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By George Dimopoulos, Ph.D.

Prostate cancer is the third most common type of cancer in men with approximately 500,000 cases diagnosed annually [1]. About half of these cases occur in the United States and about 2 million American men are living with the disease [2]. It is estimated that the prostate cancer market may grow to $7.8 billion by 2015 [3]. An aging population and the introduction of new, innovative drugs, which extend survival rates in patients with advanced prostate cancer, are significant factors fueling market growth.

The majority of new prostate cancer treatments are focused on extending long-term survival. In early stage prostate cancer, hormone therapy, which slows testosterone induced tumor growth, is the first-line treatment intended to minimize prostate tumor growth and prevent bone metastases. Zoladex (goserelin), a gonadotropin releasing hormone agonist, is an example of a treatment that is used before and during radiation therapy in patients with localized prostate cancer. A combination treatment of Zoladex, flutamide, and radiation treatment has shown a significant increase in median disease-free survival of 4.4 years compared to 2.6 years for radiation alone (p<0.001)[4]. Zoladex, with $1.1 billion in annual sales, is sold by AstraZeneca (AZN) to treat prostate cancer and breast cancer. While many patients' prostate cancer is held at bay by hormone therapy, resistance and progression frequently occur in these patients. Patients who have progressed despite hormone therapy and whose disease has spread outside the prostate are said to have metastatic, castration-resistant prostate cancer (mCRPC).

Sanofi's (SNY) Taxotere (docetaxel), an anti-mitotic chemotherapy, has been the first treatment choice for mCRPC patients. Before hitting the patent cliff in 2010, Taxotere accounted for 23% of the total sales of prostate cancer drugs. It was the first chemotherapy shown to extend survival rates of hormone refractory prostate cancer patients, with median overall survival of 18.9 months compared to 16.5 months for mitoxantrone (p<0.001) in a randomized, controlled trial. Taxotere chemotherapy is associated with severe side effects including neutropenia, leukopenia, anemia, hair loss, fluid retention, mouth sores, weakness, and in some patients, nerve pain. Before losing patent protection, Taxotere sales peaked near $2 billion annually but dipped to $1 billion in 2011 and continue to slide. In order to shore up this franchise, Sanofi has received initial approval for and continues to develop the antimitotic drug Jevtana (cabazitaxel).

Sanofi hopes that Jevtana will supersede Taxotere in the prostate cancer treatment paradigm. The pivotal Phase 3 clinical study for Jevtana tested the drug in combination with prednisone in mCRPC patients who had failed Taxotere/prednisone therapy. Overall survival for Jevtana treated patients was 15.1 months, compared to 12.7 months for mitoxantrone (p<0.0001). Jevtana's 2011 sales increased 135% over 2010 to approximately $244 million. Projections into 2018 have total peak sales pegged at $500 million annually. In order for Jevtana to reach blockbuster status, Sanofi will have to show that it is more effective than Taxotere as a front-line chemotherapy. The company is conducting a large non-inferiority trial comparing the two drugs in this setting for mCRPC patients. Considering that the drugs have the same mechanism of action and clinical trial accumulated for Jevtana to date, this trial is not a slam-dunk for Sanofi.

Johnson & Johnson's (JNJ) Zytiga (abiraterone), a testosterone synthesis inhibitor, is currently approved to treat mCRPC patients who have failed Taxotere chemotherapy. Annual sales of Zytiga are expected to climb to over $1 billion, but not due to its ability to extend survival in this patient population. The ease of taking oral Zytiga may enhance its position among patients over Jevtana and other drugs in the post-chemotherapy setting, fortifying its future market position. On June 15, 2012, Johnson & Johnson announced that it had submitted marketing applications to both the FDA and EMA for approval of Zytiga in a pre-chemotherapy setting for mCRPC patients.

