Zacks_Analysts' Blog : Medivation Back to Neutral - Analyst Blog

We recently downgraded biopharma company Medivation, Inc. (MDVN) to Neutral. The stock carries a Zacks #3 Rank (short-term “Hold” rating). Medivation’s shares received a major boost in early November with the company and its partner, Astellas, reporting impressive data on MDV3100 from a pre-specified interim analysis of a phase III study, AFFIRM. The Independent Data Monitoring Committee (IDMC) recommended that MDV3100’s risk-to-benefit ratio was favorable enough to stop the study.

The phase III randomized, double-blind, placebo-controlled study, AFFIRM, was conducted in men with advanced prostate cancer previously treated with docetaxel-based chemotherapy.

Medivation and Astellas intend to conduct a pre-NDA meeting with the FDA in early 2012. We believe the companies will file for regulatory approval of MDV3100 soon thereafter and expect MDV3100 to hit the market in 2013. Based on the data that we have seen so far, we believe MDV3100 has blockbuster potential and will be a game-changer for Medivation.

While we remain positive on the company’s prospects, we are moving back to a Neutral recommendation as we believe most of the positive news is already reflected in the current stock price.

Meanwhile, we have low expectations from Medivation’s other phase III candidate, dimebon, which is being developed in collaboration with Pfizer (PFE). Dimebon’s development path has been disappointing with the candidate failing to achieve its primary endpoints in late-stage studies for Huntington disease and Alzheimer’s. 

Although Medivation and Pfizer are continuing with the development of dimebon, the companies have decided that they will not develop the candidate for moderate-to-severe Alzheimer’s disease. The companies are now focusing on the development of dimebon for the mild-to-moderate Alzheimer’s disease population. Top-line data from the CONCERT study will be available in the first half of 2012. We have low expectations from this study.

Going forward, we expect investor focus to remain on regulatory and development updates on prostate cancer candidate, MDV3100.