Please ensure Javascript is enabled for purposes of website accessibility

Why Medivation, Inc. Shares Crashed 32% in January

By Todd Campbell – Feb 3, 2016 at 6:40AM

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

A delay to a key clinical trial weighed on shares last month.

Source: Medivation.

What: Ahead of news that the FDA has put a partial clinical hold on a key drug trial, shares in Medivation (MDVN) dropped 32.4% in January, according to S&P Capital IQ.

So what: In December 2014, Medivation acquired rights to MDV9300, which was believed to be a PD-1 inhibitor that works similarly to Merck & Co.'s (MRK -0.60%) Keytruda and Bristol-Myers Squibb's (BMY -0.86%) Opdivo, from CureTech.

In December 2015, Medivation initiated a phase 2 study of MDV9300 in relapsed or refractory large B cell lymphoma (DLBCL) and suggested that if the trial is successful, then a big unmet need could lead to the FDA considering an accelerated approval.

However, on Jan. 25, Medivation filed an 8-K with the SEC because it concluded that MDV9300 isn't a PD-1 targeting therapy after all.

Medivation doesn't yet know how MDV9300 works and it's knee-deep in trying to figure it out, but unfortunately, the FDA has placed a partial clinical hold on the DLBCL trial that will keep patients from being enrolled in the study until that happens.

Now what: The revelation is important because MDV9300 is a key part of Medivation's strategy to diversify its revenue beyond its top-selling prostate cancer drug, Xtandi.

Xtandi, which saw global sales grow to $547 million in the fourth quarter, has been winning market share away from Johnson & Johnson's (JNJ -0.71%) multibillion per year Zytiga, but Johnson & Johnson is developing a new prostate cancer drug that could eventually slow demand for Xtandi and as a result, pressure is building on Medivation to usher new drugs to market.

Given MDV9300 is in a holding pattern, hope shifts to MDV3800, a PARP-inhibitor that Medivation acquired from BioMarin (BMRN -0.34%) last fall. A phase 3 trial studying MDV3800 in advanced breast cancer patients with BRCA mutations is expected to wrap up in June, so investors might want to keep a close eye on Medivation's press releases this summer. 

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool recommends BioMarin Pharmaceutical and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$86.12 (-0.60%) $0.52
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$163.36 (-0.71%) $-1.17
BioMarin Pharmaceutical Inc. Stock Quote
BioMarin Pharmaceutical Inc.
BMRN
$84.77 (-0.34%) $0.29
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
BMY
$71.09 (-0.86%) $0.62

*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
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

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.