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Expert Financial Analysis and Reporting

Initiation Report (MDVN, $17.09)

I am initiating coverage of Medivation based on my interest in their new drug for prostate cancer MDV 3100, which could be a major advance in therapy. I need to see more clinical data that substantiates the results seen in early stage studies before I recommend the stock.


Stock Opinion

I am not inclined to purchase Medivation until I see more data with the 160 mg per day dosage of MDV 3100 that confirms the efficacy shown in phase I/II and its safety profile. This could occur in late 2011 or 2012. I have no great hopes for dimebon in Huntington’s disease and Alzheimers’ disease based somewhat on the data seen so far but more so the complexity and poorly understood nature of these diseases. I think that most investors agree with this position. If the upcoming HORIZON trial results are negative, I don’t expect much of a lasting effect on the stock. I feel the same about the CONCERT results which we should see in 1H, 2012. If I am wrong in my caution and the results of either HORIZON or CONCERT are positive, the stock would have a dramatic surge. I just don’t like the odds of that happening.


Overview of Key Investment Points

Medivation’s (MDVN) new drug for prostate cancer, MDV 3100, is one of the most promising drugs under development in oncology. The company and the drug are distinctly silhouetted on my radar screen. However, investors must understand that MDV 3100 is still in clinical trials which have to be successfully completed and if all goes well it is unlikely to be commercially available for two years. Before going on, I want to emphasize to the reader that most of the points I will be discussing on MDV 3100 are based on limited phase I/II clinical data and hypotheses that need to be confirmed in phase III clinical trials now underway. There is an axiom in cancer drug development that phase III trial results are never as good as phase II. Please read the preceding two sentences again before going on.


This report focuses on the how MDV 3100 works and the clinical data that has been seen so far in phase I/II trials. I also spend time on how MDV 3100 and Johnson & Johnson’s new drug abiraterone compare and contrast. I am expecting approval of abiraterone in fifth line treatment of prostate cancer sometime in 2Q, 2011 or 3Q, 2011. In subsequent reports, I will be discussing the commercial opportunities for these drugs.


MDV-3100 is a very intriguing molecule. Prostate cancer has the second highest incidence after lung cancer and because it is slowly progressing, victims can sometimes go through many courses of therapy over years as their disease progresses. MDV 3100 has the potential to be used in every stage of prostate cancer from first line now treated with the hormonal drug Lupron through to fifth line patients in the final stages of the disease who are refractory to the chemotherapy drug Taxoterre. Its mode of action should also allow it to be used in combination with abiraterone, Provenge, LHRH agents like Lupron and chemotherapy. Because it does not require concomitant use of a steroid, it might have a safety advantage over abiraterone. If most things go right in the clinical trials, this drug could be a multi-billion commercial opportunity for Medivation and its partner Astellas.


There are, unfortunately, a lot of things that can go wrong. There is the potential for some dreadful side effect to occur in the large trials now ongoing that was not detected in the small phase I/II trial. The side effect profile so far seems acceptable, but we need more data to confirm this. Of concern is that earlier on in its development, MDV 3100 was being used in three patients when seizures occurred. Two of the seizures were witnessed and occurred at doses of 360 mg/day and 600 mg/day. A third seizure which was unwitnessed occurred at 480 mg/day. The company believes that these seizures were most likely unrelated to MDV 3100 or at least not a concern for patients in the phase III trials that are using a much lower dose of 160 mg/day. The FDA appears to be in agreement as it has allowed Medivation to conduct two phase III trials. Still, if the judgments of the FDA and the company are wrong and the drug does cause seizures at 160 mg/day, it could be the end of the drug.


