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Executives

Anne Bowdidge

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

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

Lynn Seely - Chief Medical Officer and Senior Vice President

Cheryl Cohen - Chief Commercial Officer

Analysts

John Beshai

Kimberly Lee - ThinkEquity LLC, Research Division

Yaron Werber - Citigroup Inc, Research Division

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

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

Lee Kalowski - Crédit Suisse AG, Research Division

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

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

Ling Wang - Summer Street Research Partners

Eric Schmidt - Cowen and Company, LLC, Research Division

Howard Liang - Leerink Swann LLC, Research Division

Medivation (MDVN) Q2 2012 Earnings Call August 9, 2012 4:30 PM ET

Operator

Good day, everyone, and welcome to Medivation's scheduled 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 we make on this call contain forward-looking statements that are made under the Safe Harbor provisions of the securities laws, including statements regarding the potential future regulatory approval and commercialization of enzalutamide and the timing thereof; continued clinical development of enzalutamide; potential future clinical trial events or results; the therapeutic potential and safety profiles of our product candidates; our future opportunities and milestones; and financial guidance for the remainder of 2012, including projected revenue recognition, operating expenses, capital expenditures and receipt of development milestone payments.

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 collaboration and our future financial position and results. Any statements made in this call are not -- 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 Medivation's Form 10-Q for the quarter ended June 30, 2012, 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.

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. 2012 has been an eventful year for Medivation. I'd like to start the call with some exciting recent developments, and Pat will review second quarter 2012 financial results. And after that, we'll open the call up for Q&A.

Just a little over 2 weeks ago, we achieved a major corporate milestone, when the FDA notified us that our NDA for enzalutamide for the post-chemotherapy indication was accepted for filing and granted priority review designation, which is reserved for drugs that offer a significant improvement in treatment or provide treatment where no satisfactory alternative therapy exists. This acceptance triggers a $10 million milestone payment to Medivation under our collaboration agreement with Astellas.

In addition, on June 26, Astellas submitted an MAA to the EMA seeking approval to market enzalutamide in Europe for the post-chemo indication. Also in June, new data from our Phase III AFFIRM trial was highlighted at ASCO, where Dr. Johann de Bono, co-principal investigator of the trial from The Institute of Cancer Research and Royal Marsden Hospital, presented data showing that patients treated with enzalutamide reported significantly higher response rates and health-related quality-of-life measures compared to placebo, as measured by the FACT-P questionnaire, a validated measure of patient function.

Patients also demonstrated a significantly longer median time to occurrence of the first skeletal-related event compared to placebo. Our Phase III AFFIRM trial has provided us with a very rich data set, and we look forward to presenting additional data from this trial at future medical meetings.

As you know, if enzalutamide receives marketing approval, Medivation will provide 50% of the sales and medical affairs field forces supporting enzalutamide in the U.S. Since our last quarterly call, we've completed the build-out of our sales and medical affairs field forces, and we are in the final stages of preparing for launch. We continue to expect to receive FDA approval and to launch enzalutamide for our post-chemo patients in the U.S. this year. Given its potential benefits across a wide variety of prostate cancer disease states and long patent life, we and our alliance partner, Astellas, are all conducting a broad clinical development plan for enzalutamide, which we further expanded this quarter with the addition of several new trials.

As background for understanding the various patient populations we are studying in these trials, let me begin by providing a brief overview of the various prostate cancer disease states and current therapies.

Upon initially being diagnosed with prostate cancer, many men opt for what is known as definitive treatment, either surgical removal of the prostate or radiation to the prostate. In most instances, these procedures successfully eradicate all the cancer cells and, thus, are curative. However, unfortunately, a significant number of these procedures fail, and the prostate cancer continues to progress, as typically evidenced by a rising PSA level. Men whose prostate cancer has progressed following definitive treatment are said to have advanced prostate cancer. Because prostate cancer is fueled by the male sex hormone, testosterone, the initial treatment for men with advanced prostate cancer is castration, either medically, through the use of drugs known as LHRH analogs, or surgically. These treatments reduce serum testosterone to castrate levels, which generally slows disease progression for a period of time. However, in virtually all cases, the cancer will continue -- will eventually continue to progress. Men whose prostate cancer has progressed following either medical or surgical castration are said to have castration-resistant prostate cancer or CRPC. These patients typically are given hormonal therapy with an anti-androgen, such as bicalutamide, and then move on to chemotherapy once their disease continues to progress.

