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Medivation's Stock Doubles on Prostate Cancer Success


The company's experimental drug helped men with advanced cancer live longer. The treatment would challenge Johnson & Johnson's Zytiga.

The race for a better prostate cancer treatment just got more interesting as a drug developer's stock more than doubles while a rival goes down in flames.

Medivation's (MDVN) shares rose 113% Thursday morning after the company said its experimental treatment for advanced prostate cancer helped men live longer (a 37% reduction in risk of death compared with a placebo). Median overall survival rate for men taking Medivation's drug was almost five months longer than those treated with a placebo. The company and its partner Astellas of Japan said the human study was so successful, the trial ended earlier than expected.

Medivation and Astellas are testing the drug, MDV3100, in the last of three stages of clinical trials usually needed for US approval. The companies plans to meet with the Food and Drug Administration early next year to discuss a timeline for getting the OK for selling the treatment.

If approved, Medivation's drug would challenge Johnson & Johnson's (JNJ) Zytiga, which was cleared by the FDA in April. Meanwhile, Dendreon (DNDN), the darling biotech stock of 2010, lost another third of its value this morning as that company continues to struggle with disappointing sales of its prostate cancer vaccine Provenge. Shares of Dendreon plunged 80% this year to $6.84 in Thursday morning trading.

With its positive trial results, Medivation is now the focus of attention for investors interested in the next big drug for prostate cancer, a huge market for any company. Medivation is farthest along in testing its drug for men who already received chemotherapy but it's also studying the therapy for those in the earlier stages of prostate cancer. The company hopes MDV3100 can win approval for patients with advanced cancer as it conducts three other studies of the drug for treatment of the disease earlier in development.

"Because we continue to believe that MDV3100 may also benefit patients with earlier-stage disease, we plan to continue studying the compound in a broad array of earlier prostate cancer disease settings," CEO David Hung says.

Shares of Medivation are now up more than 130% on the year, trading at $35.29 Thursday morning. The stock traded to almost $39 a share in December 2009.

The trial results represented a true make or break event for the company. Had Medivation's drug failed to meet its goal of improving survival rates, the stock likely would have plunged to its cash value of around $4 a share, William Blair analyst Y. Katherine Xu estimates in a recent note.

Xu predicts the drug's worldwide sales can rise to as much as $2.2 billion with US and European approvals. Medivation won't collect all that money. Under its development agreement with Astellas, the two companies will split profit from the drug in the US. Astellas bears all the costs for development and sales outside the US, agreeing to pay Medivation a royalty on sales.

Twitter: @brettchase

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No positions in stocks mentioned.
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