Opposing Views on Medivation News and Xtandi

Medivation, Inc. (NASDAQ: MDVN) was not having a great day on Wednesday. Its shares were seen down 5% or so at $33.10 shortly before the close. News was out on Tuesday signaling that the Journal of Clinical Oncology publishes results from the STRIVE trial of enzalutamide being compared to bicalutamide in castration-resistant prostate cancer. Perhaps the real news is how drug sales are looking for Xtandi in the eyes of Medivation shareholders.

They say that it takes a buyer and a seller to make a market, and that is what we have in analyst calls. Credit Suisse maintained its Outperform rating and big $49 price target, while Canaccord Genuity downgraded Medivation to Hold from Buy and slashed its price target to $45 from $90.

Credit Suisse’s report said that Xtandi prescriptions suggest single-digit sequential growth in the U.S. and that seasonal tailwinds are bringing upside in the quarter. Credit Suisse said that it has received numerous questions surrounding Xtandi’s top-line tracking. The firm sees the potential for a top-line beat, though they cautioned that IMS capture rates continue to vary.

Credit Suisse also looked at Xtandi being stockpiled in the fourth quarter, which generally stuffs the quarter followed by an inventory drawdown in the first quarter. J&J’s commentary gave the firm a positive read for Xtandi and it also noted no expectation of generic Zytiga in 2016. The firm said:

We view the recent JCO STRIVE publication as a positive for Xtandi. Importantly, the publication calls for the use of Xtandi ahead of Casodex: “these data suggest that enzalutamide should replace bicalutamide in the treatment of men with CRPC”. We see this as a positive for the potential integration of Xtandi versus Casodex data into the Xtandi label in the second half of 2016.

So, why did Canaccord downgrade Medivation and cut the target price in half to $45? The firm’s John Newman had the highest price target. His report said:

We expect US Xtandi revenues to slow in 2016 based on continued slow uptake from the large urology segment. Importantly, we believe Xtandi has gained peak uptake among oncologists, but that a much larger sales effort is needed to boost growth among urologists. We are pushing our $3.0 billion US Xtandi peak sales estimate to 2025 from 2020 to reflect more gradual uptake among urologists.

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Medivation shares were last seen down 5% at $33.10 late on Wednesday afternoon. Shares also hit a 52-week low of $33.02 versus a 52-week high of $70.79.

Again, it takes a buyer and a seller to create a market. The selling side seemed to be winning on Wednesday, particularly if you consider that this stock hit a 52-week low.