Our clinical development program for enzalutamide includes patients in each of these disease states. At the earliest end of the spectrum, we have begun studying enzalutamide in patients immediately following initial diagnosis and prior to definitive therapy. And our trials continue throughout the disease spectrum to the latest-stage patients, those with CRPC, who have already received docetaxel-based chemotherapy, the population for which we currently have marketing applications under review in both the U.S. and Europe.

I'd like to step you through our clinical development program in each of these populations from the latest to earliest stage. As you're all aware, in our Phase III AFFIRM trial in post-chemo CRPC patients, enzalutamide produced a 4.8-month increase in median overall survival compared to placebo and reduced the risk of death by 37%. Common side effects observed more frequently in enzalutamide as compared to placebo-treated patients included fatigue, diarrhea and hot flush. Seizure was reported in less than 1% of enzalutamide-treated patients. Serious adverse events, adverse events causing patients to stop treatment, and adverse events causing death, were all lower in the enzalutamide group than in the placebo group.

At the interface between pre-chemo and post-chemo CRPC, we continued to enroll patients in our Phase I study, evaluating the safety, tolerability and pharmacokinetics of enzalutamide in combination with docetaxel in approximately 18 patients. The purpose of this trial is to determine whether enzalutamide and docetaxel can be dosed safely in combination with one another.

We consider pre-chemo CRPC to represent the largest area of unmet medical need and, thus, the largest potential commercial opportunity for enzalutamide. Thus, our development program in this disease state is particularly robust and growing. Our pre-chemo CRPC trial that is furthest along in clinical development is a Phase III PREVAIL trial, which is designed to support registration in this patient population. Importantly, PREVAIL enrolled both patients who have failed LHRH analog treatment only as well as patients who have failed both LHRH analog and anti-androgen treatment. In other words, PREVAIL covers both second- and third-line patients.

The co-primary endpoints in this trial are overall survival and radiographic progression-free survival. We completed our target enrollment of 1,680 patients in May.

In addition to completing target enrollment in our pivotal PREVAIL trial, this past quarter, we also substantially expanded our development efforts in pre-chemo CRPC patients. First, we expanded our development work comparing enzalutamide to bicalutamide, the leading marketed anti-androgen in pre-chemo CRPC patients. We continued enrollment in our ongoing TERRAIN trial, which is planned to enroll 370 patients, and we initiated patient enrollment in a new trial called STRIVE, which is planned to enroll 400 new patients. Both TERRAIN and STRIVE are double-blind trials of enzalutamide head-to-head against bicalutamide, with a primary endpoint of progression-free survival. The trials differ in that TERRAIN is enrolling only metastatic patients and is being conducted mostly in Europe, while STRIVE will enroll both metastatic and non-metastatic patients and will be conducted mostly in the U.S.

Second, we've begun initiating sites in a new trial called ASPIRE. This open-label study will evaluate enzalutamide in approximately 150 men with pre-chemo CRPC who are eligible to receive chemotherapy but have elected not to do so. The primary endpoint in this trial is radiographic progression-free survival.

Moving upstream of CRPC patients, to patients with advanced prostate cancer who have not yet been medically or surgically castrated, we've completed enrollment in our Phase II open-label study in hormone-naïve patients, which is a primary endpoint of PSA response. We look forward to presenting data from the 67-patient trial at an upcoming medical meeting. And we are also pleased to announce that this past quarter, we expanded development of enzalutamide even further upstream, to the earliest stage of prostate cancer, the stage immediately following initial diagnosis before definitive treatment. We have initiated patient enrollment in open-label clinical trial, evaluating enzalutamide as a new adjuvant therapy in approximately 50 men prior to prostatectomy. Men in this trial will receive enzalutamide for 6 months before prostatectomy and then undergo surgery. The primary endpoint in this trial was pathological response rate.