I stated earlier, there have been numerous cases in which data stemming from small phase I/II trials is not duplicated in larger phase III trials. There is a concern that the 160 mg per day dose of MDV 3100 being used in the phase III trials may not produce results as promising as the data from the phase I/II trial which included patients treated at higher doses. In those trials, patients were started at 30 mg/day and ultimately some patients were treated with doses as high as 600 mg/day. It seems that the company may have decided to move to the 60 mg/day dose being used in the phase III trials to avoid the risk of seizures or other side effects. The question is whether this will also reduce efficacy.


It is important to understand the relationship of abiraterone and MDV 3100. It is not an either/or situation with abiraterone and MDV 3100. Because they use different mechanisms of action to control the disease, I believe that the drugs in many cases will be used sequentially or in combination. The success of abiraterone that I am expecting doesn’t dim my view of MDV 3100. Abiraterone was filed in the US on December 12, 2010 for post chemotherapy metastatic prostate cancer. It was given priority review status by the FDA and accelerated assessment in the EU. It should gain approval sometime in the second or third quarter of 2011.


Medivation is conducting a phase III trial in post-chemotherapy patients called AFFIRM that targets the same patient group in which abiraterone will soon be approved. Interim data on AFFIRM may be released in late 2011 and the full topline data will be presented in 2012. Hence, MDV 3100 is about two years behind abiraterone. A second phase III trial of MDV 3100 in pre-chemotherapy patients is expected to report interim data in 1H, 2013 so that MDV 3100 is two years behind abiraterone in this key indication as well.


Medivation is also in a late stage pivotal phase III trial for another drug, dimebon, in Alzheimer's disease. So far, there has been one positive and one negative phase III trial reported. Medivation and its partner Pfizer completed enrollment in a third trial called CONCERT in late 2010 and results will be reported in 1H, 2012. The FDA has indicated to the companies that if the CONCERT results are robustly positive, there is a good likelihood of approval. Dimebon also showed encouraging data in a phase II trial in Huntington’s disease which showed improvement in cognition and memory. This has led to a phase III trial involving 403 patients called HORIZON that will be reported 1H, 2011.



MDV 3100 Mechanism of Action Promises Superior Efficacy

Prostate cancer is highly dependent on testosterone for growth. In the early and intermediate stages of prostate cancer, drugs that inhibit the production of testosterone or alternatively its signaling the tumor to grow are the mainstays of therapy. Testosterone is the main male sex hormone that is made primarily in the testes, but is also produced in smaller amounts in the adrenal gland and sometimes in the tumor itself. In order to stimulate cell proliferation, the testosterone molecule:

  1. 1.First binds to a receptor on surface of the prostate cell called the androgen receptor,
  2. 2.forms a biological complex with the androgen receptor which enables it to penetrate into the nucleus of the cell, a process called nucleotranslocation, and
  3. 3.upon entering the nucleus, the testosterone-androgen receptor complex then binds to DNA which causes cell proliferation.


Abiraterone inhibits the synthesis of testosterone while MDV 3100 interferes with the signaling. Their mechanisms of action are quite different. MDV3100 acts at three steps in the signaling pathway.

  1. It inhibits the binding of testosterone to the androgen receptor.
  2. it blocks the movement of the complex formed when testosterone binds to the androgen receptor into the nucleus of the call (see the box called cell nucleus) and
  3. finally, it blocks the binding of the testosterone-androgen receptor complex to DNA.


Casodex is the drug currently most preferred for interfering with the testosterone signaling pathway. However, it is a weak binder of the androgen receptor and does not affect the translocation of the testosterone androgen complex nor binding of that complex to DNA. MDV 3100 promises to be much more potent than Casodex and could replace much of its usage.


Johnson & Johnson’s Abiraterone Mode of Action

It is not possible to discuss MDV 3100 without comparing it to abiraterone. However, the drugs have very different mechanisms of action and will not necessarily compete head to head. I think that they will be used sequentially and also in combination. Most patients with metastatic prostate cancer will be given both drugs at some point.


