Medivation Inc. (MDVN) reported a loss of 11 cents per share in the fourth quarter of 2010, narrower than the Zacks Consensus Estimate of a loss of 15 cents and well below the year-ago loss of 78 cents. Lower expenses led to the narrower loss. Revenues for the quarter were $14.5 million, well below the Zacks Consensus Estimate of $17 million. Revenues were $20 million in the year-ago period.
Full year 2010 loss came in at 99 cents, well below the year-ago loss of $1.71 and the Zacks Consensus Loss Estimate of $1.03. Full year 2010 revenues of $62.5 million, down 9.7%, missed the Zacks Consensus Estimate of $63 million.
The Year in Detail
Revenues consisted of partial recognition of the non-refundable upfront payment of $225 million received from Pfizer (PFE) in October 2008 and $110 million received from Astellas in late 2009. The upfront payments are being recognized on a straight-line basis. While the Pfizer payment will be recognized through the fourth quarter of 2013, the Astellas payment will be recognized through the fourth quarter of 2014.
Operating expenses declined 18.4% to $95.2 million. Research and development expenses declined 17.7% to $72.2 million primarily due to a decrease in up-front and development milestone sharing expense to UCLA under the terms of Medivation’s MDV3100 license agreement and a decrease in payroll costs.
SG&A expenses declined 20.6% to $23.0 million primarily due to the 20% workforce reduction implemented in March 2010.
2011 Outlook
Medivation expects operating expenses (after adjusting cost-sharing payments from Pfizer and Astellas) in the range of $100 - $110 million. Medivation, which exited 2010 with a cash and equivalents balance of $207.8 million, expects to be able to fund operations beyond 2012.
Pipeline Update
Medivation provided an update on its pipeline candidates. The company expects to report top-line results on Dimebon from its phase III HORIZON study in the first half of 2011. Meanwhile, Medivation continues to evaluate Dimebon in the CONCERT study, which is being conducted with patients suffering from mild-to-moderate Alzheimer’s. Robust results from this study along with data from an earlier study could be enough to support Dimebon’s approval for mild-to-moderate Alzheimer's disease. Results from the CONCERT study are expected in the first half of 2012.
Medivation and partner Astellas finished enrolling patients for the phase III AFFIRM study (advanced prostate cancer) in Nov 2010. The companies initiated another phase III study (PREVAIL), which is being conducted in chemotherapy-naïve advanced prostate cancer patients. The initiation of this study triggered a $10 million milestone payment from Astellas.
Medivation and Astellas also intend to commence two new studies with MDV3100 in the first half of 2011. While one trial will be a head-to-head phase II study between MDV3100 and AstraZeneca’s (AZN) Casodex (bicalutamide), the other study (phase II) will be conducted in hormone-naïve patients. Top-line results from AFFIRM should be out in 2012. However, results could be presented in 2011 itself if an interim analysis is conducted.
We currently have a Neutral recommendation on Medivation, which is supported by a Zacks #3 Rank (short-term “Hold” rating). We expect investor focus to remain on the HORIZON study results, which are expected in the first half of 2011.


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