Please ensure Javascript is enabled for purposes of website accessibility

Medivation Inc is Down Today -- But Why?

By Brian Feroldi - Nov 6, 2015 at 11:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An earnings report chock full of good news sends shares lower. Is this a good time to consider making an investment?

What: Shares of Medivation (MDVN), biopharmaceutical company primarily focused on treating cancer, were down more than 10% today on heavy volume after the company reported its third quarter results.

So what: Revenue during the quarter came in at $260.7 million, which was up 30% over the year ago period and was much higher than Wall Street's forecast of only $229.1 million. Non-GAAP net income of $58.4 million, or $0.35 per share, also managed to come in well ahead of the $0.33 per share that analysts were expecting.

Sales of Xtandi, which treats metastatic castration-resistant prostate cancer, were strong in the U.S. and abroad. Medivation's partner Astellas Pharma reported huge growth in sales of Xtandi -- 73% and 71% growth, respectively, over the year-ago period. 

As a reminder, Medivation generates revenue from its partnership related to sales of Xtandi in three different ways: U.S. collaboration revenue, ex-U.S. collaboration revenue, and upfront and milestone payments.

Here's how those results shook out:

  Q3 2015 Q3 2014 Change %
U.S. Collaboration: $156.5 million  $90.7 million 73%
Ex-U.S. Collaboration $33.6 million $15.5 million 116%
Milestone Payments $70.6 million  $94.2 million -25%

As you can see, collaboration revenue from sales of Xtandi was up strong across the board, though milestone payments, which are lumpy by nature, were down year over year.

For the full year, the company reiterated its financial guidance, which breaks down like this:

Now what: I must admit that I'm left scratching my head as to why shares were down today. Perhaps Mr. Market was expecting the company to raise its guidance like they did last quarter, and the fact they only reiterated it gave investors pause. Sometimes you just never know, and either way shares have now declined nearly 20% year to date. 

In the press release, CEO David Hung stated:

"During the third quarter Medivation made significant progress led by continued demand growth for XTANDI for the treatment of metastatic castration-resistant prostate cancer. In October, we successfully completed the acquisition for the late stage asset talazoparib, a highly potent, orally available poly ADP ribose polymerase (PARP) inhibitor. With the acquisition of talazoparib, we now have further diversified our late-stage pipeline beyond XTANDI and pidilizumab to complement our early development programs, providing significant opportunities for growth."

Medivation continues to perform well, so today's sell-off on good new certainly looks like a buying opportunity to me.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Medivation, Inc. Stock Quote
Medivation, Inc.
MDVN
Astellas Pharma Inc. Stock Quote
Astellas Pharma Inc.
ALPMY
$16.20 (1.79%) $0.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.