Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Medivation (NASDAQ:MDVN)

Q1 2013 Earnings Call

May 09, 2013 4:30 pm ET

Executives

Anne Bowdidge - Senior Director of Investor Relations

David T. Hung - Chief Executive Officer, President and Executive Director

C. Patrick MacHado - Chief Financial Officer, Principal Accounting Officer and Chief Business Officer

Lynn Seely - Chief Medical Officer and Senior Vice President

Cheryl L. Cohen - Chief Commercial Officer

Analysts

Lee Kalowski - Crédit Suisse AG, Research Division

Yaron Werber - Citigroup Inc, Research Division

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Michael E. Ulz - JP Morgan Chase & Co, Research Division

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Matthew Roden - UBS Investment Bank, Research Division

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Biren Amin - Jefferies & Company, Inc., Research Division

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

John L. Newman - JMP Securities LLC, Research Division

Howard Liang - Leerink Swann LLC, Research Division

Ying Huang - Barclays Capital, Research Division

David M. Nierengarten - Wedbush Securities Inc., Research Division

Yi Chen - Aegis Capital Corporation, Research Division

Operator

Good afternoon, everyone, and welcome to Medivation's First Quarter 2013 Financial Results Conference Call. This call is being recorded. [Operator Instructions] I would now like to turn the call over to Anne Bowdidge, Senior Director of Investor Relations. Please go ahead.

Anne Bowdidge

Thank you for joining us. On the call today from Medivation are Dr. David Hung, President and CEO; Patrick MacHado, Chief Business and Financial Officer; Dr. Lynn Seely, Chief Medical Officer; and Cheryl Cohen, Chief Commercial Officer. We issued a press release earlier today that you can find on our website at www.medivation.com.

Before we begin, I'd like to remind you that various remarks that we make on this call contain forward-looking statements that are made under the Safe Harbor provisions of the securities laws, including statements regarding XTANDI commercialization; the potential XTANDI regulatory approvals and other markets and for other indications and the timing thereof; the continued clinical development and regulatory approval of enzalutamide and the timing thereof; potential future clinical trials, events or results; the therapeutic potential and safety profiles of our product candidates; our collaboration; our future opportunities and milestones; and financial guidance for 2013.

In addition to our prepared remarks, we may make forward-looking statements in response to questions, including, for example, statements regarding our current and future -- potential future collaborations, and our future financial position and results. Any statements made in this call that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause Medivation's actual results to differ significantly from those projected, including without limitation, the risks and uncertainties detailed in the Medivation's earnings release issued today and Medivation's Form 10-Q for the quarter ended March 31, 2013, which will be filed tomorrow with the SEC. All forward-looking statements made during this call are based upon information available to us as of today, and we assume no obligation to update these statements as a result of future events or otherwise.

This call is the property of Medivation and any replay of this conference call cannot be made without Medivation's expressed written permission.

With that, I'll turn the call over to Dr. David Hung, President and CEO of Medivation. David?

David T. Hung

Thanks, Anne, and thank you, all, for joining us today. Let me start by saying I'm very pleased with the positive market response to XTANDI in the first quarter. XTANDI generated $75.4 million in net sales, an increase of $18 million over the previous quarter. We believe that a key factor in XTANDI's adoption is the strength of our data. The Phase III AFFIRM study showed a significant survival benefit in a randomized controlled prostate cancer trial, a 4.8 month improvement in survival in treated patients over placebo-treated patients, even after failing chemotherapy. And from a safety perspective, there were fewer serious adverse events in the treatment arm of AFFIRM as opposed to the placebo arm. We hope to further expand our claims and differentiate XTANDI as we read out PREVAIL, our Phase III pre-chemo trial later this year.

With the strong U.S. launch of XTANDI, we've built a solid foundation for global success and are making significant progress towards expanding XTANDI's worldwide presence. Just 2 weeks ago on April 25, we and our partner, Astellas, reached a major milestone when we received a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use, otherwise known as CHMP, recommending European Commission approval for XTANDI for the treatment of adult men with post-chemotherapy mCRPC. We expect to hear a final decision from the European Commission shortly as this usually occurs approximately 60 days after a CHMP recommendation. XTANDI marketing applications are also under review in Switzerland, South Korea, Canada and Brazil for the treatment of post-chemotherapy mCRPC patients.

I'll now turn the call over to Pat to discuss financial results during the quarter.

