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Medivation, Inc. (NASDAQ:MDVN)

Q2 2010 Earnings Call Transcript

August 09, 2010 04:30 am

Executives

Joey Fleury

David Hung - President and CEO, Director

Pat Machado - CBO, CFO

Lynn Seely - CMO

Analysts

Kim Lee - Global Hunter Securities

Andrew Vaino - Roth Capital Partners

Ram Selvaraju - Noble Financial

Operator

Good day everyone and welcome to Medivation, Second Quarter 2010 Financial Results Conference Call. This call is being recorded, at the end of the company’s prepared remarks, we’ll open the call for questions and we’ll provide specific instructions at that point.

I would now like to turn the call over to Joey Fleury.

Joey Fleury

Thank you and welcome to Medivation’s, second quarter 2010 financial results conference call. 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 Rohan Palekar, Chief Commercial Officer. We issued a press release earlier today, a copy of which can be found at www.medivation.com in the news section.

Before we begin I would like to remind you the various remarks that we make on this call contains forward looking statements, including statements regarding the timing of clinical trail initiation, enrollment and data product candidate potential and continued development, regulatory matters, our collaboration, the sufficiency of our cash resources and statements above our future opportunities and success which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in the 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 press related progress, timing and result of Medivation’s, clinical child, difficulties as a way as in obtaining regulatory approval enrolment of patients in Medivation’s clinical trials, partnering of Medivation’s product candidate, manufacturing of Medivation’s product candidate.

Competition with Medivation’s product candidate should they receive marketing approval. The adequacy of Medivation’s financial resources unanticipated expenditures or liabilities, intellectual property matter and other risks and uncertainties detailed in Medivation’s filings with the Security and Exchange Commission including its quarterly report on Form 10-Q for the quarter ended June 30th 2010, filed today with the SEC.

You are cautioned not to place undue reliance on the forward-looking statements which speak only as of the date of this call. Medivation disclaims any obligation or undertaking to update or revise any forward looking statements contained in this conference call.

With that, I will now turn the call over to Dr. David Hung, President and CEO of Medivation.

David Hung

Thank you all for joining us today. I’ll begin the call with an update on our programs including recent developments. I will then review second quarter financial results and provide updated financial guidance. And I’ll conclude with an outline of our near term company milestone. Just to begin with our Dimebon program. As you know we together with our Partner Pfizer remain committed determining for the Dimebon offers clinical benefit to Alzheimer and Huntington disease patients.

We recently held a Dimebon steering committee meeting with our key investigators and [stock leaders] to discuss the connection data and our ongoing Phase 3 development program. And they too remain supportive and committed to conceiving our trials and securing additional data to determine as Dimebon can offer hope to this underserved patient population.

In order to achieve this goal, we are focusing on CONCERT our 12-month trial in mild-to-moderate Alzheimer’s patients. We are taking Aricept and HORIZON our six month trial in Huntington disease patients. We are encouraged by a continued progress in both trials. In Huntington disease, we are pleased to announce that we had completed enrollment in the HORIZON study of six months randomized, double-blind, placebo-controlled Phase 3 trails designed to evaluate the potential benefits of Dimebon on thinking, memory and global function.

We roll that portal of 403 patients in the HORIZON trial versus our target enrolment of 350 patients. We expect to report top line results from the HORIZON trial in the first half of 2011.

If the data are positive, we will then request a pre-NDA meeting with the FDA. We believe our clinical development program in Huntington disease is an attractive opportunity for Medivation for several reasons. First, Huntington disease is a fatal genetic disease with a substantial unmet medical need. Currently, no medication are approved by the FDA to treat the impairments and cognition in global function that are associated with the condition.

Second, the patient population being studied in HORIZON is more homogeneous at Alzheimer’s patients, because Huntington disease is a genetic disease with a single genetic cause.

And third, we believe that the Huntington disease market represents a commercially attractive opportunity to Medivation even in the scenario where Dimebon is not approved to treat Alzheimer’s disease. The HD indication offers a shorter regulatory approval period, [proper cash] of our premium pricing, reduced commercialization cost and a potentially longer commercial exclusivity period based on orphan drug exclusivity as well as intellectual property.

In Alzheimer’s disease, we presented the data from the Phase 3 CONNECTION study and the separate Phase 3 safety and tolerability study to the FDA as well as at the international conference on Alzheimer’s disease. After reviewing these data, the FDA confirmed that our prior trial published in the Lancet plus our ongoing Phase 3 CONCERT trial will support approval of Dimebon to treat mild-to-moderate Alzheimer’s disease provided that the CONCERT results are robustly positive.

As a reminder, CONCERT is 12-month trial providing twice as much time as CONNECTION to observe potential benefit in Dimebon-treated patients and potential decline in placebo patients. In addition, the CONCERT trial is inpatient already on backlog Aricept who we believe are more typical of the general Alzheimer’s population. We are pleased with the FDA feedback and remain on track to complete enrollment in the CONCERT trial this year.

