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

Medivation (NASDAQ:MDVN)

Q2 2014 Earnings Call

August 07, 2014 4:30 pm ET

Executives

Anne Bowdidge - Senior Director of Investor Relations

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

Rick Bierly - Chief Financial Officer and Principal Accounting Officer

Lynn Seely - Chief Medical Officer and Senior Vice President

Analysts

Matthew Roden - UBS Investment Bank, Research Division

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

Lee Kalowski - Crédit Suisse AG, Research Division

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

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Christopher Mortko

Carter L. Gould - JP Morgan Chase & Co, Research Division

Richard Goss - Leerink Swann LLC, Research Division

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

John L. Newman - Canaccord Genuity, Research Division

Biren Amin - Jefferies LLC, Research Division

Operator

Good afternoon, everyone, and welcome to Medivation's Second Quarter 2014 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; Rick Bierly, Chief Financial Officer; and Dr. Lynn Seely, Chief Medical Officer. Dawn Svoronos, our interim Chief Commercial Officer, will not be joining us today.

We issued a press release today that you can find on our website at www.medivation.com. Before we begin, I would 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 an XTANDI commercialization; the potential XTANDI regulatory approvals in other markets and for other indications, and other potential future clinical trial initiation events or results; the therapeutic potential and safety profiles of our product candidates; our future opportunities and milestones; and financial guidance for 2014.

In addition to our prepared remarks, we may make forward-looking statements in response to questions, including, for example, statements regarding our current and potential future collaborations, potential in-licensing opportunities and our future financial position and results.

Any statements made in this call that are not statements of historical facts 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 Medivation's quarterly report on Form 10-Q for the quarter ended June 30, 2014, which we filed today with the SEC.

All forward-looking statements made during this call are based on 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 is the property -- this call is the property of Medivation and any replay of this conference call cannot be made without Medivation's express written permission.

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

David T. Hung

Thanks, Anne. Thank you, all, for joining us today. We appreciate the opportunity to discuss Medivation's financial performance during the quarter, and the excellent operational progress we and our partner, Astellas, have made on multiple significant commercial regulatory and clinical milestones.

This was a tremendous quarter marked by the stronger-than-expected U.S. performance of XTANDI for patients with metastatic castration-resistant prostate cancer who have previously received docetaxel. XTANDI continues to lead this market segment as the preferred choice for oncologists in this post-chemo treatment setting. This is a significant achievement, which we believe speaks to the product's differentiated clinical profile. Rick will discuss the financials in more detail in a few minutes.

Looking beyond the U.S., Astellas has made significant progress expanding worldwide access to XTANDI and has generated strong results internationally. XTANDI is now approved in over 40 countries for the treatment of metastatic CRPC patients who have previously received docetaxel. In addition to the excellent commercial performance from XTANDI sales, we also had a number of key milestones that occurred during the quarter that set the stage for the future.

In May, we and our partner, Astellas, reached a major milestone when the FDA accepted our sNDA based on the PREVAIL study for men with metastatic CRPC who have not received chemotherapy. The FDA's acceptance of the filing triggered a $25 million milestone payment to Medivation during the second quarter from Astellas. The application was granted a priority review designation, which is reserved for drugs that treat a serious condition, and if approved, would offer a significant improvement in safety or effectiveness.

The FDA has set the PDUFA date for the completion of its review as September 18, 2014. As we approach our September 18 PDUFA date, we are fully prepared for a potential approval and subsequent launch of XTANDI in this expanded indication, and are excited about the opportunity to enter into this upstream market, which we believe is largely untapped.

Our commercial team, led by our interim Chief Commercial Officer, Dawn Svoronos, is working closely with our Astellas counterpart to ensure proper coordination at launch and excellent execution. Since our last call, we completed the expansion of our field forces by approximately 50%, which includes an exceptional team of sales representatives with proven expertise. In Europe, Astellas has also taken steps to amend the European Marketing Authorization Application for XTANDI for the treatment of adult men with metastatic CRPC who are asymptomatic or mildly symptomatic after failure of androgen deprivation therapy, and in whom chemotherapy is not yet clinically indicated.

The variation was submitted in April, and the European Medicines Agency validated the filing, which resulted in a $15 million milestone payment to Medivation. During the quarter, we also received a $15 million milestone payment related to Astellas' plan to address the PREVAIL population in Japan. These and other milestones resulted in over $85 million in revenue to Medivation thus far in 2014.