C. Patrick MacHado

Thanks, David, and good afternoon, everybody. As David mentioned, U.S. net sales of XTANDI for the quarter, as reported by Astellas, were $75.4 million. This represents the second full quarter of XTANDI sales following its availability for shipment on September 13, 2012. While the first quarter can typically be challenging for oral oncology products due to the Medicare Part D "donut hole," we continue to be pleased with the commercial launch to date. The increase of $18 million over the fourth quarter was primarily driven by volume, but was also impacted by a favorable gross-to-net adjustment of approximately $4.4 million taken by Astellas relating to prior quarters. Under our collaboration agreement, gross-to-net deductions are determined in a manner consistent with Astellas' internal accounting policies and estimates used by Astellas in calculating gross-to-net deductions will be reassessed periodically and trued-up as appropriate.

I'd now like to provide some additional color on the market dynamics that contributed to the strong growth in the second full quarter after launch. From a prescriber perspective, our market research continues to show that XTANDI has over 90% aided awareness among oncologists and urologists and leads in share of voice for oncologists. In the first quarter, XTANDI continues to dominate the share of details in oncology with a range of approximately 40% to 50% of the metastatic CRPC product details. From our launch in September until the end of the first quarter, prescriptions for more than 19,000 XTANDI bottles have been written by more than 2,800 individual prescribers and more than 400 institutional accounts. Payers have responded favorably to XTANDI and patients continue to have broad access to XTANDI, with more than 98% of both Medicare and commercial plans now covering XTANDI.

Turning to Medivation's financial performance. Collaboration revenue for the first fiscal quarter was $46.2 million. As a reminder, Medivation's collaboration revenue consists of 3 components: revenue attributable to U.S. XTANDI sales; revenue attributable to x U.S. XTANDI sales; and revenue attributable to upfront and milestone payments.

The first part of our collaboration revenue is revenue attributable to U.S. XTANDI sales. In the U.S., we share XTANDI sales, costs, profits and losses with Astellas. Our collaboration revenue attributable to U.S. XTANDI sales in each period will equal half of the U.S. XTANDI net sales reported by Astellas. For the first quarter, our collaboration revenue attributable to U.S. XTANDI sales was $37.7 million.

The second part of our collaboration revenue is revenue attributable to x U.S. XTANDI sales. Outside the U.S., Astellas bears all XTANDI costs, retains all XTANDI profits and losses and pays Medivation tiered royalties ranging from the low-teens to the low-20s on x U.S. sales. Our collaboration revenue attributable to x U.S. XTANDI sales consists of royalties we may receive from Astellas on sales of XTANDI outside the U.S. We have not recognized any revenue attributable to x U.S. XTANDI sales to date.

The third part of our collaboration revenue is revenue attributable to upfront and milestone payments. For the first quarter, our collaboration revenue attributable to upfront and milestone payments was $8.5 million. We remain eligible for $277 million in additional development milestone payment and up to $320 million in sales milestone payments under the Astellas collaboration. The next milestone payment we expect to receive is $15 million for EU approval of XTANDI and post-chemotherapy patients, which as David mentioned, we expect to receive shortly.

We are required to share 10% of any such development milestone payments received with UCLA under the terms of our enzalutamide license agreement.

Total operating expenses for the first quarter were $68.5 million, compared with total operating expenses of $35.7 million for the same period in 2012. These figures include noncash stock-based compensation expense of $8.3 million in the first quarter of 2013, compared with $4.3 million in the prior year period.

We reported a net loss for the first quarter of $27.2 million or $0.36 per share, compared with net income of $440,000 or $0.01 per diluted share for the prior year period. Net income in the first quarter of 2012 was a result of accelerated recognition of deferred revenue from our former collaboration with Pfizer. The per share numbers reflect the 2-for-1 forward split of our common stock that we implemented on September 21, 2012. At March 31, 2013, we had cash, cash equivalents and short-term investments of $271.5 million.

In terms of guidance, we continue to expect 2013 operating expenses, net of cost sharing payments from Astellas, could be between $285 million and $300 million. Approximately $29 million of which consists of noncash stock-based compensation expense.

With that, I'll now turn the call back over to David.

David T. Hung

Thanks, Pat. While we're pleased with our rapid commercial uptake to date, we continue to believe that the most substantial commercial opportunity for XTANDI lies earlier in the disease continuum, in pre-chemo patients. I'd now like to update you on our progress in ongoing trials to develop enzalutamide earlier in the prostate cancer disease spectrum and also in breast cancer.

The trial that is furthest along is PREVAIL, our Phase III trial in metastatic pre-chemo patients. As we announced at the beginning of April, we have exceeded the protocol specified number of radiographic PFS events required for the final analysis of the study, and we plan to conduct an interim overall survival analysis this year. We completed targeted enrollment of approximately 1,700 patients in May of 2012, and are currently following those patients. The co-primary endpoints in this trial are overall survival and radiographic PFS. As we mentioned in our last earnings call, advancing enzalutamide development upstream of the PREVAIL population constitutes a significant growth opportunity for Medivation and is a critical corporate objective for our company.