Now let me turn to MDV3100, our triple-acting, oral androgen receptor antagonist. The second quarter was a busy one for MDV3100, building awareness of MDV3100 to presentations of our Phase 1-3 data with an [onCore] oral presentation at the American Urological Association annual meeting in San Francisco and the poster presentation at the America Society for Oncology annual meeting in Chicago.

In addition, our firm, our randomized, placebo-controlled Phase 3 trial [amended] with castration-resistant prostate cancer, who have failed prior chemotherapy is progressing on track. And we expect to complete patient accrual this year. We and our partner Astellas also remain on track to initiate three new trials in earlier stage prostate cancer this year. A Phase 3 trial known as castration-resistant prostate cancer who are chemotherapy-naïve which will known as PREVAIL, a Phase 2 head-to-head trial compelling MDV3100 with bicalutamide or Casodex and a Phase 2 trial in hormone-naïve patients. As is the case with our ongoing AFFIRM trial, two thirds of the development cost for all three of these new trials will be funded by our partner Astellas.

In addition, the initiation of our PREVAIL trial with trigger a milestone payment to Medivation under our collaboration agreement with Astellas.

In summary, with enrollment completed in our HORIZON trial, we expect the completion of enrollment in two additional Phase 3 trials CONCERT and AFFIRM, and initiation of three new MDV3100 trials this year. The expected announcement of data from our HORIZON trial in the first half of 2011.

Our strategic partnerships with world class collaborative for both Dimebon and MDV3100 and a strong financial position. We believe, we are well positioned as a company for a long term success.

I will now turn the call over to Pat, who will review the financial results for the second quarter, and our updated 2010 financial guidance.

Pat Machado

Thanks, David and good afternoon, everyone. Revenues for the second quarter of 2010 with $15.8 million consisting of partial recognition of a non-refundable upfront payment of $225 million received from Pfizer in the first quarter of 2008, and $110 million received from Astellas in the fourth quarter of 2009.

Both upfront payments will recorded a deferred revenue upon received and are being recognized on a straight line basis over the estimated performance period of the company’s obligation under the applicable collaboration agreement, which the company presently expects to complete in the second quarter of 2013 for the Pfizer collaboration, and in the fourth quarter of 2014 for the Astellas collaboration.

Total operating expenses for the second quarter were $23.2 million, compared with total operating expenses of $24.2 million for the same period in 2009. These figures included non-cash stock base compensation expense of $3.2 million in the quarter ended June 30, 2010, compared with $2.5 million for the same period in 2009.

For the six months ended June 30, 2010, total operating expenses were $56.7 million, compared with total operating expenses of $46.2 million for the same period in 2009. These figures included non-cash stock based compensation expense of $6.7 million in the six months ended June 30, 2010, compared with $5.1 million for the same period in 2009.

Beginning in October 2008, Pfizer became responsible for 60% of all Dimebon related development and commercialization cost in the US, and 100% of such cost outside the US.

Beginning on October 2009, Astellas became responsible for 50% of all MDV3100 related development and commercialization cost in the US, other than cost for clinical trial supporting development in both the US and either Europe or Japan, including the ongoing Phase 3 AFFIRM trial the up coming Phase 3 PREVAIL trial, and the two additional trials in earlier stage prostrate cancer, we expect to initiate in 2010, which cost [of one] two third by Astellas and one third by Medivation.

Astellas is also responsible for 100% of all such cost outside the United States. The parties may quarterly [true up] payments as necessary to ensure that each bears a pack total share of cost.

For the second quarter of 2010, the net true up payment payable to Medivation were $6 million and $7 million under the Pfizer and Astellas collaboration respectively.

Medivation presents the cost sharing true-up payments in the applicable expense line on a consolidated statement of operations. Medivation reports the net loss for the quarter ended June 30, 2010 has $7.2 million or $0.21 per share compared with a net loss of $8.9 million or $0.29 per share for the same period in 2009. For the six months ended June 30, 2010 the net loss was $24.7 million or $0.73 per share compared with a net loss of $14.5 million or $0.47 per share for the same period in 2009. Cash, cash equivalent and short-term investment at June 30, 2010 totaled $233.3 million compared with $278.2 million at December 31, 2009 and $255.5 million at March 31, 2010.

Turning to financial guidance, we now expect full year 2010 operating expenses net of cost sharing payments from Pfizer and Astellas to be in the range of $95 to $105 million down from our prior guidance of $105 million to $115 million, as our Dimebon and MDV3100 development programs per graph. It is important to remember that our cash position remain strong. We continue to believe that based on current assumption, existing cash is adequate to find our currently planned operations beyond the end of 2012 by which time we expect to report a top line data from three Phase 3 trails.

Our twelve month CONCERT trail in mild-to-moderate Alzheimer’s disease. Our six months HORIZON trail in Huntington disease and our AFFIRM trail in captivation-resistant prostrate cancer. We therefore believe that our current cash run rate gives us the opportunity to generate an attractive return for our investors without any near term financing over hand.

With that I will turn the call back over to David

David Hung

Thanks, Pat. I would like to reiterate that our five near-term priorities remain due; number one, complete patient accrual in the 12-month CONCERT trial of Dimebon in combination with Aricept this year. Number two, complete patient accrual in AFFIRM trial of MDV3100 and patients with castration-resistant prostate cancer this year. Number three, initiate three new MDV3100 trails in earlier stage prostate cancer this year including our Phase 3 PREVAIL trial. Number four, report results from the six-month HORIZON trial of Dimebon and Huntington disease patients in the first half of 2011. And number five, manage our portfolio, operations and cash to maximize our return on investment and probably a success as a company.

We will now open the call for questions. Operator please go for questions.

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from Kim Lee from Global Hunter Securities. And your line is now open.

Kim Lee - Global Hunter Securities

Good afternoon. Can you give me some update on the MDV3100 study and if you could give us any clarity on how normal it’s going and if you have seen any offshore in some patients (Inaudible) if you have seen any other features? Thanks.

Lynn Seely

Hi Kim, this is Lynn. So, we could just barely hear you but it’s kind of like you are asking for an update on the MDV3100 AFFIRM study which is the study in post-chemotherapy patients. That study is on track to completing normal as promised by the end of the year. And the study is followed very quickly by the (Inaudible) and data monitoring committee and as you know the study is continuing as originally designed. I think also we have announced that we are getting up and going second Phase 3 trial, the PREVAIL trial which we’ll be discussing in more detail after we enroll the first patient. And as far as the strong study goes if there were to be any adverse effect now of would that be reported the IRB.

So, certainly all serious adverse events and as in any trial reported within 24 hours of the site becoming aware of that and we also quote adverse events very regularly to feed into our regular data monitoring review.

Kim Lee - Global Hunter Securities

And has there any other cases of seizures so far?

Lynn Seely

I think other than the comments I have already made, which I think are quite telling that’s the level of detail, I can get into.

Operator

Thank you. Our next question comes from Andrew Vaino from Roth Capital Partners. Your line is now open.

Andrew Vaino - Roth Capital Partners

Just a quick question on the CONCERT Study, is there any possibilities there of an interim data look?

Lynn Seely

The CONCERT study as you know is a 12 month study which is on track to be completing enrollment at the end of this year. And at this point of time there are no plans for interim analysis.

Operator

Thank you our next question comes from Ram Selvaraju from Noble Financial and your line is now open.

Ram Selvaraju - Noble Financial

First of all with the HORIZON study should you get positive results from the trials in the first half of next year? Are you considering potentially filing for approval on Dimebon and Huntington’s disease before you see any data from the CONCERT trial?

David Hung

Yes.

Ram Selvaraju - Noble Financial

With respect to the CONCERT study, you made the comments that the FDA would regard this as an acceptable pivotal trial to complete a registration quality filing in mild-to-moderate Alzheimer’s if the results are robust. Could you give us some more clarity on what that constitutes, if it’s just meeting the primary endpoint or if there is some requirement on top of that?

Lynn Seely

No. The requirement is robust and that will be in the eyes of the regulators, so it will be a reviewer (Inaudible) there were no specific requirement.

Ram Selvaraju - Noble Financial

And then with the AFFIRM study, following the closure of enrollment, can you give us any color at all on when we might expect to see top-line data from this trial or when you expect to be able to report top-line data?

Lynn Seely

No, we haven’t given any guidance on that at this point.

Ram Selvaraju - Noble Financial

Then the last question, with respect to the three new proposed trials. Could you help us think about those in terms of what their size would be, and how that would compared to the AFFIRM study? Like in the PREVAIL study, expected to be of similar size or larger than the AFFIRM study and what about the other two Phase 2 trials? And then finally, what is the nature of the cost sharing for those studies with your partners Astellas under the agreement?

Lynn Seely

Obviously the Phase 3 PREVAIL trial will be a larger trial, more consistent with what you are seeing for AFFIRM. The Phase 2 studies are going to be smaller studies and we will be discussing more about the exact details of the trials as we move the first patient?

Patrick Machado

All of those will be cost shared two-thirds by Astellas one-third by us.

Operator

(Operator Instructions) Our next question comes from Geoffrey Meacham of JPMorgan. Your line is open.

Unidentified Analyst

This is Krishna behalf of Geoff. I was wondering if you can please elaborate on the HORIZON trial, the regulatory plan going ahead, as there is no precedence to compare in the past, I’m wondering if you can give us some color as to what the feedback was from the NDA in terms of regulatory times and endpoint?

Lynn Seely

On the HORIZON trial, there are Co-primary endpoints, the Mini-Mental State Examination and CIBIC-plus, we intent to file with this study, if the study meets at Co-primary endpoints. The regulatory timelines as you know are up to the regulator there is a producer date for a (inaudible) indication of six month.

Operator

I’m showing a follow-up question from Andrew Vaino from Roth Capital Partners. Your line is open.

Andrew Vaino - Roth Capital Partners

Just one quick follow-up on the, you mentioned that the dual primary endpoint, are you going to leave the hit 0.025 about or 0.05?

Lynn Seely

0.05.

Operator

And this time we will conclude the Q&A portion of the call. Dr. Hung do you have any closing remarks?

David Hung

Thank you, all for joining the call today. We prefer to updating you on our future calls. Thank you.

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