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Medivation, Exelixis Show Promise as They Take Aim at Prostate Cancer

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These two development-stage biotechs join Dendreon and Johnson & Johnson in the search for a prostate cancer treatment, a multi-billion dollar opportunity in the US alone.

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Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

My firm's decade-long work covering Dendreon (DNDN) has meant we're more familiar than most with the prostate cancer space. We know the top urology and oncology docs, we're connected to patient advocacy organizations, and we'd like to think we have our finger on the pulse of how investors view the space.

(See the latest on DNDN in Debate Over Dendreon's Provenge Coverage Is Settled.)

Over the last year I've watched with interest the developments from two development-stage biotechs, Exelixis (EXEL) and Medivation (MDVN). Before the bell today, my firm initiated positive coverage on both companies.

I'd looked at Exelixis a number of times in the past. This company has spent an eye-popping $1.2 billion of shareholder money with no approved drugs to show for it. Fortunately for anyone interested in Exelixis going forward, there is new management and a new appreciation for fiscal responsibility.

Exelixis is focused on XL184, a tyrosine kinase inhibitor (TKI) primarily targeting VEGFR, MET, and RET -- all markers scientifically linked with cancer. XL184 has been around long enough to have been passed over by two big pharma companies, something that should always give investors pause. But rather remarkable early data from a Phase II prostate cancer trial made my firm take another look.

Prostate cancer preferentially spreads to bone. Spread to bone is what causes most of the side effects (and eventually death) in the 30% of men diagnosed with prostate cancer who die of the disease. In the first 20 XL184 patients with bone scan data, Exelixis' drug improved the bone scans of 19 patients. The 20th patient got no worse. These are rather remarkable data that four leading prostate cancer docs on a panel at the company's December 2010 R&D Day said they'd never seen before.

Exelixis has reorganized the company to focus on XL184 in prostate cancer. It is expanding its prostate program into another Phase II trial. Additional data from the initial trial are expected at the ASCO Genitourinary Conference in February.

Medivation has MDV3100 in two Phase III trials for the treatment of prostate cancer. MDV3100 works by blocking the entry of androgens into a prostate cancer cell. Since prostate cancer cells use androgens to fuel their dirty work, it is hoped MDV3100 will help patients by blocking this fuel source.

An early Phase I/II trial was a good hint this could be the case. The data from MDV3100 was comparable to slightly better than Johnson & Johnson's (JNJ) abiraterone, which has a roughly similar approach but is about a year ahead in clinical trials.

Medivation may be better known for Dimebon, however, a drug for Alzheimer's Disease (AD) and Huntington's Disease that failed a Phase III trial in AD. More than a few shareholders were run over by that failure, given a fairly large, randomized Russian Phase II trial in AD was positive. False negative trials are very common in central nervous system drugs, so there might still be hope for Dimebon. Most every professional investor, however, is looking past Dimebon at MDV3100.

Provenge, abiraterone, MDV3100, and XL184 -- assuming clinical trials for the latter three drugs continue to be positive -- will form the backbone of prostate cancer treatment in the back half of this decade. Prostate cancer is a multi-billion dollar opportunity in the US and 2 to three times that worldwide, so there is plenty of cash to go around for all four companies.

My firm's purpose for adding coverage on Exelixis and Medivation to our existing coverage on Dendreon was so we could keep a closer eye on the three drugs we believe will be the most important for the prostate cancer market. And, of course, to see if we can make some money as investors along the way from Exelixis and Medivation as we have with Dendreon.
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