We and Astellas have both approved a 2013 collaboration budget that includes funding for registration development of enzalutamide upstream of our PREVAIL population, and we expect to initiate a Phase III trial in patients with non-metastatic, also referred to as M0, castration resistant prostate cancer this year. As is our standard practice, we plan to provide the details on patient population, endpoints and other pertinent study design features once we have randomized our first patient in the trial. We continue to enroll patients in our 2 clinical trials that are comparing the effect of enzalutamide head-to-head against bicalutamide, the most commonly used anti-androgen. The STRIVE trial is enrolling approximately 400 men with either metastatic or non-metastatic disease, primarily in the U.S., and the TERRAIN trial is enrolling approximately 370 men with metastatic disease, primarily in Europe.

On February 14, at ASCO GU, we presented data from our Phase II open-label study evaluating enzalutamide in 67 hormone-naïve patients. The primary endpoint of the study was PSA response, defined as a reduction of PSA levels of at least 80% after 25 weeks of treatment. The Phase II data presented at ASCO GU showed that use of enzalutamide resulted in a PSA response in 93% of patients. And in these patients, the median PSA reduction was 99.6%. Common adverse events seen in the study were mostly Grade 1 and 2 and included gynecomastia, fatigue, nipple pain and hot flush. We are extremely pleased with this very high PSA response rate in this upstream patient population.

In addition to the Phase II hormone-naïve data, we also presented a post-hoc analysis of the Phase III AFFIRM trial evaluating the survival impact of baseline corticosteroid use in men. The abstract was also selected for an oral session at GU ASCO and was presented by Dr. Howard Scher, the Chief of the Genitourinary Oncology Service at Memorial-Sloan Kettering Cancer Center and co-principal investigator of the AFFIRM trial. Dr. Scher showed an association between prednisone and negative patient outcomes in AFFIRM. While these data are preliminary, we find it extremely intriguing.

We are also continuing to enroll patients in our Phase I study evaluating the safety and tolerability of enzalutamide in breast cancer. The study includes a dose escalation stage, followed by an expansion, where women with androgen receptor-positive breast cancer will be enrolled. If the safety data are acceptable, our next step would be to advance into Phase II development.

To assist us now as we move into next phase of our growth, we've expanded our board to included 3 new members: Kate Falberg, Dawn Graham and Wendy Yarno. Kate is the current CFO of Jazz Pharmaceuticals and the former CFO at Amgen. Dawn retired from Merck as its President of Europe and Canada, and Wendy retired from Merck as its Chief Marketing Officer, and previously served as Corporate Head of Human Resources. Our new board members bring deep pharmaceutical industry experience do Medivation, including expertise in finance, U.S. and x U.S. commercialization and human resources management, all of which will be a critical contributions to our team as we seek to grow Medivation to the next level.

Over the remainder of 2013, we'll be focused primarily on continuing the commercial expansion of XTANDI in men with metastatic CRPC, who have previously failed docetaxel, and advancing enzalutamide development to earlier prostate cancer disease indications and into new areas such as breast cancer, where medical need remains high.

We're also looking to replicate our track record with XTANDI by identifying other product candidates through both our internal research efforts and licensing opportunities. Stay tuned for further updates on that. We thank you, all, for your support and look forward to updating you further on our progress.

With that, I'll now turn the call over to the conference coordinator to open the call up for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Lee Kalowski of Crédit Suisse.

Lee Kalowski - Crédit Suisse AG, Research Division

I guess on the upstream indication. So you said you're moving forward with M0. I guess, can you say the rationale for going with M0 as opposed to hormone-naïve for Phase III? And you said that you expect to be in the -- you expect to dose the first patient later this year. What logistically needs to happen between now and then?

David T. Hung

Lynn?

Lynn Seely

Sure. So we have announced that we're going to be getting a M0 CRPC study. And I don't think that the right term is to say, in lieu of a hormone-naïve study. I think that this is a step as we move further upstream. But we are committed to developing enzalutamide across a broad spectrum of the disease and the next step for us is in the non-metastatic CRPC space. But that does not mean that's going to be the last step. We do intend to dose this year. As you know, it's a -- a Phase III trial is large, and there are a lot of logistics to get the study up and going from an operational standpoint. We're making great progress on that. And Medivation will be operationalizing this study, so we're very confident that we'll be getting it up in a timely fashion.

Lee Kalowski - Crédit Suisse AG, Research Division

Okay, appreciate that. And I guess on a slightly different note. You had mentioned that there might have been some impact in Q1 as is typical of all orals from the "donut hole." I guess as we think about the next couple of quarters, qualitatively if not quantitatively, how should we think about, as we move from Q1 to Q2, the "donut hole," treatment duration and uptake in the pre-chemo setting?

