Company Update (NASDAQ:MDVN): Medivation Inc Reports Second Quarter 2016 Financial Results


Medivation Inc (NASDAQ:MDVN) reported its financial results for the quarter ended June 30, 2016 and reaffirmed full-year 2016 financial guidance.

U.S. net sales of XTANDI® (enzalutamide) capsules, as recorded by Astellas, were $330.3 million for the quarter ended June 30, 2016, an increase of$31.8 million (+11% compared to the second quarter of 2015). The year-over-year net sales growth was driven by an 18% increase in underlying demand, partially offset by a lower net selling price resulting from a higher gross-to-net rate. Ex-U.S. net sales of XTANDI, as recorded by Astellas, were approximately $265 million for the quarter, an increase of $76 million (+41% compared to the second quarter of 2015).

“For the second consecutive quarter, XTANDI was the leading novel hormonal agent in the U.S. We continue to see increases in duration of therapy and new patient starts as well as accelerating uptake in the urology market,” said David Hung, M.D., Founder, President and Chief Executive Officer ofMedivation. “In addition, we anticipate a very exciting second half of 2016 for XTANDI as we prepare commercially for the October 22 PDUFA date for a potential U.S. label amendment to include head-to-head data of enzalutamide versus bicalutamide. We also expect top-line results from our Phase II ER/PR positive breast cancer trial and our PLATO trial before year end. Looking ahead into next year, we anticipate the completion of enrollment for PROSPER, our Phase III trial in non-metastatic castration-resistant prostate cancer, as well as potentially top-line results from this study.”

“Moreover, we have made important strides in advancing the development of talazoparib, having completed successful meetings with the FDA to align on clinical development plans in several indications. We anticipate initiating multiple, including some potentially registrational, studies for talazoparib in non-gBRCA breast cancer, prostate cancer, small cell lung cancer and ovarian cancer in 2016 and glioblastoma multiforme, non-small cell lung cancer and potentially other indications in 2017. We also expect to read out top-line results from our first talazoparib registrational study, EMBRACA, in germline-BRCA mutated breast cancer in the first half of 2017. And finally, given the overall survival results we have recently reported with pidilizumab in a rare childhood brain tumor called diffuse intrinsic pontine glioma, or DIPG, we plan to meet with the FDA to discuss potential approval pathways for this wholly owned, late-stage asset.”

Key Highlights Include:

  • XTANDI maintained its lead in the novel hormonal therapy (NHT) market with 51% share
  • The European Medicines Agency updated the XTANDI European label to include data from the head-to-head TERRAIN trial of enzalutamide versus bicalutamide
  • Announced plans to initiate the Phase III ENDEAR trial investigating enzalutamide in patients with diagnostic-positive triple-negative breast cancer with enrollment expected to begin in the fourth quarter 2016
  • Received the 2016 Health Science Award from American Urologic Association for outstanding support of physician and patient education in prostate cancer
  • Announced activation of the talazoparib-containing arm of the investigator-sponsored I-SPY 2 trial investigating talazoparib in combination with low-dose irinotecan in the neoadjuvant setting in patients with newly diagnosed, locally advanced HER2-negative breast cancer
  • Held two successful meetings with the FDA to discuss and align on potential registrational trials for talazoparib in castration resistant prostate cancer and small cell lung cancer
  • Announced results from a Phase I/II study of pidilizumab, an investigational antibody with immune-mediated anti-tumor effects, that demonstrated potential clinical benefit in pediatric patients with diffuse intrinsic pontine glioma
  • Named one of the San Francisco Bay Area’s Top Workplaces for the fourth year in a row by the San Francisco Bay Area News Group.

GAAP and Non-GAAP Financial Results:

Revenues:

Medivation’s collaboration revenue on a GAAP basis for the second quarter of 2016 was $206.2 million, compared with $175.7 million for the same period in 2015 (+17% vs. prior year). Non-GAAP collaboration revenue for the second quarter of 2016 was $206.2 million, compared with $174.8 million, for the same period in 2015 (+18% vs. prior year). Medivation’s collaboration revenue related to U.S. net sales of XTANDI for the second quarter 2016 was $165.1 million, compared with $149.2 million for the same period in 2015 (+11% vs. prior year). Medivation’s collaboration revenue related to ex-U.S. net sales of XTANDI for the second quarter 2016 was $41.0 million, compared with $25.6 million for the same period in 2015 (+60% vs. prior year).

