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Medivation, Inc. (NASDAQ:MDVN)

Credit Suisse Group AG Healthcare Conference

November 14, 2012 1:30 PM ET


David Hung – President and CEO


Lee Kalowski – Credit Suisse

Lee Kalowski – Credit Suisse

I am Lee Kalowski, one of the biotech analysts here. I'm here to introduce Medivation presenting on behalf of the company is Dr. David Hung, CEO. As many of you know, Medivation received approval last quarter for Xtandi, the brand name of enzalutamide for metastatic castrate resistant prostate cancer. David, I am sure, will be talking about Xtandi and Medivation. So with that, here you go.

David Hung

Thanks, Lee and thank you all for coming. So the investment thesis for Medivation is outlined on the slide here. As Lee mentioned, the FDA approved our drug Xtandi on August 31 this year. The indication is for patients who are post chemotherapy with metastatic castration resistant prostate cancer. The approval came three months early than we had anticipated because the PDUFA date was actually in November.

The U.S. Xtandi launch is well underway. We began promoting to prescribers right after Labor Day and Xtandi was available to patients in mid-September. The average cost of the drug is $74.50 for a 30-day supply. Medivation is very well capitalized to fund the Xtandi launch. As of last Q last week, we had $340 million in cash and we received a $45 million in development and milestone payments during Q3.

We have also filed for European approval and EMEA has accepted our MAA for view and importantly we have another Phase III trial called the PREVAIL trial which is a trial of Xtandi in pre-chemotherapy patients who has been fully enrolled more than six months ago and the reason that’s an important trial for us is because obviously the pre-chemo indication represents a much larger commercial opportunity due to a much larger patient population and longer duration of treatment.

We will review the Xtandi label in brief. The indication, as I said, is for patients with metastatic castration resistant prostate cancer who have previously failed Docetaxel, a dose if 160 milligrams a day given orally once a day with or without food and importantly, Xtandi does not require the use of concomitant steroids.

On the efficacy front, the mean overall survival in Xtandi treated patients was 18.4 months compared to 13.6 months in placebo patients. This represented a 4.8 month improvement in mean overall survival and a 37% reduction in the risk of death. On the safety side, we are pleased that there was only one contraindication to the drug, pregnancy and one warning and precaution which is seizures which occurred at less than 1% in Xtandi treated patients compared to 0% in placebo patients. Adverse events occurring at least 5% more frequently in Xtandi treated patients than placebo, a very few, only fatigue, hot flush and headache and also very importantly the number of grade 3 and 4 adverse events were actually lower than the Xtandi treated group than placebo patients, 47% versus 53%.

We have hired a very experienced uptil (ph) sales force of a 11 years of oncology sales experience. You can see that we have gotten that from a number of companies that are well established in the prostate cancer space.

We had our field materials since June and some of them here are outlined in the slide showing that we were talking about AR targeting and how androgen receptor signaling is a very important mechanism in tumor growth. And as I said earlier, promotion of Xtandi began the week of September 4th and on this slide you can see that we are focused on the 18.4 month duration of survival in our Xtandi treated patients.

We reported in our Q on our call last week that in the third quarter Xtandi sales were at $14.1 million representing the first 12 business days of the launch because we only had 12 days of sales in the quarter but a little more than $1 million a day.

We have had very promising initial prescriber and peer response. As we also cited on the call, 88% of oncologists by four weeks after launch were aware of Xtandi, more than 50% of physicians supported post-chemo details for September and we have planned some place covering approximately two thirds of the U.S. population.

Our third quarter financial results are outlined in this slide. Xtandi net sales were $14.1 million or the 12 days of sales in the third quarter. Total collaboration revenue was $64.8 million which represented $7.1 million in U.S. Xtandi sales and $57.7 million in upfront and development milestone payments between Astellas and Pfizer. Our development and milestone payments totaled $45 million, $10 million of that was from the NDA acceptance, $30 million of that was in the Xtandi approval and $5 million from EMA acceptance. We had $340 million in cash at September 30.

We have a very broad development program with enzalutamide. As you can see here, we have six other trials in prostate cancer and another trial, a seventh trial, ongoing in breast cancer. I will talk about each one of these trials in more detail.

So the way that prostate cancer patients are treated, I really follow this pyramid here. So after definitive therapy, which includes radical prostatectomy or radiation therapies for localized prostate cancer in the prostate. Once you fail that, you operating on to systemic therapy. And the first systemic therapy given is generally at the bottom of that pyramid in the purple and that’s treatment with LHRH analogs like Lupron. And importantly, in 2008 Lupron sales were about $2.6 billion to give you an idea of how large commercial opportunity that is. Once you fail Lupron, most cases go on to a first generation AR antagonists called Casodex and so Casodex represents second line therapy in the United States and rest of the world in 2008, Casodex sales were roughly $1.3 billion.

Once you fail Casodex, most patients go on to chemotherapy and the first chemotherapy approved to show us survival benefit was Taxotere. And now in the fourth line setting, there are a number of drugs that have been approved including, Jevtana, or cabazitaxel, Zytiga with prednisone and now Xtandi.