Finally, enzalutamide has also shown potential utility in breast cancer. At the 2011 Era of Hope Conference, researchers from the University of Colorado Denver presented data to demonstrate that enzalutamide has antitumor activity in human breast cancer cell lines. And at the AACR conference in early April, Medivation presented additional preclinical data on the potential utility of enzalutamide in breast cancer. Based on these data, last quarter, we initiated an open-label Phase I study designed to evaluate the safety and tolerability of enzalutamide in breast cancer. The study is expected to enroll approximately 24 breast cancer patients who have failed prior hormonal therapy. Breast cancer is an area of significant unmet medical need, and we look forward to seeing data resulting from this program in the future.

In summary, this has been an extremely productive time for Medivation, and I'm very proud of the individual and collective efforts of all of our employees. With a potential product launch for this year, multiple ongoing studies across a broad spectrum of prostate cancer disease states, a newly initiated trial of breast cancer and over $340 million in cash, we believe we are well-positioned as a company for long-term success.

I will now turn the call over to Pat, who will review the second quarter 2012 financial results.

C. Patrick Machado

Thanks, David, and good afternoon, everyone. Revenue for the second quarter of 2012 was $42.9 million, consisting of partial recognition of the non-refundable up-front development milestone payments to date from our corporate partner, Astellas, and former partner, Pfizer. These payments were recorded as deferred revenue upon receipt and are being recognized as revenue on a straight-line basis over the estimated performance period of our obligations under the applicable collaboration agreement.

Due to the termination of the Pfizer collaboration, we recognized $35.6 million of deferred revenue from that collaboration in the second quarter of 2012 and expect to recognize the remaining $5.5 million of deferred revenue from that collaboration in the third quarter of 2012. We expect to continue to recognize the $58.0 million of deferred revenue remaining from the Astellas collaboration as of June 30, 2012 at a rate of approximately $7.3 million per quarter until all such deferred revenue has been recognized.

Total operating expenses for the second quarter were $43.9 million compared with total operating expenses of $26.2 million for the same period in 2011. These figures include non-cash stock-based compensation expense of $5.6 million in the second quarter of 2012 compared with $3.7 million in 2011.

We reported a net loss for the second quarter of 2012 of $5.5 million or $0.15 per diluted share compared with a net loss of $9.5 million or $0.27 per diluted share for the same period in 2011.

Cash, cash equivalent and short-term investments at June 30, 2012 totaled $344.5 million compared with $380.1 million at March 31, 2012. We currently expect total operating expenses for 2012 net of cost-sharing payments from Astellas to be between $183 million and $198 million, approximately $25 million of which consists of non-cash stock-based compensation expense. This increase from prior guidance of between $155 million and $170 million is due primarily to increased U.S. commercial launch-related costs of $19 million and increased non-cash stock-based compensation costs of $8 million.

We continue to expect to incur approximately $15 million in capital expenditures in 2012, primarily related to the build-out of our new corporate and commercial headquarters.

Finally, as David mentioned, we became entitled to receive a $10 million milestone payment from Astellas upon the FDA's acceptance for filing of the enzalutamide NDA last month. We expect to become entitled to receive an additional $35 million in development milestone payments from Astellas in 2012 based on the assumed acceptance for filing of the MAA in Europe and the anticipated approval of the U.S. NDA. These 2 events would trigger milestone payments of $5 million and $30 million, respectively. We are required to share 10% of any such development milestone payments received with UCLA under the terms of our enzalutamide license agreement.

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

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Geoff Meacham from JPMorgan.

John Beshai

This is actually John Beshai in for Geoff Meacham. One of the things that I had a question about was -- really, what we learned from ASCO was there is a potential effect by prednisone with this ITEGA [ph] data. Just if you could touch upon that and how PREVAIL is different. I know the end number is much higher, but if you could just touch on that and potential confounding from prednisone.

Lynn Seely

So the -- by the potential confounding of prednisone, there are a couple of issues. One is that there is some response to prednisone in their control arm, which we don't have. As you know, our PREVAIL trial is a placebo-controlled trial. There are an increasing number of data that are coming out which suggest, and we'll probably be hearing more about this at ESMO, that prednisone may have other effects as well. And so I think right now that the prednisone issue is something that's under intensive study and we're going to be hearing more about it in the future. As for PREVAIL, as you know, enzalutamide is given without steroids, and so it's something that we don't have to contend with. We'll have a pure placebo arm and then the enzalutamide arm.