Expenses:

Research and Development (R&D) expenses on a GAAP basis for the second quarter of 2016 were $73.4 million, compared with $47.3 million for the same period in 2015.

Non-GAAP R&D expenses for the second quarter of 2016 were $60.5 million, compared with $41.3 million for the same period in 2015 (+47% vs. prior year). The increase in non-GAAP R&D expenses primarily relates to expenses associated with Medivation’s talazoparib program, which Medivationacquired in the fourth quarter of 2015. On a sequential quarter-over-quarter basis, non-GAAP R&D expenses decreased approximately 12%.

Selling, general and administrative (SG&A) expenses on a GAAP basis for the second quarter of 2016 were $758.4 million, compared with $74.7 millionfor the same period in 2015. The increase in SG&A expenses was primarily due to a non-cash charge of $674.0 million due to an increase in the fair value of the contingent consideration liability related to Medivation’s acquisition of talazoparib from BioMarin Pharmaceutical Inc. Medivation recorded an increase in the fair value of this liability due to various market and development-specific events that occurred during the quarter, including the announcement of positive Phase III data for Tesaro’s PARP inhibitor product candidate, positive feedback received from regulatory authorities on two potentially registrational studies for talazoparib and recently generated clinical data for talazoparib.

Non-GAAP SG&A expenses for the second quarter of 2016 were $68.0 million, compared with $57.5 million for the same period in 2015 (+18% vs. prior year). The increase in non-GAAP SG&A expenses primarily relates to expenses related to higher sales and marketing costs following the expansion ofMedivation’s salesforce, higher royalties, and talazoparib.

Net Income:

Medivation reported a GAAP net loss of $403.9 million, or $2.45 per diluted share, for the quarter ended June 30, 2016, compared with GAAP net income of $25.8 million, or $0.15 per diluted share, for the same period in 2015. Medivation’s second quarter net loss was a result of the non-cash increase to SG&A expenses related to the increase in Medivation’s contingent consideration liability for talazoparib, as discussed above.

Non-GAAP net income for the second quarter of 2016 was $50.0 million, or $0.29 per diluted share, compared with non-GAAP net income of $48.7 million, or $0.29 per diluted share, for the same period in 2015.

Cash Position:

At June 30, 2016, cash, cash equivalents and investments were $348.7 million, compared with $225.9 million at December 31, 2015, an increase of$122.9 million.

2016 Financial Guidance:

Medivation is reaffirming its 2016 full-year financial guidance as set forth below. For R&D expenses and SG&A expenses (and, as a result, total operating expenses, tax rate and diluted earnings per share), Medivation is not providing guidance regarding GAAP results because it is unable to reliably forecast the items excluded from non-GAAP expenses, such as contingent consideration and transaction-related advisory expenses, except to the extent reflected in the footnotes to the table below. Certain of the excluded items have been material through June 30, 2016, and these and other excluded items can be expected to be material for the full year 2016. (Original Source)

Shares of Medivation closed today at $63.45, up $0.27 or 0.43%. MDVN has a 1-year high of $64.39 and a 1-year low of $26.41. The stock’s 50-day moving average is $61.58 and its 200-day moving average is $50.32.

On the ratings front, Medivation has been the subject of a number of recent research reports. In a report issued on July 29, Leerink Swann analyst Geoff Porges reiterated a Hold rating on MDVN. Separately, on July 22, Jefferies Co.’s Brian Abrahams assigned a Hold rating to the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Geoff Porges and Brian Abrahams have a total average return of 0.9% and 8.3% respectively. Porges has a success rate of 44% and is ranked #2060 out of 4105 analysts, while Abrahams has a success rate of 64% and is ranked #294.

The street is mostly Bullish on MDVN stock. Out of 11 analysts who cover the stock, 7 suggest a Buy rating and 4 recommend to Hold the stock. The 12-month average price target assigned to the stock is $66.33, which implies an upside of 5.1% from current levels.

Medivation, Inc. engages in the development and commercialization of novel therapies to treat serious diseases for which there are limited treatment options. The company was founded by Clarence Patrick Machado and David T. Hung in October 1995 and is headquartered in San Francisco, CA.