Medivation's Xtandi sales fell short in Q1, but analysts say it's gaining on J&J's Zytiga

Astellas and Medivation ($MDVN) may have disappointed analysts with their first-quarter Xtandi sales. But recent script numbers suggest the disappointment may be short-lived--and that the prostate cancer pill may be gaining ground on its head-to-head rival, Johnson & Johnson's ($JNJ) Zytiga.

Medivation CFO Richard Bierly

Xtandi brought in $357 million for Q1, a slight decline from fourth-quarter sales, with $224 million in the U.S. The latter fell short of analyst estimates by about $10 million, give or take a few. According to Medivation CFO Richard Bierly, an inventory buildup in the fourth quarter, coupled with Medicare Part D discounts particular to Q1, accounted for the slippage, which--as he reminded analysts on the Q1 earnings call--had been expected and predicted.

Here's why the Q1 numbers were watched so closely: It was the second quarter since Xtandi won a new indication for first-line use in advanced prostate cancer--an indication that Zytiga won lickety-split after its 2011 approval. Just as analysts eyed Xtandi's early sales for signs of its positioning against Zytiga, so are they keeping tabs now.

And here's where recent script numbers come in. An estimated 31,000 to 32,000 Xtandi scripts were written during the first quarter, Bierly said, compared with 28,000 in the fourth quarter of 2014. 

Plus, Astellas hiked Xtandi prices April 4--which makes script growth even more of a payoff as the months wear on.

Meanwhile, Leerink Partners analysts say their contacts in urology and oncology are projecting an increase in use for Xtandi--an increase bigger than they expect for Zytiga. The Astellas-Medivation drug is gaining ground particularly among urologists, which the Xtandi sales teams have been targeting of late.

Even more impressive is the fact that data from the Phase II STRIVE trial unveiled in March--and expanded upon just this week at a urology conference--has already pushed doctors to use Xtandi in patients whose cancer hasn't yet spread. That's an off-label use--for now--but could become official based on data from a Phase III trial, PROSPER.

"Although we assume significant uptake in the non-metastatic setting will likely require positive Phase III PROSPER results, we believe our survey points to earlier stage prostate cancer as a source of upside," Leerink's Howard Liang wrote in an investor note.

Overall, Leerink's surveyed physicians said they see Xtandi surpassing Zytiga in their patients by next April. One caveat: The firm's estimates cover urologists, oncologists and hematologists, and not other doctors who are writing about one-third of Xtandi scripts.

Further down the road, there's the potential for Xtandi to move into breast cancer. Some promising data had execs talking up the idea during the Q1 call.

Meanwhile, Astellas and Medivation are spending considerable dough on marketing Xtandi, with Astellas expecting that spending to grow this year. The Japanese drugmaker even plans to cut back marketing spend elsewhere to divert resources to Xtandi without messing up its SG&A-to-sales ratio. Already, Astellas has beefed up the U.S. salesforce for the drug, expanding its team by 50% last September.

- see the release from Astellas and Medivation
- get the call transcript from The Street (PDF)

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