Stock Dropping - MDVN

Medivation Inc (NASDAQ:MDVN) has been in a free fall ever since the ASCO conference at the beginning of June, losing over 20% of its value. The drop confused everyone I talked to considering Medivation’s prostate cancer drug Xtandi is on pace to eclipse over a billion in sales and management had presented very compelling data at ASCO for the use of Xtandi in treating Triple Negative Breast Cancer (TNBC). In addition, not only is Xtandi entering new indications like breast cancer but Medivation has told investors it is making progress on its pipeline and will be entering clinical trials in hematopoietic cancers with its PD-1 inhibitor this year and will also have a new clinical candidate announced at their R&D day coming up.

All good news. So again, why the drop following ASCO? It appears much of the fall is based on ASCO releasing its framework to assess the value of cancer treatment options where Xtandi scored a 32 compared to Johnson & Johnson (NYSE:JNJ) rival drug Zytiga which scored a 42. In accordance, a recent Motley Fool article proposed this was the main reason for Medivation’s June decline. I will discuss below why the ASCO scoring system has been misinterpreted by investors and will be corrected. I continue to accumulate shares and look for the stock to rebound to $140 range as investors realize the sell-off is exaggerated and based on incomplete information.

ASCO Scoring System for Xtandi and Zytiga Incomplete

The ASCO scoring system is based on a scale of 0-130 and takes into account various metrics to assess value such as clinical benefit, drug toxicity and bonus points for improvements in cancer related symptoms and treatment-free intervals. Price of treatment will be factored in the future. Importantly, the major problem with the scoring system is that the drug is compared to the placebo in the trial making it nearly impossible to compare drugs. Also, different clinical trials have different inclusion and exclusion criteria making comparisons muddy at best. In accordance, ASCO has stated that the scoring system is to aid clinicians but not intended to compare drugs to one another. Frankly, I don’t really understand the point of the system if not used to compare drugs, but that is beside the point.

Following the ASCO meeting, an article was published in the Journal of Clinical Oncology, detailing the scoring system with a few examples. One of the examples used was Xtandi and Zytiga for post chemotherapy metastatic castration-resistant prostate cancer (mCRPC).

*Figure from Schnipper et al., JCO 2015

Both Xtandi and Zytiga scored 32 points for clinical benefit based on benefits in overall survival. Neither drug scored any points for toxicity. However, this detailed a major flaw in the way in which points were scored. Zytiga had 37 grade 3-5 adverse events in the trial compared to 34 in the placebo arm so only 9% difference. However, remember Zytiga needs to be taken with steroids which likely accounted for the high adverse events in the placebo arm of the trial. Xtandi does not need to be taken with any steroids. There were only 8 adverse events in the Xtandi arm compared to 6 in the placebo arm. However, when compared with placebo Xtandi appears bad with a 33% increase in events. However, the data is misleading as the number of adverse events compared to Zytiga is actually much lower. Having to take steroids was not factored into the clinical score at all. Another major flaw.

Finally, the main difference between the two is Zytiga was awarded 10 bonus points for pain relief while Xtandi was not awarded any. So Zytiga’s score came out to be 42 compared to Xtandi 32.

*Figure from Schnipper et al., JCO 2015

*Figure from Schnipper et al., JCO 2015

This confused me since the effects on pain relief by Xtandi are statistically significant, well documented and published. When I went back to the ASCO scoring system I noticed they only referenced the initial New England Journal of Medicine paper from 2012 describing the Xtandi clinical trial results. The pain relief data for Xtandi was later published in the Lancet in 2014. I went ahead and contacted Dr. Lowell Schnipper who is the lead author on the ASCO scoring publication and asked why Xtandi was not awarded 10 points for pain relief like Zytiga. He stated,

“The framework includes only data from the NEJM publication, pain is not reported in that manuscript”

Mystery solved. The Xtandi and Zytiga comparison was used solely as an example and not expected to be the final ASCO scores. Of course, when ASCO finalizes the scoring system they will need to take into account the totality of the data not just pick a single reference to base the scoring system on. In my opinion, it was irresponsible to publish the incomplete data and should not have been published without proper review of the outstanding literature. Of course it is easier to push papers without proper review when the journal being published is the official ASCO journal and the article was considered a “Rapid Communication” about ASCO scoring. Nonetheless, these scores will be corrected and at the very least Zytiga and Xtandi will both score 42 points. Major flaws currently in the scoring system still exist such as no points added for patient convenience like the need to not take steroids or restrictions on when pills can be taken like Zytiga. In addition, Xtandi’s efficacy is without a doubt better than Zytiga in every metric studied to date.


The fall of Medivation in June and early July based on the release of the ASCO scoring system in which a publication scored Zytiga 10 points higher than Xtandi was incomplete and not the final scores. Since the one NEJM paper the authors referenced did not include the pain relief data for Xtandi the drug was not awarded the 10 points Zytiga was. This will be corrected in the final scoring system as pain relief for Xtandi is statistically significant and published. Although, US Medivation sales according to IMS and Symphony health data have leveled off the past couple of months near 1800 weekly prescriptions, I fully expect sales to continue to increase going forward especially overseas where Xtandi uptake has been slower than expected.

*Source Symphony Health Solutions, Bloomberg and JMP Securities.

The 17 analysts which follow the stock have a median price target of $143 representing nearly 40% upside from current levels. You will not find a cheaper biotech on the market with a blockbuster drug than Medivation. Historically, I do not know of an example of a biotech with a billion dollar drug which did not go on to become a behemoth or get acquired. I’ll take either option and am accumulating shares.