Another key event that occurred during the quarter was the June 1 online publication of the results of the Phase III PREVAIL study in The New England Journal of Medicine. The article, which was published in print on July 31, included the full result of the PREVAIL study, along with an updated overall survival analysis with a data cutoff date of January 15, 2014, which included 116 additional deaths that occurred before a crossover from placebo to enzalutamide was completed.

Based on results of the PREVAIL study, we believe that, should XTANDI be approved for the expanded indication in metastatic CRPC, it will have an important place in the treatment continuum.

With that introduction, I'll turn the call over to Rick to discuss our financial results for the second quarter of 2014, and then I'll update you on our clinical and research program. Rick?

Rick Bierly

Thanks, David, and good afternoon, everyone. I'll begin with an overview of XTANDI net sales as reported last week by Astellas, our collaboration partner. U.S. XTANDI net sales at the brand level, as reported by Astellas, were $143.7 million in the second quarter of 2014, 74% higher than the $82.4 million reported in the prior year period.

The second quarter 2014 sales were 15% above net sales in the first quarter, driven by demand growth in the post-chemo segment. For the 6 months year-to-date period ended June 30, U.S. XTANDI net sales were $268.2 million, an increase of 70% over the 2013 period.

Compared with March 31, we believe there is no significant change in trade inventory levels at channel partners at June 30.

During the second quarter, prescriptions had been written for approximately 20,000 bottles, each representing a 30-day supply of drug, and since the launch of XTANDI in September 2012, prescriptions have been written by more than 6,300 individual prescribers in the U.S.

Prescriber and payer response to XTANDI continues to be strong. Our market research shows XTANDI has a high awareness among both oncologists and urologists. In addition, for the second consecutive quarter, our research shows XTANDI continues to be the drug therapy chosen most often by oncologists in the post-chemo setting. XTANDI also continues to enjoy robust and widespread coverage in virtually all U.S. Medicare and commercial payor prescription plans.

Based upon continued post-chemotherapy approvals outside the U.S., and strong initial uptake in Japan as a result of the recent AFFIRM launch, x U.S. XTANDI net sales, as reported by Astellas, were $83.3 million in the second quarter of 2014. On a year-to-date basis, x U.S. XTANDI net sales were $131 million, compared with $3.7 million in the comparable 2013 period.

XTANDI was granted marketing authorization in the European Union in June 2013, and in Japan in March 2014.

Turning now to Medivation's income statement. Total collaboration revenue was $148.1 million in the second quarter of 2014 compared with $70.1 million for the second quarter of 2013. For the 6-month period, collaboration revenue was $235.3 million in 2014, more than double collaboration revenue of $116.3 million in 2013.

As a reminder, Medivation's collaboration revenue consists of 3 components: revenue related to U.S. XTANDI net sales, revenue related to x U.S. XTANDI net sales and revenue from upfront and milestone payments.

In the U.S., we share XTANDI net sales, costs, profits and losses with Astellas. Our collaboration revenue related to U.S. XTANDI net sales in each period is equal to 1/2 of the U.S. XTANDI net sales reported by Astellas. For the second quarter 2014, our collaboration revenue related to U.S. XTANDI net sales was $71.9 million compared with $41.2 million in the year-ago quarter, an increase of 74%.

Outside the U.S., Astellas handles commercial activities and bears all XTANDI costs, retains all XTANDI profits and losses, and pays Medivation tiered royalties ranging from the low teens to low-20s as a percentage of x U.S. net sales. For the second quarter 2014, our royalty revenue related to x U.S. net sales of XTANDI was $10 million. This revenue was just $0.5 million in the year-ago quarter, which included initial launch in several markets. For the second quarter of 2014, Medivation collaboration revenue from upfront and development milestone payments was $66.2 million compared with $28.5 million in the year-ago quarter.

For the 6-month period, such revenue was $85.5 million in 2014, $36.9 million in 2013. Development milestones earned under our collaboration agreement with Astellas in the 2014 second quarter were $62 million, and amortization previously received upfront and development milestone payments was $4.2 million.

Development milestones are related to steps to address the PREVAIL population in the U.S., EU and Japan.

Moving now to operating expenses. Medivation's total operating expenses in the 2014 second quarter were $93.1 million compared with $70.1 million in 2013. These amounts include noncash stock-based compensation expense of $11.2 million in the second quarter 2014 compared with $8.1 million in the prior year period.

Medivation's second quarter 2014 operating expenses increased by 33% versus the year-ago quarter. The increased expenses continue to reflect additional investment in the commercialization of XTANDI, including expansion and training of our U.S. field sales organization, and enzalutamide clinical trial activity. In addition, increased spending also reflects early-stage research expenditure for other programs. On a 6-month year-to-date basis, operating expense was $188.8 million in 2014, about 36% higher than 2013.

