Medivation Inc.
(
MDVN
) reported second quarter loss of 15 cents per share, wider than
the Zacks Consensus Estimate of a profit of 23 cents per share.
Second quarter 2012 loss, however, was well below the year-ago loss
of 27 cents.
Revenues came in at $42.9 million, missing the Zacks Consensus
Estimate of $47 million. Revenues, however, increased 171.6% 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
(
PFE
) in October 2008 and $110 million received from Astellas in late
2009. The upfront payments are being recognized on a straight-line
basis.
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 in 2012. While
Medivation recognized $35.6 million of deferred revenue under the
Pfizer collaboration in the second quarter of 2012, $5.5 million
will be recognized in the third quarter of 2012.
As far as revenue under the Astellas collaboration is concerned,
about $58.0 million deferred revenue remains from this
collaboration. Medivation intends to recognize the same at the rate
of $7.3 million per quarter.
Operating expenses increased 67.6% to $43.9 million. Research
and development expenses increased 12.6% to $21.6 million.
SG&A expenses increased 217.5% to $22.3 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 US in 2012. Medivation said
that it has finished recruiting its sales and medical affairs field
forces.
Once enzalutamide is approved, Medivation will provide 50% of
the US sales and medical affairs field forces for the product.
2012 Outlook
Medivation now expects operating expenses (after adjusting
cost-sharing payments from Astellas) in the range of $183 - $198
million, up from the previous guidance of $155 - $170 million.
Higher launch-related costs and non-cash stock-based compensation
costs led to the upward revision in operating expense guidance.
Medivation, which became eligible to receive a $10 million
milestone payment from Astellas related to the acceptance of the
enzalutamide NDA, could receive additional milestone payments of
about $35 million related to the regulatory filing ($5 million on
the acceptance of the EU filing) and potential US approval ($30
million) of enzalutamide.
The company expects capex of about $15 million, especially
connected with its new headquarters.
Pipeline Update
Medivation along with its partner Astellas Pharma filed for US
approval of their prostate cancer candidate, enzalutamide, in the
second quarter of 2012. The FDA granted priority review which means
a response should be out by November 22, 2012. The EU filing has
also been submitted.
Meanwhile, Medivation continues to evaluate enzalutamide in the
pre-chemo setting which represents huge commercial opportunity.
Besides conducting the phase III PREVAIL study (chemotherapy-naïve
advanced prostate cancer patients), enzalutamide is 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 study (STRIVE) commenced recently - this study is being
conducted mainly in the US in patients with either metastatic or
non-metastatic disease. A third study (ASPIRE) is being conducted
in chemo-naïve patients. Medivation is also evaluating enzalutamide
at the earliest stage of prostate cancer, when the disease is
initially diagnosed. The company is enrolling patients in an
open-label clinical trial which will study enzalutamide as a new
adjuvant therapy prior to prostatectomy. Medivation is also
exploring enzalutamide for breast cancer (phase I).
We expect investor focus to remain on the regulatory status of
enzalutamide.
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