Are Doctors Shifting From Johnson & Johnson's Zytiga to Medivation's Xtandi?

Two of the most intriguing drugs to launch in the past two years are Medivation's (NASDAQ: MDVN  ) Xtandi and Johnson & Johnson's (NYSE: JNJ  ) Zytiga. The two drugs face off in an increasingly competitive multi billion market for metastatic castration-resistant prostate cancer treatment, or mCRPC.

Bridging the gap
So far, J&J's Ztiga has enjoyed pole position thanks to winning approval last December as a pre-chemotherapy treatment. But, that edge is fading as doctors digest data that suggests that Medivation's drug may be as effective for those patients, too.

In the third quarter, the gap between J&J and Medivation narrowed further as Xtandi sales, which were primarily in the United States, climbed nearly 32% from the second quarter. Meanwhile, Johnson's Zytiga sales grew just 3% in the United States over the same period, as unit volume was essentially flat.

Company

Q3 Sales

Q2 Sales

Quarter-Over-Quarter Growth

Xtandi

$108.5 million

$82.4 million

31.67%

Zytiga

$198.5 million

$192.9 million

2.90%

Source: Yahoo! Finance.

While J&J is still selling more Zytiga than Medivation is selling Xtandi, the rapid quarter-over-quarter growth suggests Xtandi is catching up quickly despite not yet winning FDA approval for that important pre-chemotherapy designation.

Xtandi moves into new markets
One of Zytiga's sales advantages is its presence in overseas markets -- markets Xtandi is just now reaching. That presence produced a doubling of Zytiga sales year-over-year in the third quarter, which helped Zytiga's global sales grow 15% from the second quarter, offsetting tepid sequential growth in the United States.

But, that global advantage may shrink given the EU approved Xtandi in June, leading to Medivation capturing $13 million in sales outside the United States during the third quarter. With Xtandi now approved in 12 countries and applications filed in another 35 countries, international sales to Medivation's partner Astellas should ramp nicely, generating additional royalty payments for Medivation's over the coming year.

Medivation's pre-chemo approval may be coming
Medivation reported results from its ongoing study of pre-chemo patients with mCRPC showing Xtandi reduced risk of death by 30% versus placebo. The strong data drove the independent monitors to halt the trial, allowing placebo patients to switch over to Xtandi.

If that data is convincing enough for the FDA to approve the drug for pre-chemo mCRPC patients, the impact on sales may be great. After J&J's Zytiga won approval in December for pre-chemo patients, its sales jumped 70% year-over-year during the second quarter of 2013.

Taking on bicalutamide
As a result of strong sales so far this year, Medivation bumped up its forecast for 2013. It now expects Xtandi revenue will outpace the prior estimate of $345 million-$365 million. The solid showing should carry over into 2014, particularly if the FDA approves the drug for that second line pre-chemo indication.

Beyond that, both Medivation and J&J are setting sights on capturing first line treatment market share from bicalutamide, sold as Casodex by AstraZeneca (NYSE: AZN  ) . AstraZeneca's Casodex generated more than a billion a year in sales before losing patent protection in 2008  and bicalutamide remains the most commonly prescribed drug for mCRPC patients. Despite generic competition, AstraZeneca still sold $281 million worth of Casodex in the first nine months of this year. Couple that with the revenue generated by the 10 generic manufacturers of bicalutamide and there's a significant opportunity to grow sales by winning first-line status.

To address that opportunity, Medivation has ongoing mid stages studies comparing Xtandi head-to-head with AstraZeneca's bicalutamide both in the U.S. and Europe. 

This Fool's final word
Sales of Medivation's Xtandi are growing quickly and should continue to increase as the drug wins share in international markets. The company may also win away business from Johnson's Zytiga if the FDA grants it approval for the pre-chemo indication. That suggests investors should keep a sharp eye on the FDA.  Once that decision is made, the focus will move to Medivation's and J&J's opportunity to challenge AstraZeneca's biculatamide, and that means paying attention to data from those head-to-head trials.

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  • Report this Comment On November 18, 2013, at 2:52 PM, wmdoncologist wrote:

    These two drugs are not in head to head competition scientifically! Zytiga and Xtandi have two different mechanisms of action. No clinical research has shown which drug should be given first. Some evidence even suggests that they should be given together - but that would be at a cost of over $15,000 per month and would not be justified without rigorous scientific study.

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