Medivation reported net income of $47.9 million, or $0.60 per diluted share, for the second quarter of 2014 compared with a net loss of $4.9 million, or $0.07 per diluted share, for the same period in 2013. On a 6-month year-to-date basis, net income was $34.3 million, or $0.43 per diluted share, compared with a net loss in the earlier period of $32.1 million, or a loss of $0.43 per diluted share.

At June 30, Medivation had cash and cash equivalents of $290 million, an increase of approximately $61 million from year end. The face value of the convertible notes outstanding at June 2014 was approximately $259 million.

I'd now like to turn to guidance for 2014, starting with U.S. XTANDI net sales. We now estimate 2014 U.S. net sales of XTANDI at the brand level to be in a range between $600 million and $640 million, such that our 50% share, reflected as collaboration revenue related to U.S. XTANDI net sales, would approximate $300 million to $320 million.

We are increasing 2014 guidance based on continued stronger than previously anticipated U.S. XTANDI net sales demand seen in the second quarter of 2014 and a correspondingly stronger second half performance than previously projected.

We now anticipate collaboration revenue related to upfront and milestone payments will be approximately $279 million in 2014, an increase of $50 million from our guidance issued in our May 8 first quarter earnings call. This higher amount includes $16.8 million of previously referenced upfront and development milestone amortization, $212 million of previously referenced development milestones, and new in this quarter's guidance, $50 million of sales milestones related to a greater likelihood of achieving $800 million in worldwide XTANDI net sales for 2014.

Regarding development milestone timing, we assume that either European approval of the PREVAIL label, which would trigger a $45 million development milestone from Astellas, or the Japan approval related to the PREVAIL population, also with a $45 million milestone, will occur in late 2014.

The above is our base case, although it is also possible these approvals may both occur in the same year, such as both in late 2014 or both in early 2015.

Based on the above elements, we now anticipate our total collaboration revenue in 2014 will range from $615 million to $640 million.

Turning to operating expense. We are not changing prior guidance for 2014 operating expense for the year, net of cost sharing with Astellas, and we continue to project operating expenses at $400 million to $430 million. As before, this includes an estimated $45 million to $50 million of noncash stock-based compensation expense, and as before, SG&A expense is expected to be just over half of 2014 operating expense.

Our operating expense guidance does not include the impact, if any, of new in-licensing arrangements that we may choose to do from this point forward in 2014. We will continue to pursue appropriate in-licensing opportunities to further our strategic objective of diversifying beyond a single product company, to one with a portfolio of multiple approved products.

Finally, at June 30, the company has established and continues to maintain, a full valuation allowance against its deferred tax assets in the amount of approximately $100 million. As more fully described in the footnotes to our Form 10-Q filed today, there is a reasonable possibility that our improving business outlook may enable a conclusion in the months ahead that a significant portion of the valuation allowance may no longer be required. A release of the valuation allowance would increase certain deferred tax assets, and reduce income tax expense in the period recorded. And the amount would be highly dependent on the timing of the release and the level of profitability attained prior to the release.

If conditions in our assessment result in a determination to release the valuation allowance later in 2014, we estimate the amount could be as high as $50 million. While such a release of the allowance is an accounting adjustment that may materially increase earnings, it would not impact cash flow.

So with that, I'll turn the call back over to David.

David T. Hung

Thanks, Rick. I'd now like to update you on progress in our ongoing clinical trials to further develop enzalutamide in the prostate cancer disease continuum, and also in breast cancer.

Enrollment is continuing in the PROSPER trial, a global Phase III trial we initiated in December that is enrolling a higher-risk subgroup of approximately 1,500 pre-chemotherapy non-metastatic CRPC patients who are progressing despite androgen deprivation therapy and are asymptomatic.

The primary endpoint of the trial is metastasis-free survival. We completed enrollment in our Phase II clinical trials, TERRAIN and STRIVE, which were both designed to compare the effect of enzalutamide head-to-head versus bicalutamide, the most commonly used anti-androgen. TERRAIN enrollment was completed by Astellas in July of last year, and STRIVE enrollment was completed by Medivation in March of this year.

In total, these 2 trials enrolled nearly 800 men with castration-resistant prostate cancer. The TERRAIN trial enrolled patients from Europe and the U.S. with metastatic disease. The STRIVE trial enrolled men with both metastatic and non-metastatic disease in the U.S. The companies continue to follow these patients. We expect TERRAIN to report out towards the back end of 2014 or very early 2015, with STRIVE to follow thereafter.

