Medivation's Xtandi Curves Are Kate Upton-esque: An Update
Bottom line: Medivation and Astellas now have the data needed to accelerate Xtandi sales growth and turn the drug into a $3 billion-a-year blockbuster. Xtandi should now become the No. 1 choice for urologists treating pre-chemo prostate cancer patients, more so than Johnson & Johnson's (JNJ - Get Report) competing prostate cancer drug Zytiga.
J.P. Morgan analyst Geoff Meacham sums up the bull case for Medivation well:
In our view, the full phase 3 PREVAIL data of Xtandi in pre-chemo prostate cancer (PC) leave little room for debate on whether Xtandi or JNJ's Zytiga will have majority market share. We acknowledge the caveats of cross-trial comparisons, but in our judgment, many of the efficacy metrics definitively favor Xtandi. Importantly, Xtandi also wins on convenience metrics which are commercially relevant (no need for steroids, 1x/day, no food effect). Overall, we believe that the profile of Xtandi in pre-chemo PC should be very attractive to both urologists and oncologists, with the former being largely untapped and critical for upstream use. We suspect that utilization may accelerate in the US prior to YE14e label expansion and as such, we are raising our 2014-2016 WW forecasts by 5-20% given increasing duration of therapy and higher market share for Xtandi. Yesterday, we raised our Dec 2014 target to $85 from $75 based on what we thought would be a differentiated clinical profile of Xtandi. Today, we are raising our Dec 2014 target to $101 from $85 based on emergence of real phase 3 data which we believe positions Xtandi as the clear winner in pre-chemo, justified by higher forecasts and additional upside levers.
You want to hear from a urologist directly? Dr. Ben Davies, assistant professor of Urology at University of Pittsburgh and an expert in urological cancer, had this to say on Twitter last night:
PREVAIL data is profoundly impressive. There is no ? that a 17 month delayed to chemo & 81% radiographic response is better than abi trial daviesbj (@daviesbj) January 28, 2014
Investor (and prostate cancer obsessive) David Miller of Alpine Bioventures echoed Davies' view:
Urologists and patients are absolutely going to LOVE that 17-month median delay to chemo slide. $MDVN Zytiga was only 8.4 months David Miller (@AlpineBV_Miller) January 28, 2014[Disclosure: Miller is long Medivation.]
About that Xtandi 17-month median delay to chemotherapy. Here is what those data look like:
These data are important for two big reasons: From the prostate cancer perspective, delaying chemotherapy is a huge benefit. Xtandi delays the onset of chemotherapy greater than J&J's Zytiga. Secondly, urologists tend to pass off prostate cancer patients to medical oncologists once chemotherapy is required. Urologists will love Xtandi because it allows them to retain their prostate cancer patients longer. [Yes, the treatment of cancer is a business for doctors, too.]
Credit Suisse analyst Lee Kalowski:
All in, last night's Xtandi data are a big boost to the Medivation bull thesis.
Following the data release, we spoke to our urologist consultants. It was referred to as "great data" and a "home run" - when pressed to find a weak point in the data, they could not.Ultimately, the urologists - in contrast to the oncologists - appear focused on endpoints around disease abatement, e.g. response rates and progression-related endpoints. Indeed what one urologist said particularly resonated with him was (1) the 17 month delay on the time to chemotherapy (Exhibit 2), which was about twice the benefit seen with Zytiga and (2) the 78% PSA 50 response (Exhibit 3). Ultimately, our consultants said current utilization of Zytiga and Xtandi has largely been in-line with the current labels (Zytiga pre-chemo and Xtandi post-chemo), but expected utilization to change once Xtandi has a pre-chemo label and reimbursement, which we think could happen later this year in the US. Once that happens, they expected to use Xtandi first in all pre-chemo patients.