SAN FRANCISCO (TheStreet) -- The prostate cancer drug Xtandi, developed by Medivation's (MDVN) and sold through a marketing partnership with Astellas, continues post better-than-expected sales numbers. Late last week, Astellas reported third-quarter Xtandi revenue of $181 million in the U.S, topping consensus estimates. In addition, Astellas raised their 2014 guidance for Xtandi sales to between $600M-640 million, which implies Medivation revenues of between $300-320 million, an 11% increase from the original guidance. [Medivation reports its own third-quarter results on Thursday.]
The strength in Xtandi sales is coming at the expense of Zytiga, the competing prostate cancer drug sold by Johnson & Johnson (JNJ) . The clinical data demonstrate Xtandi's superiority over Zytiga, which is now translating into solid market share and revenue advantages. If the battle with J&J is won, what's next for Medivation?
Perhaps the biggest catalyst coming up is the presentation of Xtandi breast cancer data at the San Antonio Breast Cancer Symposium, December 9-13. At this point, most investors are waiting to see the data before including any breast cancer revenue in their Xtandi financial models. A good showing, then, should spark investors to start increasing their peak sales estimates.
Medivation began this process by licensing an anti-PD-1 antibody already in a couple of phase II trials. We all know immuno-oncology is a hot space, but it's also crowded, especially with antibodies targeting PD-1 and its associated ligand. Even if Medivation made a wise choice with its anti-PD-1 antibody and its ultimately gets approved, the drug still faces significant competition.
The diversification away from Xtandi has only just begun. The anti-PD-1 compound is a good start. The cash flow Medivation receives from Xtandi should free up the company to increase its business development activities and compete for larger deals.
Sobek has no position in Medivation and is long Celgene.