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One out of every six men will be diagnosed with prostate cancer.
-- American Cancer Society
At some point, it's likely that all of us will know someone who has been diagnosed with prostate cancer. In my case, it's my stepdad. Prostate cancer has become so common that it's generating big money for drug companies, including Medivation (NASDAQ: MDVN ) and Japanese drug company Astellas, who co-market fast growing drug Xtandi.
A crowded market is getting more crowded
In the past, the dominant treatment for prostate cancer was docetaxel. That drug was formerly sold by Sanofi-Aventis (NYSE: SNY ) as blockbuster Taxotere, a $3 billion a year drug before losing patent protection in 2010.
Today, a number of new prostate cancer drugs have reached the market, including Sanofi's injectible Jevtana, which gained FDA approval in June 2010.
Sanofi developed Jevtana in an attempt to maintain some of Taxotere's post-patent-expiration market share. In phase 3 trials, Sanofi evaluated Jevtana in advanced prostate cancer patients who had seen a worsening during or after treatment with docetaxol. The results were compelling. Jevtana patients saw median overall survival of 15.1 months versus 12.7 months for generic mitoxantrone -- a competing treatment option.
The results were good enough for Jevtana to capture a good share of the third line market for prostate treatment. As a result, the drug generated $52 million in sales for Sanofi during Q2. However, Jevtana's sales trend is slumping. First-half sales slipped 10% to $106 million compared with last year.
One of the reasons Jevtana's sales slid is Medivation's oral Xtandi, which gained FDA approval as a treatment for metastatic castration resistant prostate cancer last August.
In phase 3 trials, Medivation studied Xtandi in advanced prostate cancer patients who had previously been treated with docetaxol, a common treatment when patients develop a resistance to bicalutamid, a widely used monotherapy for early-stage patients.
Those treated with Xtandi had overall survival of 18.4 months versus just 13.6 months for placebo. As a result, Xtandi is being increasingly prescribed over Jevtana.
Prescription growth pushed Xtandi's Q2 sales up to $82 million, 95% of which were in the United States. International sales should move significantly higher since Canada approved the drug in May and the EU approved the drug in July.
A right-for-everyone drug?
Medivation has an ongoing phase 3 study for Xtandi as a pre-chemo prostate therapy. Preliminary results from that study are expected this year.
If the data is positive, it erases an advantage held by Johnson & Johnson's (NYSE: JNJ ) Zytiga, another recent prostate cancer drug.
Zytiga got approval as a pre-chemo treatment last December and sales have surged, making Zytiga -- with $192 million in second-quarter sales -- one of the top 100 drugs sold in the U.S. Many expect Zytiga sales will continue to grow, potentially reaching $1.8 billion in sales by 2015, according to Decision Resources.
The sales opportunity to strip away Zytiga's market leading market share isn't lost on Medivation. Xtandi already owns 20% of the market for second line treatment, and the company hopes that positive data can slow Zytiga's momentum.
Once data from the phase 3 preliminary data is released, attention will likely focus on overall survival, with an eye toward whether Xtandi extends survival beyond the five months for those taking Zytiga. If overall survival is better, Xtandi could steal hundreds of millions of sales away from Zytiga.
Either way, Xtandi and J&J will battle fiercely for prostate cancer scripts over the coming years. Especially since J&J spent $1 billion to buy Aragon this past June. Aragon's ARN-509 is a promising early stage prostate cancer treatment born out of the same UCLA research department as Xtandi. It's so promising that Medivation and Astellas sued challenging others ability to commercialize it. So far, Medivation has come up short in proving its case. But, even if Medivation doesn't block J&J's newly acquired ARN-509, it's likely years before patients will have access to it.
Even more interesting than the pre-chemo indication would be success in its ongoing phase 2 trial of Xtandi versus first line treatment bicalutamid. If that study proves successful, Xtandi could elevate into the go-to first line choice for treating prostate cancer. That would likely push Xtandi much closer to blockbuster status.
A big and growing market for Xtandi
Last fall, Citi Investment Research estimated that Xtandi sales would grow to $172 million in 2013 and $390 million in 2014. Six months into this year, Xtandi already had sales of $157 million, suggesting it will significantly exceed the estimate for this year.
According to Decision Resources, drugs like Xtandi and Zytiga will fuel a doubling of prostate cancer spending to $9.1 billion by 2021. Research firm FirstWord estimates the global market for prostate treatment will increase to $7.7 billion in 2017, from $3.5 billion in 2012. The bullish forecasts are in part because the drugs aren't cheap. Zytiga costs $5,500 a month, while Xtandi gets $7,450 a month.
But, the upside is also tied to a bigger global patient pool. While incidence rates have declined in the U.S., there are 238,000 new cases of prostate cancer diagnosed annually. And there were 2.6 million men with a history of prostate cancer in the U.S. alone in 2010. Since six in 10 patients are over 65 when they're diagnosed, a longer living global population likely means more people requiring treatment.
The final take
A rising patient pool is likely to drive to drive overall spending on prostate cancer treatment higher, providing tailwinds for Xtandi. The growing market will continue to spark development, with new drugs threatening to win market share. That suggests that if Xtandi were to stumble, another player may step in to capture its market share. For now, Xtandi's future appears bright. So Fools may want to consider Medivation as part of a speculative portfolio.
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