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We recently reiterated a Neutral recommendation on Medivation, Inc. (MDVN - Analyst Report). Medivation received a major boost in late August when the FDA approved its prostate cancer treatment, Xtandi, several months ahead of the target date. Xtandi, which was launched in the US in September, could very well be a game-changer for Medivation. Xtandi is approved for the treatment of patients with metastatic castration-resistant prostate cancer who have previously received docetaxel.

The prostate cancer market represents huge commercial potential and Xtandi is already off to a strong start. Xtandi, which was launched on September 13, delivered net sales of $14.1 million. Medivation has consistently presented impressive data on Xtandi. Based on the data we have seen so far, we believe the product has blockbuster potential.

We also view Medivation’s collaborative agreement with Japanese company, Astellas Pharma (ALPMY) as favorable.  Not only has the agreement brought in cash, Astellas’ strong presence in the urology market should be a major boon for Medivation.

However, we remain concerned about Medivation’s dependence on just Xtandi for growth. Xtandi is currently in several studies including studies for the pre-chemo setting. Disappointing data from any of these studies would have a negative impact on the shares.

Meanwhile, although the prostate cancer market provides immense commercial potential, we note that companies like Sanofi (SNY - Analyst Report) and Johnson & Johnson (JNJ - Analyst Report) already have a strong presence in the market.

Medivation currently carries a Zacks #3 Rank (Hold). We expect investor focus to remain on the commercialization of Xtandi. While Sanofi and Johnson & Johnson also carry a Zacks #3 Rank, Astellas Pharma carries a Zacks #1 Rank (Strong Buy).
 

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