So we are doing clinical trials that really target every one of these segments of the pyramid. So the AFFIRM trial our Phase III post-chemo trial, which we got our approval for Xtandi in the post-chemo setting really cover fourth line patients. The PREVAIL trial, as I mentioned earlier, is a pre-chemo study but importantly, PREVAIL covers both second and third line patients because some of the patients in PREVAIL have failed both Lupron and Casodex and therefore are third line but some patients in PREVAIL have only failed Lupron that not yet seen Casodex, that would be second line. So PREVAIL will cover both second and third line patients.

We are doing two other trials called TERRAIN and STRIVE trials are head to head trials against Casodex or bicalutamide. The TERRAIN trial is being conducted in Europe and the STRIVE trial is being conducted in the United States and the main difference between those two trials is that the TERRAIN trial includes only metastatic patients, those with documented radiographic metastasis, whereas the STRIVE trial includes both M0 and M1, so that is non-metastatic as well as metastatic. Then we have another trial with even (inaudible) of that, which we have not given a name to, but it’s a Phase II study that includes hormone naive patients, so these are patients before they have even started Lupron.

We will kind of go through each one of these trials in a little bit more detail. The AFFIRM trial enrolled 1199 patients. The primary endpoint was overall survival, the dose of enzalutamide used was 160 milligrams against placebo and the trial was randomized two to one, so there are twice as many patients on the drug arm as placebo arm.

We published our results from the AFFIRM trial in mid-August in the New England Journal of Medicine and in the article we summarized the result percentage that’s already mentioned to you. That’s the median survival in the drug arm was 18.4 months versus 13.6 months in the placebo arm which represents a 37% reduction in the risk of death, a hazard ratio of 0.63 with a p value of less than 0.001. And the survival benefit in the AFFIRM trial was consistently seen across patients subgroups. So what were some of those subgroups? Looking at secondary end point, when we look at radiographic progression-free survival and time to PSA progression, you can see that in the enzalutamide arm, the drug conferred about five month benefit, 5.4 months in radiographic PFS, 5.3 months in time to PSA progression and both those numbers correlated very, very nicely with our nearly five-month survival benefit in overall survival. So all PSS and PSA and overall survival correlated very tightly in the AFFIRM trial.

Time to first skeletal-related event was also significantly improved by Xtandi with a hazard ratio of 0.69 representing a 31% reduction in a time to first skeletal-related event and p value less than 0.01 and the soft tissue response rate, you can see it there, about 29% in the drug treated group compared to 4% in the placebo group. A number of PSA responders was 54% and the drug group rate was 2% in the placebo arm. And the quality of response – quality of life response rate with 43% in the drug arm compared ot18% in the placebo arm.

We presented some data at the European Society of Medical Oncology just this past summer and we presented an abstract on the impact of Xtandi on time to first skeletal-related event and pain in our Phase III AFFIRM trial.

Importantly, as I mentioned earlier, the adverse event profile of Xtandi is quite attractive and despite the fact that patients on the drug arm were actually in a follow-up period because you got to be monitored for adverse events as long as you are on the clinical trial because patients on Xtandi were in the clinical trial for more than twice as long as placebo patients that the ratio over which they were monitored was over twice as long as the placebo arm and in spite of that, total adverse events were comparable between the two groups and in fact, serious adverse events were lower in the Xtandi than the placebo group. And if you look at adverse events that caused human discontinuation or deaths, again they were both lower in the Xtandi treated patients than they were in the placebo treated patients despite being filed to more than twice as long.

Our PREVAIL trial is our pre-chemo study. We finished enrollment in May of 2012, we enrolled 1717 patients, this was a very large study. We do have an interim analysis baked into the protocol but that analysis maybe modified with additional information. And as I said earlier, the PREVAIL trial includes both second and third line patients. There are co-primary endpoints in that study including both progression free-survival and overall survival, both those (inaudible) being used against the same dose as in AFFIRM, 160 milligrams once a day against placebo and the trial unlike AFFIRM’s randomized one to one instead of two to one.

We have some data that leads to believe that it's possible that Xtandi may have even bigger benefits upstream in the pre-chemo patients compared to downstream in post-chemo patients. And if we look at our Phase I, II data which we represented a little while ago, we enrolled a 140 patients, half of which were pre-chemo and half of which were post-chemo. And we look across all endpoints measure including PSA response rates, stabilization of soft tissue mets, stabilization of bone mets, conversion of tumor cells from the bad prognostic category to the good prognostic category and median time to PSA progression. You see that in every instance, our patients in the pre-chemo segment did much better than patients in the post-chemo segment.

So we believe that these data suggest as with many oncology agents that these agents are more effective the less the sick patients arm. So this leads us to believe that there is a possibility that that PREVAIL could demonstrate an even more robust treatment effect that we have seen in our AFFIRM post-chemo study.

The TERRAIN and STRIVE trials are head to head trials against bicalutamide. We started enrollment of TERRAIN in March of last year, that trial has been operationalized by Astellas and Medivation is running the STRIVE trial which began just in August this year. TERRAIN will enroll 370 patients, STRIVE will enroll 400 patients. They are all second line patients. The primary endpoint is progression-free survival. And the main difference in TERRAIN and STRIVE as I said earlier is that TERRAIN includes only metastatic patients whereas STRIVE includes both metastatic and non-metastatic patients and TERRAIN is only in Europe, primarily in Europe and STIRVE is primarily in the U.S.