C. Patrick MacHado

Lee, this is Pat. With respect to the "donut hole," that's a classic headwind in Q1 for makers of high-priced drugs that are targeted largely at Medicare beneficiaries, which -- a category which XTANDI obviously falls into. So we would expect qualitatively the headwinds in Q1 to be the most strong of all 4 quarters.

Lee Kalowski - Crédit Suisse AG, Research Division

And as far as the other 2 factors, pre-chemo and treatment duration?

C. Patrick MacHado

So I think with respect to both of those, we like to defer public comment until we've amassed an adequate amount of data to be able to make reliable statements. I think with respect to treatment duration, we just haven't been on the market long enough for those data to have matured. And with respect to pre- and post-chemo, I mean, we can certainly tell you anecdotally, we're hearing of utilization of this drug in a pre-chemo setting as we expected given its profile and given what we've seen with ZYTIGA. But what you're talking about here is patient level data and those data are also pretty difficult to collect, and we really want to wait and see until we get more of those data and have established clear trends before we would start to speak publicly about particular numbers.

Operator

Our next question comes from the line of Yaron Werber of Citi.

Yaron Werber - Citigroup Inc, Research Division

So just for Pat, maybe for you and for David also. Just help us understand, when you're coming down to the "donut hole" in Q1, does it actually hit the top line. Are you taking the gross-to-net in the top line? And how do we think about that $4.4 million in sort of reverse from the discount, is that related to the "donut hole"? And then I have a question. I'm trying to get a sense on growth quarter-over-quarter.

C. Patrick MacHado

Yes. So I think you're on to really 2 separate issues. So the gross-to-net is calculated based on a lot of factual assumptions regarding things like a channel through which product is flowing, payer mix of patients who are getting our drug. So at the beginning, we obviously had no data. Astellas had no data and had to make assumptions. It turns out the assumptions they made were a little bit overly conservative, which is the reason for the gross-to-net adjustment in Q1. So that really is a separate and distinct issue from the "donut hole." I think, with respect to the impact of the "donut hole," it impacts patients' ability to get the medicine just by virtue of their inability to cover the 20% copayment that's required under Medicare Part D.

Yaron Werber - Citigroup Inc, Research Division

No. Right. But in others words, what I'm trying to understand is if the $75 million in the top line was net of discount, it should give more discounts in Q1, which presumably would relate to the "donut hole" relative to Q4. And I'm trying to understand the quarter-over-quarter dynamic in discounting. The effect of Q4 to Q1.

C. Patrick MacHado

Yes. The growth is really attributable to 2 things. One is volume, and the second is the $4.4 million gross-to-net adjustment, so no discounting.

Yaron Werber - Citigroup Inc, Research Division

All right. And second question, just to understand. The 19,000, -- and I'm sorry if I missed this. The 19,000 prescriptions you've mentioned, is that prescriptions since launch? Is that the prescriptions in the quarter?

Cheryl L. Cohen

This is Cheryl. That's since launch. That's since launch.

Yaron Werber - Citigroup Inc, Research Division

Okay. So that gets us to what, about 10,000, 10,000 to 11,000 prescriptions in Q1?

Cheryl L. Cohen

Yes, we didn't give the specifics for Q1, how many prescriptions. So launch-to-date, it's 19,000 have been written by more than 28 individuals -- 2,800 individual physicians and 4,000 institutional accounts.

C. Patrick MacHado

400.

Cheryl L. Cohen

400. Sorry.

Yaron Werber - Citigroup Inc, Research Division

And then can you give us a sense, what percentage of prescriptions are in urologists now?

Cheryl L. Cohen

Yes, we're not going to give that level of data about the percentages. The good news is, is that we're seeing exactly what we anticipated with our post-chemo label. That a majority of the prescriptions are being written by the oncologists. But the positive side is, on our market research, the urologists actually see the benefit in our product profile.

Operator

Our next question comes from the line of Kim Lee of Janney Capital.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Just 2 questions here. Can you detail to us what percentage of the scripts you've seen so far, the 19,000 scripts, are in the post-chemo setting? And then I have another question after that.

Cheryl L. Cohen

Sure. This is Cheryl. We actually are not going to give the percentage of post versus pre because it's too early in launch to tell. But I can tell you that it's across both spectrums.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Sorry, what was that last part?

Cheryl L. Cohen

I can tell you that it's across both indications. I mean, across both, pre and post as well.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Okay. And the majority being in which setting? I assume post-chemo?

David T. Hung

Kim, this is David. Yes, the vast majority is in post-chemo as you would expect.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Yes, okay. And what should we expect out of ASCO?

David T. Hung

Lynn?

