I generally advise investors which small cap biotech stocks are worth a look. Medivation Inc (NASDAQ:MDVN) was a small cap stock when I first bought it years ago on the hope of its lead compound Xtandi (Enzalutamide), a next-generation androgen receptor (AR) inhibitor, succeeding in prostate cancer. We all know how that turned out. Approved for metastatic castrate resistance prostate cancer (mCRPC) following chemotherapy and more recently expanded to pre-chemotherapy, the drug has already surpassed $1 Billion in sales run rate for 2015.

The rapid uptake of Xtandi is not surprising considering the drug significantly outperformed Johnson & Johnson’s┬áprostate cancer drug Zytiga in clinical trials, which currently rakes in ~$2 billion in sales a year. By 2023, the prostate cancer drug market is supposed to reach over $9 billion in sales and it’s predicted that Xtandi will be the top-selling agent, raking in over $3 billion in sales. With Medivation building a war chest of money, over $500 million in cash, management is looking to expand Xtandi’s indications and drug portfolio. Not only will Medivation have a PD-1 inhibitor in clinical trials for hematopoietic cancers soon, recently released results at ASCO show that Xtandi is extremely effective in treating triple negative breast cancer (TNBC) patients who are AR+.

Currently, most analysts have not factored in any success for Xtandi in breast cancer to their price target models. In my opinion, the recent breast cancer data provides significant upside that has yet to be baked into the stock price. A nice poster illustrating clinical activity of Xtandi in AR+ pancreatic cancer in a Phase 1 trial was also presented at ASCO but overlooked by many. The recent pullback following the ASCO meeting provides investors a nice opportunity to gain 20-30% in the mid-term with little risk.

Xtandi to be First Targeted Therapy in TNBC

TNBC is a very aggressive cancer with a high unmet need. Currently, the standard of care involves treating patients with a combination of surgery, radiation and various chemotherapeutics, which have numerous toxic side effects. Prognosis for these patients is very poor with a median overall survival (OS) of only ~13 months following diagnosis of metastatic TNBC. The response rates and median progression free survival (mPFS) vary depending on the trial and chemotherapy combinations used but they range from 1-10 months with most around 8 months for front-line treatment. The mPFS for second-line treatment is much less.

Importantly, there are currently no targeted drugs approved for TNBC. Avastin in combination with chemotherapy was approved for TNBC after the Phase 3 clinical trial illustrated an advantage in mPFS over chemotherapy alone (8.1 vs. 1.7 months). However, the FDA later revoked the approval saying the slight improvement observed in OS (18.9 months vs. 17.5 months) was not worth the toxicity of the combination treatment. Xtandi is poised to be the first targeted therapy for TNBC.

A study at Memorial Sloan-Kettering Cancer Center (MSKCC) had previously identified a subset of TNBC that had expression of the AR, suggesting active hormonal signaling fueling tumor growth. A Phase 2 study testing the low level androgen inhibitor Bicalutamide on AR+ TNBC illustrated the proof of principle with a 19% clinical benefit rate in patients at 6 months, but no partial or complete responses. The mPFS was 12 weeks. Due to the limited treatment options available following chemotherapy failure, Bicalutamide is already being prescribed off label. Medivation’s Xtandi is a much more potent androgen inhibitor with superior efficacy in prostate cancer. Knowing this it makes sense that it should improve upon the Bicalutamide effect in TNBC.

The Phase 2 open-label, multicenter trial evaluating Xtandi as a monotherapy in advanced AR+ TNBC enrolled 118 women. There was no limit to the number of prior treatments received to enroll. All women enrolled had some level of AR expression by antibody staining. In addition to antibody staining to determine AR status, a gene expression signature relating to AR positive status was also developed to further increase sensitivity and accuracy to identify those patients most likely to respond. Approximately half of the 118 women qualified as diagnostic positive based on the AR gene signature profile. Once selected for AR status, the results were extremely impressive.

In the trial, 39% of diagnostic positive patients had a clinical benefit at 16 weeks and almost all sustained that benefit at 24 weeks. This compares to only 11% at 16 weeks in the diagnostic negative cohort and 6% at 24 weeks. The mPFS for patients regardless of how many prior treatments they had was nearly double in the diagnostic positive group at 16.1 weeks. Perhaps the most impressive is the mPFS in those patients who had one or less prior therapies, which was ~50% of patients.

In the diagnostic positive group, there was an outstanding 40.4 week mPFS, compared to only 8.9 weeks in the diagnostic negative group. This number was updated in the ASCO presentation from the stated 32 weeks in the abstract. The 40.4 week mPFS is as good as any drug to date in TNBC for front-line treatment. Median OS has not been reached yet for the diagnostic positive cohort but was 32 weeks in the negative cohort.

