Johnson & Johnson And Medivation: A Prostate Cancer Marketshare

| About: Johnson & (JNJ)

As Prostate cancer cases continue to be diagnosed in the U.S. in abundance (estimated 238,590 new cases of prostate cancer will be diagnosed with nearly 30,000 deaths) drug makers are also intensifying their effort to confront this late stage of life disease in men. The average age at the time of diagnostics is 67. Prostate cancer is the second leading cause of cancer death in U.S. men, only behind lung cancer. Reportedly the U.S. market for treatment is approximately $12 billion annually. That enables multiple drug firms and their treatments to be successful in such a large space. Firms large and small still have a play.

Two pharmaceutical players, Johnson & Johnson (NYSE:JNJ) and Medivation (NASDAQ:MDVN) are competing head to head on the prostate treatment front.

Johnson & Johnson's ZYTIGA. J&J's second quarter saw sales grow by 70% to $395 million and the recent quarter saw sales topple $464 Million. Developed by one of its research arm's (Janssen Biotech), ZYTIGA plus prednisone is used to treat patients with prostate cancer that is resistant to medical or surgical treatments and that has expanded to other areas in the body. In clinical trial results, patients receiving treatments have lived longer than those treated with placebo plus prednisone (median overall survival was 35.3 months for men treated with ZYTIGA plus prednisone compared with 30.1 months for men treated with placebo [sugar pill] plus prednisone). Additional results were that treatments delayed the median time to starting chemotherapy (25.2 months for patients receiving ZYTIGA plus prednisone and 16.8 months for patients receiving placebo [sugar pill] plus prednisone). Johnson received FDA approval in April of 2011, as a treatment for metastatic castration-resistant prostate cancer, or mCRPC. That approval was based on a phase 3 trial showing that Zytiga patients' overall survival improved by 4.6 months compared to placebo.

The buy-in for Johnson is not cheap at $92.33 as this large Market Cap firm ($259 Billion) is a giant, active in many product areas. In fact, its share price has increased more than 30% over the past 4 quarters with some analysts projecting high targets of $104.00. Johnson is in a great position though to garner considerable market share and revenue from other Prostate drug makers and has deep enough pockets to do so. The last two quarters in sales have clearly demonstrated that. A few potential risks for a buy in at $92.00 are that an early year market correction could cause a downward slide reducing the 30% gain of the prior year. Market acceptance from competitive second generation drugs are another factor. Newer therapies that do not require Prednisone (constituting significant side affects), will make a dent in upcoming years.

Johnson & Johnson's real competition comes from Medivation's Xtandi, a co-developed drug with Astellas (OTCPK:ALPMF), a Japanese firm. Xtandi received FDA approval for mCRPC in August, 2012. In the third quarter, Xtandi sales totaled $108 million, up 32% from the second quarter. XTANDI is indicated for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC) who have previously received docetaxel. A risk on the radar for Medivation is a patent battle with Aragon Pharmaceuticals, a private company who was recently awarded a patent judgment against Medivation for their ARN-509 drug, now in Phase II of clinical trial. A long legal battle may be ahead and an appeal is on the burner.

Still on the radar is Dendreon's (NASDAQ:DNDN) Provenge. The storied biotech is still out there, slugging away for survival. Realistically Provenge does not constitute much competition in the future due to several reasons, the first being it is priced higher than competitive products ZYTIGA and Xtandi, and second that Dendreon has little resources to grow market presence of it, due to cash problems. Sanofi's (NYSE:SNY) represents another competitive force. Their treatment, Jevtana was approved in 2010. Sales in 2013 were down 2.9% to $165 Million, but Sanofi is just digging in.

The key for firms entering the prostate marketplace is in international markets and approval country by country for the drugs. Xtandi reportedly has to-date 12 countries approval with applications for filed in 35 more countries. ZYTIGA was approved for approximately 65 countries as of last year. One very large pending factor is that the FDA has yet to decide on whether to expand Xtandi's reach to include pre-chemo. If that happens, it brings great leverage to Medivation, as it would essentially eliminate ZYTIGA as a second line treatment. Medivation's 4.68 billion market cap represents a large player in the game. Entry point at $62.16 seems high, unless you consider the growth market that is available, and the upcoming FDA decision may provide for a great catalyst event.

With a growing market for Prostate treatments rooted in the U.S. and international sales, there is room for both ZYTIGA, and Xtandi. Johnson and Medivation meanwhile may battle it out for market share leaving investors a clear path for gain no matter who wins.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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