Lynn Seely

Sure. We have 3 abstracts that are going to be presented at ASCO. We have more data from the oral, the hormone-naïve monotherapy study that Matt Smith will be presenting. We have some data on men with visceral metastases from the AFFIRM trial. And then we have a presentation on a docetaxel enzalutamide combination study.

Kimberly Lee - Janney Montgomery Scott LLC, Research Division

Okay. And also, can you give us an update on Japan, where you guys stand there in post-chemo?

Lynn Seely

Sure, as you know, Astellas is leading our regulatory interaction for Japan, and they've given guidance that they'll be filing in 2013 or 2014. Needless to say, with Astellas leading us, we're highly committed to getting that Japanese filing done as soon as possible.

Operator

Our next question comes from the line of Geoff Meacham of JPMorgan.

Michael E. Ulz - JP Morgan Chase & Co, Research Division

This is actually Mike in for Geoff. I just wonder if you guys can provide an update on enrollment in the STRIVE and TERRAIN studies and maybe give us a sense of when we might expect data from both those studies?

David T. Hung

Lynn?

Lynn Seely

Sure. So for those who don't know the STRIVE and TERRAIN studies, they're 2 trials that Medivation and Astellas have ongoing, evaluating enzalutamide head-to-head with bicalutamide. The TERRAIN trial has been operationalized by Astellas, and it's enrolling metastatic castration-resistant prostate cancer patients. And the STRIVE trial, which has been operationalized by Medivation primarily in the U.S. is enrolling patients with both metastatic and non-metastatic castration-resistant prostate cancer. And the endpoints of both trials are radio -- are progression-free survival. We haven't given guidance at this point on when data from those trials will be available, so you'll just have to stay tuned, and we'll look forward to giving updates in the future.

Operator

Our next question comes from the line of Navdeep Singh of Goldman Sachs.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

I have a couple of questions on PREVAIL. First question is, can you please discuss how you protected PREVAIL from a crossover effect from ZYTIGA? Did you set it up -- did you set up any sites in countries where ZYTIGA is not available? If so, what percentage of the patients enrolled -- what percentage of patients are enrolled from such sites?

David T. Hung

Lynn?

Lynn Seely

Sure. Needless to say, we were acutely aware of the threat of ZYTIGA when we set up this clinical trial. And so yes, we very strategically placed the majority of our clinical sites outside of the U.S. And so the majority of the patients will be enrolled outside of the U.S., and we made a specific effort to move to sites where ZYTIGA would be available and marketed later rather than earlier.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Okay, that's helpful. And then can you just remind us why you're confident that PREVAIL will show a greater than 5-month survival benefit in favor of XTANDI?

David T. Hung

So first of all, Navdeep, this is David. We haven't really speculated on what the survival benefit will be. We think we designed PREVAIL very well. We think that we conducted that trial very well. To further expand on Lynn's point, I might remind you that in the AFFIRM trial, we had 60% crossover in the AFFIRM trial and in spite of that -- 60% of the crossover with all AEs [ph] in the AFFIRM trial, and in spite of that, we still showed a very robust survival benefit. The data that we have to suggest that the effects of PREVAIL could conceivably show a larger delta in the survival benefit. It really comes from our Phase I, II data. If you look at our Phase I, II data, the time of progression in our Phase I, II trial for post-chemo patients was 203 days. We didn't measure overall survival in that phase, so that's the best surrogate that we have. It was 203 days in post-chemo patients and the time to progression in that trial for pre-chemo patients was 4x longer than that, 812 days. So since it's obviously impossible to die until you've progressed, at least those progression data suggest that the effects in PREVAIL could be larger than those in AFFIRM.

Operator

Our next question comes from the line of Matt Roden of UBS.

Matthew Roden - UBS Investment Bank, Research Division

It's on PREVAIL. I'm just wondering if you had talked a little bit about the inclusion criteria vis-à-vis the 302 study. In PREVAIL, patients with visceral organ mets were allowed, whereas in 302 they were specifically excluded. So I was wondering if you could talk about the rationale for inclusion of these patients, whereas 302 didn't. Whether or not you have any sense for what percent of the pre-chemo patients present with visceral organ mets. And just kind of your thoughts on whether or not if this is a sicker subset? Is that related to why you sort of hit the PFS event trigger maybe a little bit sooner than what we were talking about prior?

David T. Hung

Lynn?