Abiraterone inhibits a steroidal enzyme called CYP 17 that is required to synthesize testosterone; hence it reduces the amount of testosterone that is available for signaling the androgen receptor. It works higher up in the biological pathway than MDV 3100. It has a drawback in that its mechanism of action also causes an increase in a class of hormones called mineralo-corticoids including ACTH, which leads to an increase in blood pressure. To offset this side effect, abiraterone must be combined with low doses of prednisone or prednisolone to inhibit ACTH. Unfortunately, prednisone and prednisolone bring with them a laundry list of side effects that are undesirable, especially if they are taken over a long period of time.


Abiraterone Phase III Results in Post-Chemo Patients Were Strikingly Positive

In October of 2010, Johnson & Johnson presented results from an interim analysis of a phase III trial of abiraterone in post-chemotherapy patients. This was the first time that a testosterone ablation therapy showed efficacy in late stage prostate cancer and the results were striking. The trial included 1,195 patients with metastatic castrate resistant prostate cancer who had failed treatment with one or more chemotherapy regimens, at least one of which contained Taxoterre (docetaxel), the standard of care. Patients were randomized into two groups that received prednisolone/ prednisone combined with either abiraterone or placebo.


The data showed that treatment with abiraterone resulted in a 35% reduction in the risk of death versus placebo (p


Phase I/II Results for MDV 3100 are Encouraging

A phase II trial of MDV 3100 was started in July 2007 in which 140 patients were enrolled; these included both pre-chemotherapy and post-chemotherapy patients. Doses ranged from 30 to 600 mg. per day and showed that the drug was well tolerated at doses up to 240 mg/day. Above that level, side effects began to occur, the most significant of which was fatigue. One of the issues with MDV 300 is that the dosage being used in the phase III trials of 160 mg/day may not be as effective as the phase I/II results which included patients treated at higher doses.


Anti-tumor activity was shown across multiple endpoints as can be seen below:


Positive Phase I/II

Published in Lancet

-140 pre-chemo and post-chemo patients

-Doses of 30-600 mg./day: well tolerated to 240 mg/day

-Anti-tumor activity shown across multiple endpoints




≥50% PSA decline



Stabilization of soft tissue metastases



Stabilization of bone metastases



Favorable CTC conversion



Source: Medivation presentation


The drug showed robust responses in several important measures of clinical efficacy in both pre and post-chemotherapy patients. It stopped progression of both soft tissue and bone metastases in a very meaningful percentage of patients. It also caused very significant declines in PSA. While many patients and physicians focus on PSA, most academics feel that it has limited prognostic value at this stage of the disease. What is interesting is the favorable conversion of the number of cancer tumor cells from unfavorable to favorable; the literature suggests that this may be a good prognostic tool for providing a survival advantage.


Medivation believes that one of the most significant predictors of therapeutic benefit may be the number of circulating tumor cells (CTCs) in the blood, which is a measure of tumor burden. High levels of CTCs result in a much worse prognosis. A recent study suggested that survival can be improved by as much as 15 months if the CTC count is favorable To put this in perspective, the best drugs now available for metastatic disease only offer a survival advantage of three or four months. If the CTC count can be favorably maintained or converted from unfavorable to favorable, the median survival can possibly be increased by 15 months.


Conversion of CTCs From Unfavorable to Favorable Correlates with 15 Months Improvement in Median Survival

MDV 3100 Effects on CTCs




Favorable to unfavorable



Unfavorable to favorable



Source: Medivation Presentation


The preceding chart shows the effects of MDV3100 on CTCs. While it should not be taken to mean that MDV 3100 has proven that it increases survival. it should be noted that if patients started with a favorable CTC count, MDV 3100 was able to keep 91% of both pre- and post-chemotherapy patients in a favorable count status. In addition, MDV 3100 was able to convert the CTC count from unfavorable to favorable in 75% of pre-chemo patients and 37% of post-chemo patients. This suggests that MDV 3100 may have the potential to give a significant survival advantage. Future studies will tell.