Operator

Our next question comes from the line of Kim Lee from ThinkEquity.

Kimberly Lee - ThinkEquity LLC, Research Division

If you can, can you go through some details as far as the ASPIRE trial program -- the study design for that? I know you mentioned how many patients, but maybe if you'd give us a little more detail on trial design. And also, how the advanced patients with no medical or surgical treatment fits into this -- the whole gamete of prostate cancer?

Lynn Seely

So the ASPIRE trial is an open-label trial. We're expecting it to enroll about 150 patients, and these are men who are eligible for chemotherapy but really choose not to take it for a variety of reasons. And so, this is a study which really is supportive along with the PREVAIL chemotherapy-naïve population and really just gives men and their patients another choice of when to use enzalutamide. And the endpoint, we're going to be looking for a radiographic progression-free survival.

Kimberly Lee - ThinkEquity LLC, Research Division

Okay. And just what about the advanced patients with no medical or surgical -- or I guess is that the population we're talking about...

Lynn Seely

So yes. So oftentimes, men who haven't had, they're really at the time not eligible for any sort of definitive therapy but they would typically receive chemotherapy, they would also be eligible. I haven't looked -- I have to -- I can't say particularly for the ASPIRE trial, but that would be in the chemotherapy-eligible patient population.

Kimberly Lee - ThinkEquity LLC, Research Division

Okay, great. And can you give us some kind of -- some sort of idea on timelines for the TERRAIN and STRIVE trial?

Lynn Seely

Sure. So we're really quite excited about the STRIVE trial. The study has just kicked off. It's designed for urologists. It's going to be run primarily the U.S., and it really is designed much as urologists practice. When a man comes in with rising PSA disease progression after a GnRH analogue therapy, they can be enrolled in this trial whether they have metastatic disease or non-metastatic disease, and they're randomized either to enzalutamide or bicalutamide. So we're really working to provide urologists with the information that they need to be able to use enzalutamide effectively. So I think this is a study we're really excited about. And the TERRAIN trial is a similar study that's being run in metastatic patients, primarily in Europe, and enrollment for that trial is -- remains ongoing.

Operator

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

Yaron Werber - Citigroup Inc, Research Division

I just had 2 questions, maybe as a follow-up to the previous questions. Give us a little bit of a sense, first on the TERRAIN study. How much longer do you think you need before you actually enroll all 370 patients? And then -- and I'm sorry for the noise here. And then second, just give us a little of a sense, bicalutamide, what are you expecting in terms of the average PFS in that study from bicalutamide? I mean, you can sort of -- it's a very wide range between kind of patients who are failing in LHRH and the patients who fail both in AR and then LHRH.

Lynn Seely

Yes, so we haven't given guidance on when we expect TERRAIN to complete. This is a trial which is being operationalized by our partner. And as for the expected duration of benefit of bicalutamide, again, we haven't discussed that at length, but generally, it's no more than 4 to 6 months in most situations.

Yaron Werber - Citigroup Inc, Research Division

And maybe just if I can do a follow up, just on the PREVAIL study, I mean, given the data from J&J, what's your sense -- I mean, do you have the flexibility to change what the criteria is going to be for your interim analysis just like you did with the AFFIRM study?

Lynn Seely

Yes. Certainly, that is an opportunity that's available to us and one which we are considering very carefully. The trial does currently have an interim analysis in it, and we are, needless to say, looking very closely at how we're going to optimize the analysis plan for the study based upon what we've learned from Johnson & Johnson.

Yaron Werber - Citigroup Inc, Research Division

Is there any way you can give us a little bit of a sense? Is it going to be the middle of next year or second half of next year?

Lynn Seely

Yes, sorry. I can't give you any color at all on that.

Operator

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

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

So I'm just wondering, in PREVAIL, you said you enrolled patients who failed LHRH and/or Casodex. I'm just curious, what is the definition of CRPC in this case? And are you really looking for -- going for a label that is CRPC and metastatic chemo-naïve, kind of the same label as Provenge? Or you're going for something more?

Lynn Seely

So the definition in the study of castration is as soon as they have failed at least LHRH analogue therapy. So some patients, that's the only therapy that they've failed second line, or some have also failed bicalutamide or a standard anti-androgen. And so the indication will go forward. We'll wait and see. We haven't given guidance on that, but the patient population that's being studied is a castration-resistant patient population.

