Neutral on Medivation (MDVN)

We recently reiterated our Neutral recommendation on biopharmaceutical company Medivation Inc. (MDVN). Medivation, which currently does not have any marketed product in its portfolio, focuses on the development of novel small molecule drugs for the treatment of serious diseases for which there are limited treatment options.

The company’s lead pipeline candidates are Dimebon, which is being developed for the treatment of Alzheimer’s and Huntington’s diseases, and MDV3100, which is being developed for the treatment of castration-resistant prostate cancer.

While Dimebon is being partnered with Pfizer (PFE), Medivation has an agreement with Japanese company, Astellas Pharma, for the development and commercialization of MDV3100. We view both these collaborative agreements as favorable for the company. Not only have these collaborations brought in cash for Medivation, they have also provided the company with excellent marketing partners.

Meanwhile, Medivation suffered a huge setback earlier this year with its lead pipeline candidate, Dimebon, failing to achieve both its primary and secondary endpoints in a phase III study. The results were a huge disappointment for the company and sent the share price plunging.

The companies are now focusing on the development of Dimebon for the mild to moderate Alzheimer’s disease population and Huntington’s disease. The successful development of therapies for the treatment of Alzheimer’s is challenging and we note that several companies including Bellus Health and Eli Lilly (LLY) have faced major setbacks in developing treatments for Alzheimer’s.

Although Medivation is continuing with the development of the candidate, we remain concerned that additional development setbacks would have a major impact on the stock. Moreover, we are concerned about partner Pfizer’s commitment towards the Dimebon collaboration. We note that Pfizer already has another Alzheimer’s candidate, bapineuzumab, in its portfolio that is being developed with Johnson & Johnson (JNJ). Pfizer may, therefore, decide to focus its efforts towards the development of bapineuzumab.

Our Neutral recommendation on Medivation is supported by a Zacks #3 Rank (short-term “Hold” rating). We would be more positive on the stock once we see encouraging results from ongoing studies.

MEDIVATION INC (MDVN): Free Stock Analysis Report

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