Medivation Gains On Higher Q3 Revenues (MDVN)

After remaining on a declining trend for the past two weeks, the share price of biopharmaceutical company Medivation (NASDAQ: MDVN) gained yesterday following an increase in the fiscal 2012 third-quarter revenue reported on Friday after the market closed.

The California-based company is focused on the development of novel small molecule drugs for the treatment of disease such as prostate cancer. The company’s flagship drug is Xtandi, which received FDA approval in the month of August 2012.

The revenue for the fiscal 2012 third quarter increased to $64.80 million from $14.94 million in the corresponding period last year. The revenue estimate of analysts was $48.99 million for the third quarter of 2012.

Medivation’s flagship drug Xtandi registered sales of $14.1 million for the fiscal 2012 third quarter. The company has a joint collaboration with Astellas Pharma for commercialization of the product.

The net loss for the reported quarter narrowed to $4.54 million, or $0.06 per share, from $10.04 million, or $0.14 per share, in the third quarter of fiscal 2011. The consensus estimate of analysts was a net loss of $0.04 per share for the third quarter.

Commenting on the results, David Hung, President and CEO of Medivation, said, “The rapid approval and subsequent U.S. launch of Xtandi in the third quarter marked a transformative time for Medivation as we made our transition into a commercial company.”

The share price of Medivation, which was trading near $23.00 in January 2012, has appreciated more than 100% so far this year. The prostate cancer drug data released on February 1 lifted the share price to $37.00 in less than a week. An increase in the share price target to $93.00 by analysts at Brean Murray, as well as a rating upgrade by “The Street Ratings” from “sell” to “hold”, triggered another round of buying that saw the share price of Medivation rise to a high of $44.46 on May 24. Another round of target price increases by Jefferies and William Blair pushed the share price to $47.93 on July 9. Two weeks later, the FDA accepted the NDA (new drug application) for enzalutamide filed by Medivation and its collaboration partner, Astellas Pharma. The news pushed the share price to $51.33 on July 27. On August 24, Medivation reported the FDA approval for prostate cancer drug Xtandi, resulting in a rally that took the share price to $54.61 on September 4. On September 24, Medivation announced the completion of a two-for-one stock split. Ten days later, the share price of Medivation hit a new 52-week high of $58.83. However, the share price of Medivation underwent a correction in the next two weeks to around $45.00.

Yesterday, the share price opened around 2% higher than Friday’s close of $45.70 and continued to gain another 2% in the next half hour of trading. For the rest of the trading session, the share price hovered around $47.00.

Going forward, Medivation expects fiscal 2012 total operating expenses, net of cost-sharing payments from Astellas, in the range of $205 million to $215 million. The previously anticipated operating expense was between $183 million and $198 million for fiscal 2012. The increase was attributed to the rise in compensation and royalty expense resulting from Xtandi’s approval in the U.S. approximately one quarter earlier than expected.

Medivation also said that it continues to expect approximately $15 million in capital expenditures in fiscal 2012, primarily related to leasehold improvements at its new corporate and commercial headquarters facilities.

Medivation ended yesterday’s trading session at $47.47 per share, up $1.87 or 4.1% on a volume of 1.05 million shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.