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

Okay. So this is the same inclusion and definition for the 302 study from the ITEGA [ph]?

Lynn Seely

I can't comment on that. The inclusion/exclusion criteria for those

[Audio Gap]

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

Okay. And do you -- as we are pretty close to a launch right now, are you prepared to share the commercial team composition and some commercial plans? As much of those details that you can share?

Cheryl Cohen

Yes, this is Cheryl Cohen. I can let you know that we're very excited about this opportunity, and the sales force is ready to go and fully hired, and we've been fortunate enough to be able to hire some individuals with great experience in oncology and relationships, and they're are actively out in the field working with our partners, Astellas, on account planning. So we're real excited about the launch. We currently will have 60 representatives that will be out on the Medivation side selling enzalutamide, and we also have our partners, Astellas, which will have over 100 representatives, but obviously, they'll be selling other products.

Operator

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

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

My question is for Pat. First, Pat, it looks as though your expenses by the end of the year are going to be close to a $60 million-per-quarter run rate. Is that the base that we should be using for 2013 and beyond? And secondly, I just wanted to get an additional question on the PREVAIL study. Could you give us a sense of the proportion of patients who are going to have failed bicalutamide or at least anti-androgens in that study versus the proportion who have just failed the LHRH agonist?

C. Patrick Machado

So Geoff, on your first question, I think with respect to 2013 guidance, as per our standard practice, we'll be giving that when we file our Q -- I'm sorry, our 10-K. For 2012, I think just looking at the current numbers, the 183 to 198, that does include $25 million of non-cash items, so when you strip that out, that does produce a quarterly run rate for 2012 that's quite a bit below the $60 million that you referred to on a cash basis.

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

Sure. And then in PREVAIL?

Lynn Seely

Yes, this is Lynn. With respect to the proportion of patients within PREVAIL, this is an ongoing Phase III trial, so we can't comment on anything about the patient population enrolled at this point. But certainly, that will be something that we'll be discussing after the data become available.

Operator

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

Lee Kalowski - Crédit Suisse AG, Research Division

I'm wondering if there's anything you guys can share based on your experience with the expanded access program, in terms of either anything you know about the patients who are going into it, have they failed at ITEGA [ph]? Or is going on a prednisone-free regimen important to them? Anything at all that you're seeing based on that? And then, as far as the development plans for the, I guess as we might call, versus Casodex, is it your expectation that TERRAIN and STRIVE will be it? Will there be other studies? And are you planning on filing a formal indication, or do you think that you might use these 2 trials to get something like a compendia usage?

Lynn Seely

Great question. For the -- with respect to the expanded access program, while it has been up and running for a period of time now, and we do have many patients participating and as I really can't give you any local color about the data, so I can't provide much information there other than to tell you it's up and running and going well. With respect to development plans, yes, we are -- right now, our current plans are TERRAIN and STRIVE. We really want a body of data out there which gives justification to use this drug as the urologists are currently using bicalutamide, and that's the intent. And certainly, we believe these studies, as you know, they're quite large studies, would be potential for compendia listing, and I think that's largely the anticipated plan.

Operator

Our next question is from Biren Amin from Jefferies.

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

I guess, first of all, on TERRAIN, I'm trying to assess your enrollment in the trial, so it seems that in the earlier Phase I, Phase II trial that was published in Lancet, where you enrolled 140 patients across 5 sites in 18 months, it just seems that TERRAIN is taking longer as far as enrollment versus the smaller study on a per-patient, per-site basis, and I'm just trying to understand the disconnect between the slower enrollment in TERRAIN versus historical and enrollment trends, and, I guess, should we expect a similar type of trends to occur in STRIVE?

Lynn Seely

So, yes, I think those are fair questions, and I think the best thing I can say there is that we don't have direct control over the operationalization of the TERRAIN study. We are directly in control of STRIVE, and certainly, we're going to be doing everything we can to ensure a very rapid enrollment in that study.

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

Okay. And then I guess on STRIVE, should we resume similar PFS assumptions as TERRAIN with 6-month PFS with the bicalutamide arm and 9 months with enzalutamide?

