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Slowing Sales for Johnson & Johnson's Zytiga May Be Good News for Medivation

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Johnson & Johnson  (NYSE: JNJ  ) and Medivation  (NASDAQ: MDVN  )  , with its partner Astellas Pharma, are locked in a high-stakes battle for prostate cancer treatment market share. Both companies have highly successful prostate cancer drugs in Zytiga and Xtandi, respectively. But Johnson & Johnson's Zytiga appears to be losing steam as oncologists embrace Xtandi.

I wrote about that dynamic last quarter, and based on J&J's fourth-quarter earnings release, it appears this quarter may have played out similarly.

Growing, but slowing
Zytiga remains an unquestionable success for J&J. That drug's sales jumped 85% from a year ago in the fourth quarter to $211 million. Zytiga's growth was even better overseas, with sales up 89% from last year to $284 million.

The fourth-quarter results brought Zytiga's full year sales to $1.7 billion, which is 77% higher than the fourth quarter of 2012. Roughly $750 million of those sales were generated in the United States, up 62%, while overseas sales jumped 90% to $948 million.

But turning attention to sequential growth throws some cold water on those seemingly rock-solid results. For a second consecutive quarter, Zytiga's sequential growth rate in the United States was in the single digits. After losing U.S. prostate cancer patient market share early in the fourth quarter, J&J's market share rebounded into the year's end. However, J&J's market share remains below its peak, and given that Xtandi's market share climbed steadily in the fourth quarter, Zytiga's year-end push doesn't appear to have come at Medivation and Astellas' expense.

Source: Johnson & Johnson Q4 Earnings Presentation

Instead, that share growth probably came from other treatments, including the most commonly prescribed treatment for metastatic castration resistant prostate cancer: bicalutamide. That was sold as AstraZeneca's billion-dollar-a-year drug Casodex before losing patent protection in 2008. AstraZeneca still generates a few hundred million dollars in sales from Casodex, and that revenue may be shifting to J&J and Medivation. 

Market share may also have come at the expense of Sanofi's Jevtana. It was supposed to succeed Sanofi's blockbuster prostate cancer drug Taxotere when it lost patent protection in 2010, but Jevtana hasn't lived up to sales expectations.

Dendreon's (NASDAQOTH: DNDNQ  ) struggling drug Provenge may have lost more ground, too. Despite being the only immunotherapy treatment available for prostate cancer, Provenge never gained significant traction, and sales of the drug slumped 13% in the third quarter from a year ago, prompting Dendreon to put itself up for sale. 

Fool-worthy final thoughts
Zytiga's 3.4% sequential fourth-quarter sales growth in the United States suggests Xtandi is winning business more quickly in both previously treated chemotherapy patients, for which Xtandi is already approved, and in pre-chemotherapy patients, for which Xtandi is awaiting FDA approval and is used off-label.

Medivation and Astellas may also start cutting into J&J's overseas sales, too.  Xtandi has just started competing with Zytiga in many of those international markets, and international sequential growth for Zytiga slipped to 9.2% in the fourth quarter, down from 17.6% in the third quarter.

There's plenty of opportunity for both J&J and Medivation to win business away from AstraZeneca's and Sanofi's legacy drugs and their competing generics. The two companies will probably continue to eat away at Dendreon's sales, too. But Zytiga's sequential slowing suggests Xtandi may be the prostate cancer drug to watch in 2014.

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Editor's Note: A previous version of this article did not mention that Astellas Pharma is Medication's partner on Xtandi. The Fool regrets the error.

Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 22, 2014, at 6:56 PM, Alteonwins wrote:

    Dendreon gained ground last quarter.

  • Report this Comment On January 25, 2014, at 12:38 PM, MTherami wrote:

    Once again, Todd Campbell continues to write articles that contain false, negative statements about Dendreon (DNDN) and it's drug, Provenge --- the only immunotherapy treatment approved by the FDA for metastatic castrate-resistant prostate cancer.

    Here is the correction that needs to be made to the article above:

    FALSE - "Dendreon's struggling drug Provenge may have lost more ground, too."

    TRUE - In Q4 2013, Provenge sales grew 10% versus the Q3 2013 result.

    The announcement of the Q4 2013 Provenge sales result was released to the public on January 13, 2014 --- nine (9) days before this article was published. There is no reason for this misstatement of fact to be included in the piece, except for either (a) poor fact-checking or (b) an attempt to intentionally mislead the public. The repeated false, negative statements about Provenge that continue to appear in Todd Campbell's articles suggest that he is promoting a short agenda against the Dendreon corporation.

    Further points that should be noted:

    - Provenge Q4 2013 US sales grew by $7 million versus Q3 2013, an increase of 10%. Compare that to Zytiga Q4 2013 US sales growth of $7 million versus Q3 2013 (as Campbell points out, a revenue growth rate of just 3.4%). Provenge's sequential quarter-over-quarter dollar growth in the USA is now matching that of Zytiga.

    - XTANDI may also be gaining ground on Zytiga (as Campbell suggests) in terms of revenue growth. However, in a Phase III trial, XTANDI's calculated point estimate for median

    overall survival was only 2.2 months. Compare that figure to Provenge, which in a Phase III clinical trial demonstrated a statistically significant median overall survival benefit of 4.1 months --- nearly DOUBLE that of XTANDI.

    Ultimately, sequencing therapies with different approaches to attacking metastatic castrate-resistant prostate cancer will likely become the standard form of care in the future. As treatment for mCRPC moves in that direction, Provenge will become the therapy applied during the first month of treatment (---it takes only 5 weeks to fully administer Provenge, and the drug then helps the body's own immune system defend against mCRPC for years to come). The Provenge immunotherapy will then be followed with either hormone therapies or radiopharmaceuticals for a period of approximately 8 - 18 months. In this way, a patient's body will be pre-programmed to use his own immune system to fight mCRPC in the coming months / years, while hormore or radio therapy treatments are applied to fight the disease in other ways. Provenge is the therapy that stands to gain the most in terms of revenue growth as the model of sequencing multiple therapies is advanced.

    Concerning Xofigo, Campbell fails to mention this treatment entirely in this piece. It is likely that Xofigo and XTANDI will both join Provenge in seeing double-digit percentage, sequential revenue growth in the USA in Q4 2013. Zytiga's sequential US sales are likely to turn negative in Q1 2014, as better educated patients and physicians turn to Xofigo, XTANDI, and Provenge.

  • Report this Comment On March 02, 2014, at 3:32 PM, never2dull4u wrote:

    Now that MVDN took a dump on Friday (02/28), what's your excuse now? Provenge gained market share? Perhaps the pill would be too hard for you to swallow if that was the case, now wouldn' it?

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Todd Campbell

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.

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