Comparison of Trial Results of MDV 3100 and Abiraterone: Both Look Great

Medivation in its presentations has compared the published phase I/II data of MDV 3100 with that of abiraterone in its phase III trial. Five endpoints were compared. There is always a major risk in comparing data from different clinical trials, but it is interesting, nevertheless, to do this with MDV3100 and abiraterone as in the following table:


Abiraterone Phase III Interim Analysis Positive, Validating Inhibition of Testosterone Signaling In Castrate Resistant Prostate Cancer Compared to MDV 3100 Phase I/II


MDV 3100


PSA decline (50%) at week 12









Soft tissue non-progression









Bone scan disease





Not reported




CTC Conversion (Unfav. To Fav.)









Median TTP-PSA (days) by PSAGG-1 criteria




420 days

225-234 days


166 days

169 days

* This data is not from head to head trials and should be accordingly viewed with caution.

Source; Medivation presentation


It can be seen that MDV 3100 compares very favorably to abiraterone in all five important measures of effect on tumors. However, I want to emphasize again that these are not head to head trials.


Clinical Trial Program for MDV 3100 Addresses All Stages of Prostate Cancer

Medivation’s most advanced trial is the AFFIRM trial in post-chemotherapy patients. Enrollment for AFFIRM was completed in November of 2010. It is a study of 1199 patients who have failed Taxoterre and is in the same setting in which abiraterone reported its highly positive results. The dose in the trial is 160 mg per day given once a day and the trial is randomized 2:1 in favor of MDV 3100. The primary endpoint is median overall survival like the abiraterone trial. The first data readout will be in 2012 although as was the case with abiraterone, there is an interim look that potentially could give an earlier insight in late 2011


The next trial is PREVAIL, which is taking place in pre-chemotherapy patients and began in September 2010. It will enroll 1700 patients at 160 mg per day given once a day and in a 1:1 randomization. There are two co-primary endpoints: overall survival and progression free survival. Interim data from PREVAIL is expected in 1H, 2013. The corresponding study for abiraterone was started in April of 2009 and is scheduled to complete enrollment in April of 2011; it will enroll 1000 patients. The time for study completion is April of 2014, but there is an interim analysis scheduled for late 2011.


Medivation is also starting in 1H, 2011 a phase II trial that will be a head to head study against Casodex. The intent is to replace Casodex as second line therapy. Casodex is currently the preferred androgen receptor of choice. However, it is a weak binder of the androgen receptor and does not affect the translocation of the testosterone androgen complex nor binding of that complex to DNA. MDV 3100 should be much more potent than Casodex and could replace much of its usage. Another phase II trial scheduled to start in 1H, 2011 compares MDV 3100 with LHRH agonists, the most widely used of which is Lupron. The intent is to replace Lupron as first line therapy.


AFFIRM may allow MDV 3100 to be marketed in the post-chemotherapy setting, which is becoming more crowded as MDV 3100 will compete with the new taxane chemotherapy drug Jevtana and abiraterone. Abiraterone will be positioned ahead of Jevtana because of the advantages afforded by an oral agent and the better survival benefit shown in its clinical trial. The role of MDV 3100 will be dependent on data from the AFFIRM trial, which needs to show comparable efficacy to abiraterone. If as is suggested by phase I/II results, it is just as good as abiraterone it will be possible to use it before or after abiraterone because of its different mechanism of action and also in combination. It is highly likely that patients will see both drugs. This market is estimated to be 10,000 patients and using my estimate of a price of $45,000 per year for abiraterone and MDV 3100, this is an addressable market of $450 million.


The PREVAIL study will position MDV-3100 against Provenge and abiraterone assuming that PREVAIL and the corresponding abiraterone study are both successful. Management believes that MDV 3100 could be used before or after Provenge and might also be used in combination. The same is true for abiraterone. Management feels that as abiraterone and MDV 3100 move into the treatment of less severely ill patients, the requirement to give abiraterone in combination with prednisone or prednisolone will be an advantage on MDV 3100.