We also have a hormone naive trial which we completed enrollment up in January of this year and this trial was ahead Lupron, so these are patients who have not yet had any hormone therapy. The primary endpoint is PSA response, the dose of enzalutamide being used is again the same as our all other trials, 160 milligram a day. And I think as was mentioned by Astellas on their conference call, we are shooting to present this data at GU-ASCO in February.

We also have a Phase II trial, a new adjuvant study which we started early in June this year. So new adjuvant means before the definitive procedures, so before prostatectomy. So in this case we are enrolling 50 patients prior to prostatectomy and the endpoint here is looking at pathological complete response, that we are looking after we treat these patients, they go on to prostatectomy when their props are removed, we'll look at the prostates (inaudible) inspection to see whether there is any tumor left and we will look to see what percentage of patients can we show that is no longer tumor evident to suggest a possible complete pathological response. The dose of Xtandi being used again is 160 milligrams a day.

We are also doing another Phase I study with a combination of enzalutamide with Docetaxel. I just look at tolerability. This is a small study, 18 patients, the primary endpoint is safety and endpoint and again the dose of Xtandi being used is the same as all the other trials, 160 milligrams once a day.

So how does our drug work? This drug works against the substance that really fuels most prostate cancer. So virtually all prostate cancers are driven by the primary by male sex hormone, testosterone. And the way testosterone works is it binds to a receptor called AR or androgen receptor and in order or it to stimulate the androgen receptor and cause tumor growth testosterone AR complex has to get into the cell nucleus, that’s where the DNA is and then it has to bind the DNA and activate it to cause tumor. And Xtandi works by blocking several points in that pathway. Number one, enzalutamide blocks the binding of testosterone to the AR and number two, it blocks the ability of the AR testosterone complex to get into the nucleus, that’s a process called nucleus translocation, it blocks that. Third, it blocks the ability of the AR, testosterone complex to bind to DNA and activate that. So there is really a triple mechanism by which this drug works against tumor growth.

We have also shown in preclinical studies though, that independent of the AR signaling pathway, Xtandi or enzalutamide inhibits the estrogen-mediated growth of breast cancer cells. So we know that enzalutamide inhibits testosterone-driven breast cancer as you would expect because we inhibit androgen receptor and we know that roughly 70% of breast cancers do express the androgen receptor so it’s not surprising that enzalutamide may have an effect against testosterone immediate growth. So it’s a little bit surprising to us was that enzalutamide also blocks estrogen-mediated breast cancer growth, and really independent of the AR. So that suggests that there is a possibility that enzalutamide maybe targeting a pathway, a share between the androgen receptor and estrogen- signaling pathway. So we have initiated a breast cancer trial, that trial started in April this year. It’s an open label study and we are starting off a low dose of enzalutamide because we've not been in female patients before and now we are escalating that up to 160 dose and the goal of the study is to validate the safety and tolerability of daily enzalutamide in these patients who have failed prior hormone therapy.

We have strong IP position with enzalutamide. We have issued composition of (inaudible) patents in all G7 markets. In the United States, our patent permit goes out till 2027. In Europe and Japan, the patent expires in 2026 plus up to five years of patent term extensions.

We have partnered our program with Astellas. The reason for that, that we selected Astellas was because they are global leaders in the urology field, making Flomax, the number one drug in BPH, and VESIcare, the number one bladder drug. They have a very strong presence in the urology market which is why we believe that new generation of well-tolerated prostate cancer drugs we will migrate to. So we consider Astellas a gateway to a very large urology market. Under the terms of agreement with Astellas, they pay us a $110 million upfront and will pay us up to $655 million in milestone payments, $335 in development milestone and $320 in sales milestone.

We will also receive 50% of the U.S. profit and also receive the other half in ex-U.S. sales. Astellas bears all costs and Medivation will receive here double digit royalties in ex-U.S. net sales. For development programs, in any indication, Astellas pays with two thirds of all on development costs and Medivation will pay for one third of those costs.

Just to summarize again. Our drug was approved by the FDA on August 31 this year. The approval was three months ahead of our PDUFA date and the indication is for patients with post-chemo, metastatic, castration resistant prostate cancer, our launch is well underway. We started promoting to prescribers right up after Labor Day when the drug was available in mid-September. The WAC is $74.50 for a 30-day supply. We are well capitalized with $340 million in the bank as of our last Q. We received $45 million in development and milestone payments during the quarter, we have a European submission, which has been accepted for review and we are waiting to read out our Phase III pre-chemo study called the PREVAIL trial and are following with great interest the result of the 302 Zytiga pre-chemo study which are due to be announced by their PDUFA date of December 15. So we will look forward to seeing that.

And with that, I am happy to answer questions in the breakout, which I believe is in the Canyon Room outside to the right. Thank you.

Question-and-Answer Session

[No Q&A session for this event]

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