Lynn Seely

They are similar patient populations, but the difference is the STRIVE patient population also includes non-metastatic patients. So that is a difference.

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

Okay. And I guess one last question. Maybe if you could give us some color on the combination trial with abiraterone in 60 patients and the objectives of this trial?

Lynn Seely

Yes. So that study is very similar to the bone marrow study -- the bone marrow biopsy study that we presented at GU-ASCO, maybe where we were -- it's conducted at MD Anderson. We did enzalutamide, treated patients with enzalutamide and men who had significant bone metastatic disease and looked at outcome, and now we're doing a very similar open-label study looking at enzalutamide plus abiraterone.

Operator

Our next question comes from the line of Ram Selvaraju from Aegis Capital.

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

So just a question regarding the nature of the usage of enzalutamide in breast cancer. Can you give us an idea of how the drug is likely to be deployed in combination or not in combination with what therapies, theoretically at least, so that we can get a better idea of how this product might potentially be positioned in the future along the treatment continuum?

Lynn Seely

So it is early days. Right now, we're looking at this in women right now who've already failed hormonal therapy where we're working on defining the dose to make sure that it's the same dose that we're using in prostate cancer. And I think that we're looking to move this drug up as early as possible in the treatment paradigm. So I think this is something, it's a hormonal therapy, it's something that we would expect to be using as early as possible. But it's early days, and we really need to get a better idea of how the drug is looking in a client before we'll make any statements about that.

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

And with respect to the actual effect of the drug that you've seen so far in vitro, what similarities do you see between the way in which this drug kills breast cancer cells versus the way in which it kills prostate cancer cells? And are you seeing evidence of cidality in both populations?

David T. Hung

What was the last part of the question? We see evidence of...

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

Cidality. Actually, that the cells are being killed as opposed to just being quiescent in their growth.

David T. Hung

So clearly, we believe that our prostate cancer effects are mediated largely through the AR inhibition mechanism. The data we presented in vitro showed that in breast cancer, while we do know that the majority of breast cancers also expressed AR, one of the findings that we used -- that was shown by the University of Colorado is that enzalutamide inhibits estrogen-mediated breast cancer growth. Now we know for a fact that enzalutamide does not bind the estrogen receptor with any significant affinity. So to inhibit estrogen-mediated effect would suggest that there's another target that is part of the estrogen-signaling pathway that this drug may be inhibiting, but we have not really commented on much further than that. So we believe that there are potentially different mechanisms by which breast cancer and prostate cancer may be inhibited. They both may share an AR-signaling pathway inhibition, but it's also possible that in breast cancer, there may be other mechanisms at play, and we're in the process of trying to explore that. We have shown self-kill in both the cancers with this drug, so this drug, it does exert a cidal effect and not just static effects, but we're in the process of now exploring the mechanisms by which it does that.

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

Can you say anything at this time as to whether you have, in fact, already identified other potential targets of enzalutamide and that you're working on screening those targets with other molecules? Or you cannot comment at this time?

David T. Hung

As you would imagine, we would be looking to try to assess different targets that this drug might be interacting with. We just have not made any public comments on that point. We are very committed to trying to explore fully all the ways, all the activities that enzalutamide does possess, and we are trying to sort through that, because one of our missions of the company is not only to expand these enzalutamide as broadly as possible and prostate cancer, but also to go into other indications. And so, depending on the profile of these activities, that may lend itself to exploring other indications with this drug. So we are trying to explore that thoroughly.

Raghuram Selvaraju - Aegis Capital Corporation, Research Division

And then last question, how does the mechanics of your partnership with Astellas work with respect to the exploration of the drug in breast cancer? Is it exactly the same arrangement as the way it works for prostate cancer? Or are there any differences?

David T. Hung

So in breast cancer, as with all indications, our partners will pay for 2/3 of development costs, and we will receive the same share of profits and royalties in the U.S. and x U.S. as we do in prostate cancer.

Operator

Our next question comes from the line of Ling Wang from Summer Street Research.

Ling Wang - Summer Street Research Partners

So my question is with regards to the TERRAIN study. It seems to me the enrollment, the focus has been shifted to European. I don't know whether you can confirm that. And also, I'm wondering what have been driving this shift, whether it is a difference in terms of enrollment pace in the 2 different regions?