Lynn Seely

Sure. That's a loaded question. A lot of statements in there. So in the PREVAIL study, we did allow patients to enroll who had visceral mets. It's not a large percentage of patients in the asymptomatic metastatic CRPC space that are expected to enroll. Obviously, we don't comment on any numbers in an ongoing clinical trial. But it's not expected to be a large subset. As you can see from our post-chemotherapy trial, that we do see benefits from treatment in patients with visceral mets. There'll be more data presented on that at ASCO upcoming, and we don't think -- that we think if anything, that's going to be helpful. And then finally, I don't think that there should be anything read into the radiographic progression-fee survival event. This is a very large trial, which has a lot of power for radiographic progression, and we expect to see a lot of events with 1,700 patients enrolled. The number of patients enrolled in that trial was picked for the overall survival data.

Matthew Roden - UBS Investment Bank, Research Division

Okay. That's great. And then on the breast cancer program here. What do you guys need to see from the Phase I study from either a safety or efficacy perspective to sort of give it a green light and do a ago versus no go? And sort of -- have you given thought to a priori, whether or not the mechanism suggests any particular setting within breast cancer or combination partners for advancement?

David T. Hung

Lynn, you want to start?

Lynn Seely

Sure. Maybe I'll take the last part first, in that we believe there's rationale for multiple aspects of breast cancer from the triple negative breast cancer to the ER-positive breast cancer and HER2-positive. And I think, we anticipate looking at a broad spectrum of women with breast cancer. In the Phase I study. The study is designed to look at safety and pharmacokinetics, and those will be the primary data that will be taken into account when we make a decision to move forward into a Phase II program.

Operator

Our next question is from the line of Geoffrey Porges from Sanford Bernstein.

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Yes, I have one question about pre-chemo and one question about post-chemo. Now for the post-chemo, so the revenue you're generating so far, do you have an understanding as to, are you taking shares away from competitors such as ZYTIGA or are you enlarging the overall pie? And then for the -- I'll ask the pre-chemo one later.

Cheryl L. Cohen

This is Cheryl. I just wanted to -- the first question about the pie. I think with all these, with the competitors that are in this space that we're growing the pie together, which is very nice. And that we continue to generate additional share in our approved indication post-chemo.

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Okay. And then for the pre-chemo, we understand you got an NCCN guidance listing for the pre-chemo setting. And what's the kind of impact you've seen based on that, right? So for example, are you getting medical information inquiries about pre-chemo use? And also from a payer perspective, are you getting any kind of signal regarding what's their posture regarding a pre-chemo use?

Cheryl L. Cohen

That's a really good question. As you mentioned, we do have NCCN Guidelines and what -- the benefit of that is that, that's a very important piece for the payers in order to approve products in the pre-chemo space. And we have had interest and medical requests from physicians that want to use it in that space, and we've had no issues with the payers reimbursing it in that space.

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Okay. Are they forcing any kind of scan to determine metastatic versus non-metastatic or?

Cheryl L. Cohen

All of the payers usually require a prior auth, and that could be one of the questions that is included. And they require that for ZYTIGA and for us.

Operator

Our next question comes from the line Biren Amin of Jefferies.

Biren Amin - Jefferies & Company, Inc., Research Division

I guess I want to start with the M0 Phase III trial. Have you had discussions with the FDA on the trial design and maybe if you could share any commentary that the FDA has provided to you? And also maybe if you could share on this trial, how should we think about the relevant efficacy endpoint?

Lynn Seely

Sure. And we don't comment on our regulatory strategy. So unfortunately, I can't comment on that. And I think what we'll be doing, as is our practice, is when we enroll the first patient into the trial, we'll have a greater discussion about the trial design and the endpoints at that time.

Biren Amin - Jefferies & Company, Inc., Research Division

Okay. And I think maybe a question for David. I think there's a debate in the investment community on PREVAIL in terms of the number of events that are needed to unblind on interim. So maybe in the context of the 302 data which conducted, I think, the final analysis at about 430 events. How should we think about the number of events that are needed for an interim in PREVAIL?

David T. Hung

We obviously have said that we have a very robustly powered study with 1,717 patients in PREVAIL, which is considerably larger than the 302 study. With that said, we haven't really given any more color on the specifics of our interim analysis. Our position is that we think we're in a very strong position. We feel that it is not necessary for us to take any undue risk. And so our highest priority is to ensure that we will have a positive study. That said, we also want to be sensitive to the fact that the sooner we launch, the better, but we have to balance that. So we designed an interim analysis that we think makes us very comfortable. That we'll be able to achieve our objective. And as I always said, our highest corporate priority is to make sure that our PREVAIL trial is positive. So we think that we've designed a very good interim analysis. It will happen this year. We think that we are well powered, and we think we're very well positioned to take on pre-chemo.