Last November, we initiated our 500-patient PLATO trial, which is evaluating the potential clinical benefit of continuing enzalutamide treatment in patients with chemotherapy-naïve metastatic CRPC after progression on enzalutamide. This trial is enrolling patients with chemotherapy-naïve metastatic CRPC to be treated with open-label enzalutamide. At the time of progression on enzalutamide, patients will be randomized to either continuation of enzalutamide with the addition of abiraterone acetate plus prednisone versus switching therapy to abiraterone acetate plus prednisone alone.

The primary endpoint of the trial is progression-free survival. In addition to our ongoing studies evaluating enzalutamide in prostate cancer, we also have 3 Phase III trials evaluating enzalutamide in 3 major subsets of breast cancer. The trial that is the furthest along is our Phase II trial we initiated last June evaluating enzalutamide as a single agent for the treatment of advanced androgen receptor-positive triple-negative breast cancer, known as TNBC. TNBC is a type of cancer that is not driven by the 3 most commonly targeted receptors in breast cancer: estrogen, progesterone and HER2. The Phase II open-label, single-arm, multi-center trial has exceeded our original enrollment target of 80 patients, with now more than 100 patient with AR-positive TNBC in sites in the U.S., Canada and Europe. The primary endpoint of the trial is clinical benefit rate, defined as a proportion of patients with a complete response, partial response or stable disease at greater than or equal to 16 weeks. All patients received enzalutamide at a dose of 160 milligrams to be taken orally once a day. We expect to present data from this study later this year.

In December of last year, we initiated enrollment in a randomized, double-blind, Phase II trial evaluating enzalutamide in combination with exemestane versus exemestane alone in approximately 240 women with advanced breast cancer that is either estrogen receptor-positive or progesterone receptor-positive and human epidermal growth factor receptor 2 or HER2 normal. The primary endpoint of this trial is progression-free survival in all patients, and in the subset of patients whose tumor expresses the androgen receptor.

Just recently, we and Astellas initiated startup activities in our third Phase III trial in a new breast cancer indication, with a trial evaluating the safety and efficacy of adding enzalutamide to trastuzumab, otherwise known as Herceptin, in patients with AR-positive, HER2 amplified and ER-negative or PR-negative advanced breast cancer whose disease has previously progressed on trastuzumab. The open-label trial is expected to enroll approximately 80 women. The primary endpoint of the trial is clinical benefit rate, defined as complete response or partial response or stable disease at 24 weeks.

The goal of the study is to determine whether enzalutamide will provide any incremental benefit for women who have progressed on trastuzumab. In addition to our ongoing clinical programs evaluating enzalutamide in prostate and breast cancer, we are also investing in early-stage discovery and preclinical programs, which are primarily focused on cancer and central nervous system diseases, where we believe new therapies can substantially improve the current standard of care.

In April, we showed you a small glimpse of one of our early-stage programs when we announced our license agreement with OncoFusion Therapeutics, a private company that was formed based on technology development at the University of Michigan. The work by OncoFusion cofounders and University of Michigan professors, Arul Chinnaiyan and Shaomeng Wang, was highlighted in the journal Nature in April, showing that a compound designed to inhibit BET bromodomain protein had significant effect on inhibiting prostate cancer growth in the preclinical model. We are currently determining potential development strategies based on the body of data, and we'll keep you posted on the next step.

With that, we thank you for your continued support, and we look forward to updating you further on our progress in 2014.

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] And our first question comes from the line of Matt Roden of UBS.

Matthew Roden - UBS Investment Bank, Research Division

I actually have 2 related questions related to the sort of mid- to long-term outlook view. And on this quarter you're showing us that you're doing a great job of containing costs, letting the numbers drop to the bottom line here. But if I think about the expense trends over time, I know you can't give guidance for next year, but it seems to me that you'll have your urology presence sort of built out, your infrastructure built out. I'm just wondering if you can give us a sense for what might be needed to cause continued growth of OpEx? Or whether or not we should start to see some of that dialing down a bit? The second related question is on the revenue side, I know, again, you can't give guidance for next year, you just increased it for this year. But when you look at the 2015 consensus estimate, it's up over a billion dollars, about 1050. And I'm just wondering if you can comment on your level of comfort with that number, and to what extent the demand trends that you're seeing now, sort of how you're thinking about projecting that into next year?