Results presented at the 2012 ASCO conference in Chicago support the pre-chemotherapy Zytiga application. At the meeting, JNJ presented interim results from an ongoing Phase III trial involving 1,088 patients with asymptomatic or mildly symptomatic mCRPC who have not received chemotherapy, known as COU-AA-302. In this randomized, double-blind, placebo controlled study patients receive either Zytiga (four 250 mg tablets; 1,000 mg qd) or corresponding placebo pills, which is the same dosing schedule used in the Phase III registration trial for post-chemotherapy patients. All patients in the study were also treated with prednisone (5 mg, bid). The co-primary endpoints of the trial are overall survival (OS) and radiographic progression-free survival (rPFS), measured by X-ray or other radiographic analysis of bone metastases.

The results presented at ASCO showed a positive trend favoring the use of Zytiga pre-chemotherapy patients, but questions remain. At the time of the analysis, median rPFS had not yet been reached in the Zytiga arm. In the placebo group rPFS was 8.3 months. At the time of the analysis, 150 patients in the placebo group were progression free compared to 251 on active treatment (p<0.0001). Median OS had also not yet been reached in the treatment arm compared to 27.2 months for patients taking placebo. This difference did not reach statistical significance (p=0.0097, pre-specified value of p=0.0008 need for significance). At the time of the presentation, study investigators estimated that treatment with Zytiga would afford treated patients a 9-month survival benefit. Despite incomplete results, the IDMC decided it was no longer ethical to give patients in the trial placebo, and the study was unblinded and, for purposes of the primary endpoint, essentially stopped. OS and rPFS may still statistical significance despite the muddling of survival results caused by placebo patients receiving the study drug. JNJ was granted a six-month priority review for Zytiga in this patient population.

Dendreon's (DNDN) Provenge seemed destined to be a blockbuster in the pre-chemotherapy prostate cancer market, but peak sales estimates have steadily decreased. Due to the complexity of treatment and the cost of $93,000 per treatment, as well as the complex manufacturing process, Dendreon's future growth potential in the market has dwindled. Sales have also been undermined by the introduction of more efficient and less expensive regimens. Quarterly results for the 2012 fiscal year have shown a sequential decline in Provenge sales. Recent third quarter results for 2012 reported a 2.5% decline in Provenge sales when compared to sales in the second quarter 2012. Despite the fact that it is not yet approved in the pre-chemotherapy setting, Zytiga appears to be taking market share from Provenge, further cutting growth prospects for Dendreon. Zytiga's easy dosing and cost effectiveness may be a better treatment alternative than Provenge. Furthermore, Bavarian Nordic (OTC:BVNKF) is developing PROSTVAC, a cancer vaccine, which activates the immune system against prostate cancer cells. In a Phase II trial testing the vaccine against an inactive vector, the active treatment group achieved median overall survival of 25.1 months, compared to 16.6 months for the control group (p=0.0061). The introduction of better treatments such as this should put enormous pressure on the sales of Provenge going forward. To salvage Provenge's future market standing, Dendreon is conducting clinical trials to evaluate Provenge as a treatment in earlier-stage prostate cancer patients. The company is conducting combination trials with Zytiga and will run similar trials with Xtandi. If the trials show a statistical significant survival benefit using a combination approach, management's long-term hope for Provenge is that it will be used in conjunction with Zytiga and Xtandi instead of being displaced by them.

Medivation's (MDVN) Xtandi (enzalutamide), an androgen receptor inhibitor, was granted FDA approval on August 31, 2012 to treat mCRPC patients who had failed chemotherapy. The company developed and markets the drug in collaboration with Astellas (OTCPK:ALPMF) in the United States. The Phase 3 AFFIRM Study evaluated Xtandi versus placebo in mCRPC patients who had previously failed Taxotere treatment. The primary endpoint of this study was overall survival. In the double blind study Xtandi demonstrated a statistically significant median overall survival of 18.4 months compared to 13.6 months for placebo (p<0.0001).