Operator

Our next question comes from the line of Katherine Xu of William Blair.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

I have a couple of sort of general technical questions. For example, if we're looking at the M0 approvals of any setting, it could be hormone-naïve, it could be just, let's say, a larger TERRAIN and STRIVE against Casodex or new adjuvants in various settings in the M0 setting -- the big M0 spectrum. As you are discussing with the FDA, will they eventually issue some kind of industry guidance to all the sponsors? "This is the endpoint that we're going to consider." Or is it going to be just individually negotiated sort of protocol between sponsors and the FDA? How is that shaping up in this case?

David T. Hung

Lynn, you want to start?

Lynn Seely

Sure. It's a great question. And of course, we can't predict what the FDA will or won't do. And so in lieu of any guidance that comes out from the agency, it's an individual negotiation company by company. But they do typically look for precedents, and it would be unusual for them to give companies different guidance. The exception could be in a company that had already overall survival data that they might or might not handle that differently.

David T. Hung

And let me expand a little bit on that Katherine. So obviously, having hit overall survival in post-chemo, we certainly think that's a very positive thing. Were we to hit overall survival in the pre-chemo setting, that would obviously be a very big -- an important differentiator because as you know, there are very, very few agents that have ever been able to demonstrate that with statistical significance. So getting back to the first question about, how we would do our interim analysis, and this is Medivation's one chance to really differentiate themselves from the rest of the field. And so we have designed an interim analysis that we think maximizes our possibility of hitting statistical significance. Were we to hit significance in pre-chemo, then we would be among a very, very small handful of drugs which would have done that. And our opinion is that, no matter what the FDA decides to do on upstream strategies, it can't hurt to have labels that cover OS in both pre- and post-chemo settings, which very few agents will have. So we don't know exactly what the FDA will do upstream. We think that no matter what they do, we're well positioned. And even if they do sanction other endpoints, we'll be all over those endpoints because we're moving upstream also. So I think that -- and we feel that we are in a strong position. We're going to be pretty careful about making sure we don't miss on our opportunity to really differentiate our drug from other drugs. And just stay tuned for what happens upstream depending on what the FDA does and what we announce for upstream trials.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Okay. And a follow-up on PREVAIL. I was just curious. Again, technically, what have you learned from the COU 302 study? What are the major factors from that study that you saw that influenced your determination of the final overall survival number to stop the study at -- what's the analysis.

David T. Hung

I think a couple of things are immediately apparent. Number one, I think that trial was too small. And I think that luckily, we didn't design the trial in that size, our drug trial was almost 700 patients bigger than that, so I think that's a plus. Number two is, I think that their interim analysis were too early. You saw that at the second interim analysis, 302 came close, but missed the stopping rule they needed to hit statistical significance. And so we've obviously factored that into our trial as well. So just those 2 points are pretty significant. And there are a number of other things that we've done to set up our trial that we haven't really disclosed our statistical analysis plan in great detail, but we believe that the way we've constructed our interim, we're in a pretty good position.

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

So why do you say it's too small? I mean, if you have 1,000 patients, 800 events for, let's say, final analysis. If they had done the final analysis at 800 events, they would have hit it don't you think? Or you're looking at something else?

David T. Hung

It's a combination of both, Katherine. So obviously, the larger your trial, the greater your statistical power. And the greater your statistical power, the greater your ability to detect smaller differences with greater statistical significance. So no matter how you look at it, if you can do -- if you have a choice of doing either a larger study or a smaller study, except for cost and time considerations, you always get more power with a larger trial. So we view that as a positive for us. We think that, that having more power will allow us a lot more flexibility on what we can or can't do with our statistical analysis plan.

Operator

Our next question comes from the line of John Newman of JMP Securities.

John L. Newman - JMP Securities LLC, Research Division

I guess a question for maybe Lynn and David combined. Two questions actually. Lynn, can you comment on the design of the 302 trial in terms of the fact that it actually included 3 interim analyses? And what that means in terms of the P values that needed to be hit versus your study which only includes 1 interim analysis? And also the second question, does your study allow you to take an interim look at a later period in time without suffering a statistical penalty due to the alpha function that you're using to allocate that value?

Lynn Seely

Sure. There are some advantages to being second and having an opportunity to see what was done with ZYTIGA in that 302 study. It can be an advantage to us. I think certainly, as David alluded to earlier, they took interim looks very early in the program when their data weren't quite mature. And yes, each time you do an interim analysis, there is a statistical penalty which has to be paid. And it's a greater penalty depending upon when you do the analysis, at what percentage of the total number of events. The earlier you look, the more that can be. So I think that very honestly, they looked often and they looked early, and I think that ended up not being a great thing for them. And in our case, we have the advantage of seeing what they did, what their data looked like. And it allows us to make -- we have a lot stronger data upon which to make our plan. And so it helps us feel more confident about what we're doing, and that we've been able to place our interim at a place where we ought to be able to hit statistical significance when we look the first time.