Rick Bierly

Okay. Matt, this is Rick. Thanks for your questions. So the first question, I think, speaks to where do we see OpEx trending over the next several years. I think you're right in commenting that after we've built out the commercial sales force for the PREVAIL launch that there's not a ton of additional commercial activity in terms of sales force. There might be other commercial tactics that we would undertake in that period. And -- so I see SG&A, given that we're sort of early and our sales level is low, but will be increasing, we expect, we're going to see that -- the sales ratio for SG&A come down over time. With respect to R&D, I think you're aware that we certainly have more to do with XTANDI and plan to be active clinically with XTANDI. And in addition, we've got a number of early-stage programs, which hopefully will progress to the clinic. And so -- however, having said that, I also expect that over time, we'll see OpEx ratios as a percent of sales improve compared to the sort of robust percentages that we see today. And so that's about as much I think is I'm prepared to say on that. Regarding your second question, revenue for 2015, yes, I'm aware of certainly the consensus that's out there for 2015. My view on that is let's take first things first. We'd like to look forward to the PDUFA date and see what happens with the PREVAIL label. And then we'll take a look at that, let's say, in the back half of the year. So again, that's probably all I can say at this moment. But thanks very much for your question.

Operator

Our next question comes from the line of Geoffrey Porges of Bernstein.

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

A couple related to PREVAIL and the market trends. David, could you give us a sense, you've been in the market in the U.S. now for well over a year, of what the average duration you're realizing now is predominantly in the post-chemo setting? And then what do you expect that duration might go to, or should we just used PREVAIL, for example, in the pre-chemo setting? And then secondly, could you comment a little bit about the process for getting reimbursement for the PREVAIL population? Do you think that's pretty much an instantaneous switch at the plan level or are your commercial folks telling you that there's going to be a lag there and it's going to take weeks or months to enable the bulk of the pre-chemo patients to have access to XTANDI?

David T. Hung

And so in regard to your first question, as you know, in the AFFIRM trial, our duration of therapy was at about 8 months. And our duration when we started off with this product 1.5 years, obviously was not 8 months, clearly at that time we launched, as you know the vast majority of our patients, in fact virtually all of our patients, were following ZYTIGA failure. So obviously, they would be a different level of severity of disease than we would've expected in shorter duration of therapy and, indeed, saw that. As we have now progressed toward a first line use in the post-chemotherapy setting and before ZYTIGA, clearly our duration is increasing. And as we now move to the pre-chemo setting upon getting the label, we would anticipate that duration increasing even further. So I would say that duration is -- something that's in flux, but we do expect it to be going in one direction and that is toward the longer side. And with regard to your question about access, we believe that with the PREVAIL data, the fact that we've demonstrated potentially significant survival and PFS benefits with our -- with a profile that we believe is well-differentiated from our competitors, we believe that payers will be very keen to offer a robust access to patients who need the drug.

Operator

Our next question comes from the line of Lee Kalowski of Credit Suisse.

Lee Kalowski - Crédit Suisse AG, Research Division

I wanted to ask about the underlying demand for the quarter. Rick, I believe you said there wasn't any changes in the inventory level. I'm just wondering if the 15% sequential growth is correlated to the underlying demand growth that we saw in the quarter. And if so, if you have any sense for what has changed relative to the single-digit growth that you had been talking about earlier in the year?

Rick Bierly

Okay, Lee. Yes, that's right. I think the stated 15% growth rate is principally driven by demand. There were a couple of other, I'll call them noise factors, going on in the quarter, but when you look at it, given what you point out with the ending inventory and such, there is really nothing else that's responsible for that growth rate. So that's almost entirely demand. And so I guess the next question was, why did we project single-digit growth and end up with 15%? I think this product, frankly, continues to surprise us a little bit on the upside. So we're doing our best to improve our forecasting, Lee.

Lee Kalowski - Crédit Suisse AG, Research Division

Okay. David, do you feel that with the change in the commercial team, there's been any disruption or any major changes as far as the planning for the pre-chemo launch, which sounds like is ready to go next month?

David T. Hung

No. To the contrary, Lee, I think we're really set and we've hired our last sales rep about 6 weeks ago. We're ready to launch -- we are very confident under the leadership of our interim Chief Commercial Officer, Dawn Svoronos, and we're very excited to go forward. And we are obviously in the process of looking for a permanent Chief Commercial Officer, but given the profile of this product, we're pretty optimistic about our ability to get a very high caliber, someone to even match Dawn's capability. So we're ready for launch, and very excited to get there.