In the AFFIRM trial, the most common adverse events reported with Xtandi included fatigue, diarrhea, and hot flash. It is noteworthy that in observed adverse events, causing patients to stop treatment or cause death, all were lower in the Xtandi group than in the placebo group. For instance, cardiac disorders accounted for 0.9% in the control group vs 2% in the placebo group, while myocardial infarction accounted for 0.3% and 0.5%, respectively. Liver function test abnormalities accounted for 0.4% of active arm withdrawals versus 0.8% in the placebo group. An advantage with Xtandi is that it can be taken as a monotherapy, while Zytiga requires prednisone as a co-treatment. The future competitive landscape for these two drugs will depend on survival data in the pre-chemotherapy setting.

Table 1. Marketed Drugs for Prostate Cancer

Drug

Sponsor

Mechanism of Action

Efficacy/Safety

Data

Indication

Revenue

2011

Patent Expiration

Casodex

(Bicalutamide)

AstraZeneca

Non-steroidal androgen receptor antagonist

Efficacy: as a monotherapy, significant increases in progression free survival P=0.001, but no improvements in overall survival p= 0.77 when compared to placebo.

Safety: well tolerated. Common sides effects are breast pain and gynaecomastia

Hormone sensitive prostate cancer

$550M

Expired

Cytadren

(Aminoglutethimide)

Novartis (NVS)

Blocks steroid production from cholesterol

Efficacy: n/a

Safety: well tolerated with these common side effects- drowsiness, fatigue, and mild nausea

CRPC

n/a

Expired

Eligard

(Leuprolide Acetate)

Sanofi /Tolmar Therapeutics

Gonadotropin releasing hormone agonist

Efficacy: significant reduction in serum testosterone and PSA levels. No data on progression free survival or overall survival

Safety: few minor side effects. Injection site hematoma and irritation, and flushing

Hormone sensitive prostate cancer

320M

October 28th, 2018

2011-2018

Emcyt

(Estramustine)

Pfizer (PFE)

Precise mechanism unknown; disrupts cell division

Efficacy: Emcyte combination therapy with taxotere significantly reduces PSA levels, tumor size, and extends survival by a median of 22 months.

Safety: Side effects include, blood clotting, neutropenia, granulocytopenia, edema

CRPC

30M, includes Pfizer and generic sales

Expired

Eulexin

(Flutamide )

Merck (MRK)

Non-steroidal androgen receptor antagonist

Efficacy: Stage B2-prostate cancer - when used as a co-therapy with radiation and goserelin treatments moderated distant metastasis p=0.058 and increased survival rate (4.4 vs 2.6 years) p<0.001 when compared to radiation alone.

Hormone sensitive prostate cancer

$5M, includes combined Merck and generic company sales

Expired

Firmagon

(Degaralix)

Ferring Pharmaceuticals

Gonadotropin releasing hormone antagonist

Efficacy: Studies have shown improved progression free survival and a reduction of PSA levels when compared to leuprolide

Safety/Side effects: Well tolerated overall. Common side effects include: injection site reactions (pain, swelling, and irritation), hot flashes, weight gain, fatigue, and serum increases of transaminase and gamma-glutamyltransferase.

Hormone sensitive prostate cancer

n/a

May 18th,2021

Jevtana

(Cabazitaxel)

Sanofi

Microtubule inhibitor; disrupts cell division

Efficacy: In Taxotere resistant patients, studies have shown the median survival rates of 15.1 months for Jevtana treated group vs 12.7 months for mitoxantrone treated patients p<0.0001. Progression free survival rates were 2.8 months for the Jevtana groups vs 1.4 months for mitoxantrone group p<0.0001

Safety/Side effects include neutropenia, anemia, diarrhea, and fatigue.

mCRPC

$200M

December 10th, 2025

2012-2025

Nilandron

(Nilutamide)

Sanofi

Non-steroidal androgen receptor antagonist

Efficacy: A small study has shown that in advanced prostate cancer patients, in whom androgen ablation failed, there was a significant reduction in PSA levels. Overall or progression free survival was not assessed.

Safety/Side Effects: Headache, nausea, fatigue, and dizziness.

Hormone Sensitive Prostate Cancer

n/a

Expired

Provenge

(Sipuleucel-T)

Dendreon

Cancer immunotherapy product; promotes immune response on distinct prostate cancer antigen.

Efficacy: Effectiveness was studied in 512 patients with metastatic castrate resistant prostate cancer. Study showed an increase in overall survival of 4 months of patients on Provenge versus control.

Safety: Common side effects include chills, fatigue, fever, nausea, joint ache and headache.

mCRPC

$214M

Expiration 2014-2018 in US and 2015-2019 outside of US

Taxotere

(Docetaxel)

Sanofi

Anti-mitotic ; interferes with cell division

Efficacy: First drug in advanced prostate cancer to show a survival advantage. Studies have shown that 25.8% of patients were alive at 3yrs with Taxotere vs. mitoxantrone p=0.004

Safety: Side effects include nausea, vomiting, alopecia, diarrhea, joint pain, fatigue, anemia, and an overall reduction in white blood cell count.

mCRPC

$1000M

Expired

Vantas

(Histrelin)

Endo Pharmaceuticals

(ENDP)

Gonadotropin releasing analogue

Efficacy: Clinical studies have shown a significant reduction in testosterone levels (<50ng/dl) in all advanced prostate cancer patients in 4 weeks (p=0.001).

Safety: Common side effects include hot flashes, fatigue, weight loss and edema.

Hormone Sensitive Prostate Cancer.

$20M

Expired

Xgeva

(Denosumab)

Amgen (AMGN)

Anti-RANK ligand monoclonal antibody

Efficacy: Clinical studies have shown Xgeva to significantly delay skeletal related events in advanced metastatic prostate cancer patients by 21 months versus 17 months in the Zometa treated patients.

Safety: Common side effects include hypocalcemia and osteoenecrosis.

mCRPC

$357M

Not listed in FDA Orange Book

Xtandi

(Enzalutamide)

Medivation

Androgen receptor inhibitor

Efficacy: Phase 1 and phase 2 results indicated significant antitumor activity such as reductions in PSA levels, stabilization in tumors that spread to soft tissue or bone and a decrease in circulating tumor cells. Phase 3 (randomized, double-blind multinational trial, evaluating enzalutamide (160 mg/day)) studies have indicated significant improvement in overall survival of metastatic hormone resistant patients who were on taxotere (docetaxel) compared to placebo. Overall survival median of 4.8 months with a survival median of 18.4 months versus 13.6 months for placebo arm p<0.0001)

Safety: Very well tolerated for the most part. Side effects include:fatigue, diarrhea, hot flashes, and anemia. A few patients experienced seizures.

mCRPC

n/a

Patent Expires

2027 in US and 2026 in

Europe and Japan.

Zoladex

(Goserelin)

AstraZeneca

Gonadotropin releasing hormone agonist

Efficacy: In combination with flutamide and radiation, Zoladex is associated with a trend toward the reduction in incidence of metastasis compared to radiation alone (27% vs 36%) at 4 years p=0.058. The median disease- free survival was increased in patients who were co-treated with Zoladex, radiation, and flutamide compared to radiation alone ( 4.4 yrs vs 2.6 yrs) p<0.001

Safety: Side effects include: back pain, muscle weakness, fatigue, nausea, urine retention, and blood in urine and stool.

Hormone Sensitive Prostate Cancer

$1000M

April 13th 2022

2021-2022

Zytiga

(Abiraterone Acetate)

Johnson and Johnson

Inhibits the enzyme CYP17A1 which is expressed prostate cancer tissue, adrenal gland, and testes

Efficacy: In late stage hormone -resistant prostate cancer patients who had received Taxotere chemotherapy, Zytiga and prednisone combination had median overall survival of 14.5 months compared to 11.9 months in group taking the placebo-prednisone treatment.

Safety: Side effects include joint swelling, low potassium, edema, hot flashes, cough, diarrhea, and hypertension.

mCRPC

$432M

April 28th 2014

Exclusivity

Feb 18th, 2016

Source: LifeSci Advisors

Valuations: Dendreon and Medivation

Dendreon had total cash and equivalents of $227M at the end of Q3 2012. With a quarterly cash burn rate of approximately $20M, the company will spend $100-120M in cash this year. There is considerable risk with Dendreon going forward. Manufacturing issues, sales force turnover, decline in Provenge sales due to competition, and projected increases in R&D expenditures may widen operating expense margins. Furthermore, senior convertible notes of $526M due in 2016 add instability to the financial picture of Dendreon. At the end of Q3 2012, total long-term debt was $554M. With a total diluted share count of 154.35M and a stock price of $4.17, Dendreon has a market cap of $643.64M and an enterprise value (EV) of $970.64M. Fierce competition from other drugs such as Xtandi, Zytiga, and Algeta's Alpharadin will likely harm sales of Provenge, and by 2015, we believe, sales will peak at $319M with an estimated average growth rate of 10% per year. Given Dendreon's long-term prospects and current stock price that is reflective of the company's fair value, there may not be much future upside potential. Our fair stock value for the firm is $4.74.

Medivation will report Q3 results on November 9, 2012. At the end of Q2 2012, the company had total cash and cash equivalents of $344.5M. With a quarterly cash burn rate of approximately $30M, we project $120-150M will be spent this year. With its moderate burn rate, its recent issuance of a senior note of $250M, and the recent approval and launch of its lead drug Xtandi in the United States, Medivation should not face the need to raise further capital. Moreover, Astellas Pharmaceuticals' global agreement to help develop and commercialize Xtandi removes the risks inherent with worldwide marketing of enzalutamide. With a total diluted share count of 73.66M shares, reflective of its recent 2:1 stock split, and a stock price of $47.41, Medivation has a market cap of $3.49B and an enterprise value of $3.34B. With annual sales forecasted to touch the billion dollar mark by 2015, Xtandi will compete closely with Johnson & Johnson's Zytiga, which also has the potential to become a billion dollar drug in the near term. Astellas recently reported Xtandi sales of $14M for the third quarter and forecasted sales of $100M in sales through the end of its fiscal year on March 31, 2013. While initial approvals for these drugs are in the post-chemotherapy setting, the majority of sales will eventually come from pre-chemotherapy patients. Due to a collaborative arrangement, the sales of Xtandi will be split equally between Medivation and Astellas. The current stock price is undervalued, considering our 2015 revenue forecast of $500M. Successful future results of the PREVAIL phase 3 trial, investigating efficacy in pre-chemotherapy prostate cancer patients, may add to the forecasted $500M sales by 2015 as Xtandi may be approved for treatment in pre-chemotherapy prostate cancer patients in addition to post-chemo patients. Our calculations based upon a DCF model, taking into consideration 40% profit margin and P/E multiple of 20, show that the fair stock value for MDVN is $67.43.

References

  1. Frelay J., Shin HR., Bray F., Fuman D., Mathers C., Parkin DM. Globacan 2008 v 12, Cancer Incidence and Mortality Worldwide: IARC Cancer base No. 10 [Internet] Lyon, France: International Agency for Research on Cancer, 2010. Available from: http: globocan.iarc.fr.accessed May 2011.
  2. The American Cancer Society 2012 Statistics.
  3. Research and Markets: Prostate Cancer Drug Pipeline Analysis and Market Forecasts to 2015: an essential source of information and analysis of the global prostate cancer market, January 21, 2010.
  4. ZOLADEX Label.
Source: Prostate Cancer Market Takes Shape - Part 1: Dendreon And Medivation