MDV 3100 might also have one other significant advantage over abiraterone. There are common androgen receptor mutations in advanced prostate cancers that are called splice variants. In these mutations, the androgen receptor no longer requires testosterone to be present. It is always in the on-mode signaling cell proliferation. Because abiraterone inhibits testosterone and has no effect on the androgen receptor, it would have no effect. However, the mode of action of MDV 3100 might make it effective in splice variants.


I estimate that there are about 220,000 new cases of prostate cancer diagnosed each year. Of these, roughly 80% or 176,000 have localized disease that can be treated with surgery, radiation, cryotherapy or watchful waiting. Of the other 20% or 44,000. most are hormone sensitive and revceive LHRH agonists like Lupron. Over the course of 2 to 3 years, they gradually become resistant to the LHRH agonists and Casodex is added to the regimen. These 30,000 men each year become hormone refractory and have only the chemotherapy agent Taxoterre as an option.


Prostate Cancer Market By Types of Patients

Number of patients

Current treatments

Newly diagnosed patients each year



Localized disease


Surgery, radiation, cryotherapy, watchful waiting

Non-localized disease requiring hormone therapy (first line)


LHRH agonists like Lupron with

Patients failing or needing a supplement to LHRH agonists (second line)


Casodex, ketoconazole

Patients failing hormone therapy (third line)



Patients given Taxoterre chemotherapy (fourth line)



Post Taxoterre chemotherapy (fifth line)


Jevtana, abiraterone*


* Should be approved shortly


The clinical trial program of MDV-3100 is targeted at all stages of prostate cancer.

  1. The AFFIRM trial targets fourth line patients who have failed chemotherapy (post-chemo). The only approved drug in this category is Jevtana which like Taxoterre is a taxane; it was approved in 2010.This is the patient population that abiraterone should soon be approved for. I estimate that there are 10,000 patients in this stage of the disease and further estimate that abiraterone and MDV 3100 will both be priced at about $45,000 per year. Within this market, it may be the case that most patients receive both drugs either in combination or in sequence. Hence ths addressable market is about $450 million for each drug.
  2. The PREVAIL trial is aimed at third line patients for whom the only approved drug is the chemotherapy drug Taxoterre. These patients have failed all hormonal therapies. In 2009, Taxoterre’s revenues for this indication were $630 million. I estimate that there are about 30,000 patients in this stage of the disease. Abiraterone’s initial indication will not cover this patient group. As in fourth line patients, it may be the case that most patients receive both drugs either in combination or in sequence. Hence the addressable market is about million for each drug in third line treatment might be $1.35 billion..
  3. The PREVAIL trial is also aimed at second line patients who have failed LHRH agonists like Lupron and are receiving Casodex or Casodex combined with a LHRH agonist. In 2009, Casodex gad US sales of about $850 million.
  4. The phase II trial in which MDV 3100 is pitted head to head against Casodex is also aimed at the second line indication.
  5. The phase II monotherapy trial will be in first line patients. In 2009, this market had sales of about $2.6 billion.


MDV 3100 Intellectual Property

MDV 3100 has a long patent life, which extends to 2026 and provision of Waxman Hatch could extend this even further into 2031. This long patent life supports the pursuit of the early stage indications, which offer the largest commercial opportunities, but also require clinical trials that take many years to complete.


Partnering Deal with Astellas

Medivation entered into a global development and commercialization agreement with Astellas on October 2009. Medivation has the option to co-promote MDV 3100 in the US while Astellas has all rights outside of the US. Under the terms of the deal, Medivation received $110 million upfront and will be paid $655 million in milestone payments, about half of which will be received before launch and the remainder after launch. In the US, profits will be split 50/50 and outside of the US, Medivation will receive a tiered, double digit royalty.




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