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MDVN> One Drug To Rule Them All: Medivation's Xtandi To Dominate Prostate Cancer Market

http://seekingalpha.com/article/2381115-one-drug-to-rule-them-all-medivations-xtandi-to-dominate-prostate-cancer-market

Summary

MDVN's current market cap does not reflect its future dominance of the prostate cancer market.

PhII Data showing superiority in the frontline setting is due this summer and is highly likely to be positive.

Physician sentiment amongst urologists is favoring Xtandi use over/prior to Zytiga, which is currently Xtandi’s main competition and key for extended treatment duration.

Zytiga achieved worldwide sales of 1.7B in 2013, and is expected to obtain 2.5B in 2014, with peaks sales at approx. 4.6B in 2017. In JNJ's 1Q14 conference call, they reported that Zytiga was in control of 34% of the mCRPC market. If we look at US sales of Xtandi and Zytiga in the last 3 quarters of 2013, we see a 30% increase in quarter-over-quarter sales of Xtandi, yet a rather stagnating picture for Zytiga. Keep in mind, these figures are all prior to the PREVAIL data in January, which are likely to shift these trends in Xtandi's favor even more. Physician sentiment is skewing heavily in Xtandi's favor, with some reports placing the Xtandi/Zytiga split at 70/30 market share.

It is also important to note that there is strong rationale for the combination use of Zytiga and Xtandi together. Indeed, there is an investigator sponsored trial assessing the combination in the pre-chemo setting. When looking at Zytiga vs. Xtandi, most patients will likely end up seeing both during the course of their prostate cancer treatment. However, due to cross-resistance, the treatment given first will likely see a much longer duration of treatment than the second (which = significantly higher sales). We believe Xtandi will overwhelming be the frontline therapy choice, here's why:

A potential mechanism of resistance to AR inhibition is expression of AR-V7. AR-V7 promotes resistance to both Zytiga and Xtandi. However, in a small sample size of Xtandi/Zytiga naïve patients, 25% of Xtandi-resistant patients developed ARV7 whereas 51% of Zytiga-treated patients developed ARV7. Since presence of ARV7 would make a patient cross-resistant to both therapies (thus sequential therapy would not work), this data provides rationale for Xtandi use before Zytiga and reinforces our previous points (see above) about the rationale of using Xtandi as a superior drug to prevent cross-resistance with a potential paradigm of treatment as shown below: Xtandi -> Zytiga > Zytiga -> Xtandi.

In reality, we believe that in time both drugs will be given to patients either in succession, or in combination. However, since cross-resistance does indeed occur with these two agents, whichever one is prescribed first will likely see the longer treatment duration, which will translate to higher sales.