Operator

Our next question is from the line of Howard Liang of Leerink Swann.

Howard Liang - Leerink Swann LLC, Research Division

I know that you are interested in getting more data before providing more details, but can you speak broadly on whether a majority of the XTANDI patients are ZYTIGA-naïve or post ZYTIGA?

Cheryl L. Cohen

Hi, Howard, this is Cheryl. We're seeing across both spectrums.

Howard Liang - Leerink Swann LLC, Research Division

Okay. On the -- just on -- maybe you can provide some color on the headwinds that you saw in the first quarter. For example, did the foundations ran out of money during the quarter to fund the co-pays, and do we know that whether this will not be an issue in the second quarter and forward?

Cheryl L. Cohen

Thank you for that question. We absolutely are going to continue to support the foundations and also our co-pay programs and all of access program for the rest of the year. The "donut hole" isn't just for the first quarter. Any Medicare Part D participant that actually goes on our product would have to go through the "donut hole." So we'll continue to support that, it's importance for access.

Howard Liang - Leerink Swann LLC, Research Division

Okay. The last question on PREVAIL. Would both the interim and the final, the projected final if there's one, would both of these be within 2013?

Lynn Seely

No. The interim, we've stated will occur in 2013.

Operator

Our next question comes from the line of Ying Huang from Barclays.

Ying Huang - Barclays Capital, Research Division

First, can you talk a little bit about the discontinuation trend you have seen in the field? And why typically is that beyond progression? And then secondly on the M0 trial you plan to run, is it going to be one global trial? And between you and Astellas, who is going to take the lead running the trial? And then lastly, can you talk about the average co-pay or out-of-pocket cost for a patient on therapy for XTANDI today?

Cheryl L. Cohen

This is Cheryl. I'll take the discontinuation. It's too early to tell the discontinuation rate across these therapies so stay tuned on that, we need more data to disclose anything in that area. And then regarding the average co-pay. Both of these drugs, ZYTIGA and XTANDI fall into the same category and are looked the same from a payer perspective. So the co-pays would be similar. It's just that each patient has different insurance benefits, so it's difficult to give an average because it depends on the patient's benefits and the insurance companies.

Lynn Seely

And with respect to the M0 trial, there will be a single global trial that will be operationalized by Medivation. Obviously, Astellas is extremely supportive and will be helping us support the trial in Europe.

Operator

Our next question comes from the line of David Nierengarten from Wedbush Securities.

David M. Nierengarten - Wedbush Securities Inc., Research Division

Most of my questions have been answered. But maybe you could give us -- I'll try once again on a little color on market share questions. So J&J have pointed to a 28% market share for ZYTIGA, but they really didn't give any commentary on what they were using as a basis. I mean, what kind of market share -- by my calculations, that means you guys are getting -- are proceeding to get about the same market share for new prescriptions. I mean, is that approximately correct? Or could you give any color on that?

C. Patrick MacHado

This is Pat. Market share is not a metric that we're going to be talking about for exactly the reason that you've articulated, which is, there really is no standardizable way to define the denominator. So I think to attempt to quantify that becomes a bit of a fruitless exercise. I think coming back to the earlier question and the commentary with respect to growth of our business, I think Cheryl's answered that, we're seeing both expansion of the overall market due to the fact that patients are living longer because so many life-prolonging treatments have been introduced in the post-chemo space over the past few years. And we also would expect that we are taking share away from competing agents, Jevtana and ZYTIGA being probably #1 and #2 on that list.

In terms of putting a specific -- putting a specific number on it is something that you should probably not expect to hear from us.

David M. Nierengarten - Wedbush Securities Inc., Research Division

Yes, I was just going to ask you that actually since Jevtana missed estimates, that they were seeing a continued decline in chemo and that was where perhaps you're making some of your biggest inroads but I guess you kind of answered that there. If that's fair.

C. Patrick MacHado

Yes. I mean, I think if you think of it from a patient perspective, I mean, the chemo agents are half as effective and way more toxic, so it's hard to imagine why a patient would prefer chemo over another oral hormonal whether it's ZYTIGA second after us or the other way around.

Operator

Our final question comes from the line of Yi Chen of Aegis Capital.

Yi Chen - Aegis Capital Corporation, Research Division

Can you provide more color on the time frame of when can we expect to see the results from Phase I study of breast cancer?

David T. Hung

Lynn?

Lynn Seely

Sure. So that study is ongoing, and we haven't given any guidance at this point about when we'll be providing data.

Operator

Thank you. And ladies and gentlemen that concludes our Q&A session, as well as the conference for today. Thank you for your participation. You may all disconnect. Have a great rest of the day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Medivation Management Discusses Q1 2013 Results - Earnings Call Transcript
This Transcript
All Transcripts