Response Dx+N=56 Dx-N=62
CBR16, % 39 11
CBR24, % 36 6
mPFS, wks 16.1 8.1
mPFS frontline 40.4 8.9

It is important for investors to realize that going forward, it is not essential for Xtandi to outperform standard chemotherapy to succeed. If Xtandi can at least match the mPFS seen in front-line chemotherapy, which this trial illustrates it should, then approval will follow. Patients would much rather take a pill like Xtandi, which has little side effects, compared to toxic chemotherapy regimens. The FDA said as much when they revoked Avastin in combination with chemotherapy approval in TNBC stating that the toxicity was not worth the advantage.

There was some initial excitement regarding PD-L1 inhibitors in TNBC although the more recent data at AACR in April opened up questions regarding its safety and a reduced 19% response rate. More than 10% of patients had serious adverse events with 2 deaths related to the drug. Again, with Xtandi’s stellar front-line results and a solid safety profile, I believe Xtandi is well positioned to become the preferred front-line treatment for AR positive TNBC.

Market Size for Xtandi in TNBC

The market size for Xtandi in TNBC is more sizable than thought previously. The literature had suggested that ~20% of all TNBC was AR positive. However, by optimizing the antibody staining it was found that the number is much higher. In the 404 TNBC analyzed for AR status by antibody staining, 79% had some level of expression. Of these, 50% were considered diagnostic positive by the gene signature assay. Therefore, according to SEER data, there will be 232,000 new cases of breast cancer in the US in 2015. An estimated 15-20% of these are estimated to be TNBC resulting in ~35,000 cases per year (15% conservative). Data illustrates 80% of these will qualify for AR status by antibody staining which is 28,000 patients.

The AR gene signature should be represented in ~50% of these patients, making the targeted population ~14,000 patients per year. It’s really hard to determine how long patients would remain on the drug considering in front-line treatment progression free survival was out to almost a year. If you disregard prior treatment stratification, patients would be on the drug ~4 months at ~$7500 cost, which is $420M a year. However, if used in front-line treatment, the time on drug is much longer, extending out to 10 months. This would make the annual potential market $1 Billion.

Xtandi Beyond Prostate and TNBC

To make investors even more excited about the potential of Xtandi in breast cancer, the androgen receptor is expressed in not just TNBC, but other types of breast cancers. Therefore, in addition to evaluating Xtandi in TNBC, Medivation is also performing numerous other clinical trials in breast cancer:

  1. Phase 1 – Safety Study of Enzalutamide (MDV3100) in Patients With Incurable Breast Cancer
  2. Phase 2 – Safety Study of Enzalutamide in Combination With Exemestane in Patients With Advanced Breast Cancer
  3. Phase 2 – A Study to Assess the Efficacy and Safety of Enzalutamide With Trastuzumab in Subjects With Human Epidermal Growth Factor Receptor 2 Positive (HER2+), Androgen Receptor Positive (AR+) and Estrogen Receptor Negative (ER-) Metastatic or Locally Advanced Breast Cancer

It was also presented at ASCO that Xtandi had clinical activity in AR positive pancreatic cancer in a Phase 1 trial, illustrating that we will likely see the drug expand into other tumor types in the future.

Time to Increase the Price Targets

Medivation is considered by almost all analysts a strong buy and undervalued at current levels. However, current price targets do not take into account any potential for Xtandi in TNBC. The average price target for the stock is ~$133, representing 15% upside. Canaccord Genuity analyst John Newman reiterated a buy recommendation and a $180 price target last month. The price targets will start to increase as analysts begin to pay more attention to the breast cancer story following ASCO and grasp a better understanding of the data. For example, yesterday, Maxim group analyst Jason Kolbert raised his price target from $155 to $168 based on the breast cancer data released and his discussions with Medivation’s management.


Medivation’s blockbuster drug Xtandi is poised to expand beyond prostate cancer. Data presented at ASCO illustrates impressive clinical efficacy in TNBC, especially in a front-line setting with a 40-week mPFS. Given the option, patients would prefer to take a pill like Xtandi with little to no side effects and better or similar efficacy compared to toxic chemotherapy. Dr. Tiffany Traina, a medical oncologist at Memorial Sloan Kettering Cancer Center, summed up the data perfectly stating, “This is the most exciting data we have had in triple-negative breast cancer and certainly supports moving this therapy forward in development.” Investors should buy on the dips as more upgrades and price target increases will be forthcoming as the potential for Xtandi to move beyond prostate cancer is realized.