Wall Street Bullish On Medivation, Inc. After Xtandi Approval

Published: Sep 12, 2014

Wall Street Bullish On Medivation After Xtandi Approval

September 12, 2014

By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Wall Street analysts are bullish on pharmaceutical company Medivation, Inc. after this week’s Food and Drug Administration approval of its cancer drug Xtandi as a pre-chemotherapy treatment greatly enhanced the firm’s chances of seeing market traction almost as soon as it is introduced.

The new indication means much greater and longer usage of the Xtandi capsules, which cost about $7,500 a month, and are used to treat metastatic castration-resistant prostate cancer.

"The average duration of treatment should double and the addressable patient population triple in the pre-chemo setting," Sanford Bernstein analyst Geoffrey Porges said in a research note earlier this week.

The FDA approval now sets in motion $90 million in milestone payments to San Francisco-based Medivation by Japan's Astellas under a preexisting collaboration agreement inked in 2009.

Trading of shares of Medivation was briefly halted late Wednesday after news of the approval broke. Once resumed, the company’s share prices climbed 1.6 percent to close at $98.46 on Wednesday.

Analysts at Sanford Bernstein, Credit Suisse, Stifel Nicolaus and Jefferies have all raised or adjusted their ratings on the stock in the last two weeks as the progression of Xtandi has been closely watched.

Its eventual competition will likely include Johnson & Johnson's Zytiga, a shootout that also has analysts upgrading Medivation’s rating.

"Based on our most recent CRPC survey, we expect pre-chemo market share for Xtandi of 46-48 percent, and U.S. Xtandi sales of $1.17 billion in 2015 (v. cons of $1.11B),” wrote Analyst Biren Amin with Jefferies. “On approval, we lower our discount rate and increase our [price target] to $89 (v. $80 previously)."

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