile, the company expects to finish enrolling patients for
the phase III PREVAIL study, which is being conducted in
chemotherapy naïve prostate cancer patients, later this month.
Enzalutamide is also in a phase II study (TERRAIN), which will
compare enzalutamide with bicalutamide, in advanced prostate cancer
patients who have progressed following medical castration with LHRH
analog therapy or surgical castration. Another open-label phase II
study is being conducted to evaluate enzalutamide in advanced
prostate cancer patients who have not had any previous hormonal
therapies. Enzalutamide is also being studied for breast cancer
Neutral on Medivation
We currently have a Neutral recommendation on Medivation, which
carries a Zacks #3 Rank (short-term 'Hold' rating). With the
regulatory filing for enzalutamide fast approaching, we expect
investor focus to remain on the candidate. Enzalutamide could very
well be a game-changer for Medivation.
MEDIVATION INC (MDVN): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
To read this article on Zacks.com click here.