Lee Kalowski - Crédit Suisse AG, Research Division

Apologies, one last question I was hoping to sneak in. Just thinking about the longer term, so as you think about maybe 2017, 2018, J&J is going to have a CYP17 and an AR, I'm just wondering, as you think about business development, do you feel that you're in any way at a disadvantage not having a CYP17, is that something you'd be thinking about either from a licensing or building out internally?

David T. Hung

I don't think so, Lee. I mean, there are a lot of things we could discuss at greater depth off-line about differences between an AR antagonist and the CYP17 inhibitor. We do not believe that, that's going to be our main competitor going forward. As you know, we recently licensed a new set of compounds from OncoFusion, which target a different mechanistic pathway, which we believe, and data suggests have significant promise. It's a different approach to prostate cancer and we think that we're going to be looking at newer technologies. CYP17 inhibitors have been around for a long time, since ketoconazole. And as you know, among urologists, they have not adopted CYP17 inhibitors despite their presence on the market for years. So we are looking really more forward at other newer technologies.

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 questions. First is with regards to the urology use. There's some sparse IMS data coming in and it looks like there's 5% scripts that are being prescribed in urology. Just wanted to get a sense what you're seeing. Is this something that is close to real that we can actually count on?

David T. Hung

I think that the IMS data are not fully complete. So I think I would caution you in how you interpret them. We would love to have a more complete data set out there, but that is under the control of our partner, Astellas.

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

Okay. Another question is on some of the newer technologies, David, you were talking about. So right now, we know that there's some certain resistance mechanisms being elucidated about XTANDI and including ARv7 and then some splicing variants and other forms. I'm just curious, with your BET inhibitor program or other -- any other programs that you think you can tackle that?

David T. Hung

It's certainly something for us to think about. I think that you have -- we have to caution you about how you interpret some of the splice variant data. I would actually point you to our PREVAIL and AFFIRM data, which still shows that the vast majority of patients do respond to XTANDI well. But -- so certainly, as with any drug, no matter how good it is, they will develop resistance pathways, we're well aware of them. But the good news is that the vast majority of patients have a very robust response to XTANDI and do well on it, some for a very long period of time. But we are obviously cognizant of what potential escape pathways there might be, and we are looking into that. One of our first forays into that area is to work with that [indiscernible] main inhibitors but, clearly, we are on the lookout for any other technologies that might help us address that issue. But we still think that with the current franchise we have based on XTANDI that we're providing a great benefit to a majority of patients.

Operator

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

Navdeep Singh - Goldman Sachs Group Inc., Research Division

I think in your prepared remarks you had indicated that there was about 20,000 XTANDI bottles sold during Q2. I think that figure was around 19,000 for Q1, but then we saw much more growth in terms of sales in Q2 versus Q1. So can you help clarify that discrepancy? And then I have a quick follow-up, as well.

Rick Bierly

Yes, this is Rick. So as I think we indicated a little bit, at least in my one prior conference call, the rounding that occurs on the bottles actually makes a difference, let's say, when we try and back calculate it. But it was probably closer to 18, 18 plus, let's say, in the first quarter and it could be 20 plus in this quarter. So that when you do that math with more detailed information, it works out much more closely.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Okay. And then not sure if you saw the chart from J&J that was provided during the company's Q2 earnings slide deck. The chart indicated that XTANDI had gained about 5% market share in the combined post-chemo and pre-chemo market since, I think it was January. Are you seeing a similar dynamic in the prostate cancer market?

Rick Bierly

Yes, we have seen that chart, although I will tell you, I'm not privy to how Johnson & Johnson determines the market share information that they provide. So I won't comment on that. But certainly, we are seeing, again, sort of an acceptance, really the therapy of choice in the post-chemo segment in terms of the oncology prescribing habits. So that comes through loud and clear in our market research. And so, to the best of our knowledge, that appears to be where -- what's driving it.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Okay. And my final question is on the Phase II data of enzalutamide in triple-negative androgen receptor-positive breast cancer. Do you think that data would be available sometime in Q4, maybe at the San Antonio Breast Cancer Symposium? And if so, what would you find compelling, what would you find -- what would you look to as a compelling result?

Lynn Seely

This is Lynn. And we are planning to have preliminary top line data available for the -- from the triple-negative breast cancer trial by the end of the year, and certainly San Antonio is one of the premier conferences. As we know, acceptances to that meeting are not yet available. And I think we're not going to speculate on the data at this point. We'll just have to see what it shows. But obviously, we're looking to show clinical benefits to those women with a relatively good safety profile. And that's a tremendous benefit, given that chemotherapy is the treatment of choice for these women. And I just -- the robust enrollment in this trial, which really was quite unexpected for us, demonstrates a tremendous unmet medical need.