Lynn Seely

So TERRAIN is ongoing both in the U.S. and Europe, but there is a preponderance of centers in Europe, so just the majority are open there. And I think we're really looking to give urologists a lot of experience with enzalutamide, and so putting the STRIVE trial in the U.S. really gives us an opportunity to maximize their experience in a clinical trial setting in this earlier phase of patient population. So I don't think it's really been a shift. I think it's been an addition to.

Operator

Our next question comes from the line of Eric Schmidt from Cowen and Company.

Eric Schmidt - Cowen and Company, LLC, Research Division

On the early access program, can you tell us how many patients are in the program and how or if they might be converted to commercial patients upon approval?

Lynn Seely

Yes. So I can't tell you how many are in the program right now, but it is accruing nicely, and those patients will be switched over to commercial product at the time of approval.

Eric Schmidt - Cowen and Company, LLC, Research Division

Okay. And in terms of the partnership with Astellas, who gets the final say in the U.S. on pricing?

David T. Hung

They do.

Eric Schmidt - Cowen and Company, LLC, Research Division

Okay, and I guess I didn't necessarily understand what the differences in terms of the PREVAIL study versus ITEGA's [ph] 302 trial were in terms of enrollment. Did the 302 study not include Casodex failures and just LHRH failures?

Lynn Seely

Yes. So to be honest with you, I can't comment on that. Ours is including both, and so -- but I can't tell you what their breakdown was and what they included. To my knowledge, they haven't presented those data.

Eric Schmidt - Cowen and Company, LLC, Research Division

Okay, fair enough. Last question is on the potential use of enzalutamide as a neo-adjuvant therapy. Do we know what the FDA approval endpoint might be down the road in that indication?

Lynn Seely

Yes, it's a great question. So clearly, there hasn't been precedence in prostate cancer, so we can't speak for the agency, and I think it's something that is open. There's a lot of interest in the field for this. You're seeing more and more of these neo-adjuvant studies being done, and I think that will be with some new ground that will have to be forged with the agency. And so right now, we're running an early-phase trial just to get a good understanding of what the drug can do, and then we'll use those data to really see if it warrants trying to craft a registration strategy.

Operator

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

Howard Liang - Leerink Swann LLC, Research Division

In opening the STRIVE trial and other early-stage trials, was there any safety hurdle, any hurdle you had to cross in terms of existing experience? Is there anything we can read into regarding the safety experience of the ongoing trials in FDA's approval of these studies?

Lynn Seely

I'm not sure I fully understand the question. There certainly were no safety hurdles that had to be overcome. I don't know that you can read anything into that. This is simply a study in men with earlier-phase prostate cancer, and there were no safety concerns.

Howard Liang - Leerink Swann LLC, Research Division

No, I meant, so you're doing these earlier studies at a later time point without your first accumulating safety experience with -- from later-stage trials. And does that mean that later-stage trials is going well, therefore, you get to open the earliest studies?

Lynn Seely

I think we very strategically started our studies in the late-stage patient population because that's the fastest route to approval to get this drug on the market for men who needed them very most. And then we move to the next, which was chemo-naïve again, because those registration paths are quite clear and can happen in a relatively timely fashion. Now we really want expand into the larger market and move the drug upstream, and so we're beginning to do that. But I think we strategically built this so that we can get the drug on the market as quickly as possible to the men with the highest need.

Howard Liang - Leerink Swann LLC, Research Division

Okay, great. There -- is there any interest in doing a sequence study with abiraterone? So one after another?

Lynn Seely

So it's interesting that, while originally, really, before our data became widely known, there was a lot of talk about sequencing. I think we're hearing a lot less about sequencing now, but people are interested in the combination of enzalutamide and abiraterone, and so that may be something that you'll be see coming down the pipeline.

Operator

Thank you. That does conclude our question-and-answer session, and I would like to turn the conference back to Dr. David Hung for any closing remarks.

David T. Hung

Thank you for joining the call today. We appreciate your continued support and interest in Medivation and look forward to keeping you apprised on our progress. Thank you.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect. Have a great rest of the day.

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Source: Medivation Management Discusses Q2 2012 Results - Earnings Call Transcript
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