David T. Hung

And not only is chemotherapy really the only available treatment for those women, but as you know, chemotherapy is not very effective in this particular patient population. I think it's a pretty unmet need.

Operator

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

Christopher Mortko

This is Chris in for Yaron. Can you just elaborate a little bit more, once you get approval in pre-chemo in the U.S., how quickly do you think you can get the drug launched? And then a question on breast cancer, can you go over, maybe at a sort of high level, the mechanistic rationale and what you think is so promising about combining XTANDI with Herceptin for breast cancer?

David T. Hung

So we would anticipate launching immediately upon getting the label. So we are ready, as I said, we're ready to go. So we're just waiting for the approval and we would expect to be out immediately. The mechanistic rationale for breast cancer is several fold. First of all, as you probably are all aware, about 70% of breast cancers express the androgen receptor and clearly, we are an androgen receptor antagonist. So we -- it's still yet to be defined what percentage of triple-negative patients who are AR-positive are driven by the AR, but as you know, what it means to be triple-negative is that, if you don't have ER, PR or HER2, you are not being driven by those ligands, and every cancer needs some ligand to drive growth, so we believe there is a very strong rationale for androgens like testosterone to drive breast cancers that are -- that have no other avenue of growth. If they don't -- if they lack the receptors for AR,PR and HER2, they've got to be driven by something, and if they are AR positive, we believe that the rationale is pretty strong that they're going to be driven by AR, and therefore an AR antagonist would make a lot of sense. That said, we also, as you know, are conducting studies across both ER-positive and PR-positive populations, and based on the work that we've seen preclinically with Jennifer Ricker at the University of Colorado and others, we have shown that, independent of AR and independent of testosterone, XTANDI exerts inhibitory effects on estrogen-driven breast cancer. And given the fact that estrogen is a major driver for the majority of breast cancers, that again opens up another pathway distinct from AR inhibition, which could account for -- which could really be another method -- another strategy for treating those tumors. So we're exploring XTANDI broadly across both a triple-negative population, as well as ER and PR-positive populations because we believe that there are multiple shots on goal here for enzalutamide mechanistically, but the first population we're going to report on is the AR-positive, triple-negative population.

Anne Bowdidge

Next question, operator?

Operator

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

Carter L. Gould - JP Morgan Chase & Co, Research Division

This is Carter on for Geoff. My question is, with the changes in the commercial team and the faster than expected growth over the course of the year, has there been any evolution on your thinking for targeting urologists after the approval, perhaps broadening faster than you had previously anticipated?

David T. Hung

I don't think there have been any change in strategy at all in regards to our appreciation of the importance of urology for this drug. Clearly, urologists still take care of patients for the vast majority of the time spent with which they have the disease. If the average time from diagnosis to death is 14 years, we believe something like 12 years are spent in the urologist's office compared to around 2 years in the oncologist's office. So clearly urologists are really important caregivers for this patient population. And especially given the profile of XTANDI, we believe that our profile will resonate very well with urologists, who are really -- for whom convenience and simple -- and ease-of-use is a really important consideration. So we believe that we'll do well among urologists. I think, we've been surprised to date at how differentiated XTANDI has been in the oncologist segment. Where we thought that oncologists who are used to complicated regimens and difficult-to-use drugs might not see as much of a differentiation, but yet we've already differentiated ourselves in the post-chemo segment, and we think that will only increase among urologists. So our strategy hasn't changed at all. We believe that urologists are really important, are gatekeepers for these patients. Patients spend the vast majority of the course of their disease in the urologist's office, and we believe they're an important target and we have not changed our plans in any way in that regard.

Operator

Our next question comes from the line of Howard Liang of Leerink Partners.

Richard Goss - Leerink Swann LLC, Research Division

This is Rich Goss calling in for Howard. There is some data at ASCO on AR amplification that suggests that the right sequence of treatment should be either XTANDI followed by ZYTIGA, or an XTANDI-ZYTIGA combination. Are there any data forthcoming that could confirm this hypothesis, and when would you expect the data on ZYTIGA in patients who have failed XTANDI?

David T. Hung

There's already -- there are few studies that have already shown that following XTANDI, ZYTIGA responses are quite low. So certainly you can do larger studies, I suspect that the outcome will be the same. So I think that the bottom line is, as you know throughout the history of oncology, first line therapies always do better than second line therapies who do better than third line therapies. So whoever is first is going to have probably the longest duration in the use and the greatest effects. So that's why it's important to get first in the market in the treatment paradigm, and we believe that, given our PREVAIL data, given our efficacy results, our safety results and our convenience profile, we believe that we will be the preferred treatment upfront. So that's the most important consideration for us. What other people would do in terms of trial, I'm probably not the best person to ask about that, but it's quite clear that whoever second line is not going to do as well as whoever is the first line.

Lynn Seely

And there is a Phase III cooperative group study run by the Alliance Cooperative Group, which is comparing enzalutamide versus enzalutamide plus abiraterone. And so that study has been initiated and is currently enrolling.

Operator

Our next question comes from the line of Brian Klein of Stifel.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

First, it seems quite clear that you continue to show robust growth in the post-chemo setting. Just wondering how we should think about the growth rate now that you're entering the pre-chemo setting, in particular the growth rate in post-chemo?

Rick Bierly

Okay. This is Rick. So over time, I think we view that new agents with the sort of efficacy and safety profile that XTANDI has are going to probably change the paradigm a bit. And so -- as we might -- as the label for pre-chemo would be approved, and we have the ability to serve patients in that arena, we'd expect the post-chemo opportunity, let's say, to sort of correspondingly decline. And so, I'm not sure we've totally figured out how to model that, and I'll leave that up to you, but we think that, that dynamic is going to be certainly present.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Great. And then second question is just on the TERRAIN study in Europe. Wondering when we might see that data.

Lynn Seely

So we're expecting to see that data at the end of this year or early next year.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Is there a particular venue?

Lynn Seely

No. That hasn't been discussed at this point.

Operator

Our next question comes from the line of John Newman of Cannacord.

John L. Newman - Canaccord Genuity, Research Division

I just wondered, I think, Rick, earlier in the call made some comments on -- after the first question about OpEx, waiting to see the PREVAIL label. Just curious as to, if you could give a little bit more color on that in terms of what you'd like to see or what you may see? And then I wonder if you could tell us what is the percentage of metastatic patients that are currently diagnosed by a urologist. I think the number is actually quite high, but I'm just curious as to what your numbers are showing?

Lynn Seely

So, this is Lynn. Let me just make a comment on about the label. Clearly, whenever we're in label negotiations with the agency we don't make any comment about where things stand. So I think there's just nothing we can add or say about that.

Rick Bierly

Yes. Just to add though, I think my comment might've been with respect to 2015. That's my guess. What was the second question?

Lynn Seely

Metastatic.

David T. Hung

So the second question was with respect to who makes the diagnosis of the metastatic disease? As you know, all prostate cancer is pretty much diagnosed by the urologist, if you are somebody who does the biopsy and if necessary the prostatectomy, and those patients are generally followed by a urologist, and followed until he has a biochemical recurrence, which is a rise in the PSA. So, given the fact that a rise in PSA, in the absence of a prostate, pretty much tells you that you have some cells somewhere in your body which you shouldn't have if you have your prostate gone, it would be the urologist, in the vast majority of cases, that makes the diagnosis of metastatic disease.

Operator

And our next question comes from the line of Ram Selvaraju.

Anne Bowdidge

I think then we'll have one more question then.

Operator

We'll move on to the last question from Biren Amin of Jefferies.

Biren Amin - Jefferies LLC, Research Division

So a couple of questions. First on the triple-negative breast cancer trial. David, what's the null hypothesis in the trial for the clinical benefit rate?

David T. Hung

I'll let Lynn answer that.

Lynn Seely

So what the clinical benefit rate we're looking for is 16 weeks. So it's stable disease first 16 weeks, obviously CR or PR. And we really haven't discussed sort of what the null hypothesis would be. We did have a 2-stage design where we had a Stage I, we had to meet a certain number of patients before we would move on to Stage II. That was met, and we did enroll Stage II of the trial.

Biren Amin - Jefferies LLC, Research Division

Okay. And then just a question on XTANDI. With the recent 7% price increase in July, which I guess now is at 22% premium to ZYTIGA, how does the company think about that and how that would influence XTANDI's competitiveness in the upcoming pre-chemo launch versus ZYTIGA?

David T. Hung

We believe that the competitiveness of our agent really is dependent on its efficacy, safety and convenience profile, which we think is quite extraordinary. So we believe that we'll do well, and we think that payers are going to be keen, as I said, to make a drug like that accessible to patients, and so we believe that, that we'll do fine.

Operator

And I'm now showing that there are no further questions at this time. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program, you may now disconnect. Everyone, have a great 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's (MDVN) CEO David Hung on Q2 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts