Medivation's (Nasdaq: MDVN) "lead" compound failed a clinical trial, but investors couldn't care less. Shares are trading essentially flat as I write this.

While dimebon is technically the front-runner of the company's pipeline, investors have written off any hope of the drug working after last year's failure in Alzheimer's disease.

Today's unsuccessful trial was testing dimebon in Huntington's disease, another neurological disease. There doesn't seem to be any sort of silver lining to report. Patients failed to show an improvement in both of the scales used to measure progression of the disease. Medivation and marketing partner Pfizer (NYSE: PFE) plan to drop the development of dimebon for Huntington's disease.

The duo is still following up on a trial testing dimebon in combination with Eisai and Pfizer's Aricept in Alzheimer's disease. The trial is scheduled to read out in the first half of next year. It basically serves as a call option for investors with little downside -- other than burning cash running the trial -- but substantial upside should dimebon actually work as an add-on therapy.

Alzheimer's disease is a multibillion-dollar market that remains relatively untapped. But investors must remain cautious given the high failure rate. If you're going to invest in a company like Medivation or Elan (NYSE: ELN), which is developing bapineuzumab with Pfizer and Johnson & Johnson (NYSE: JNJ), make sure you don't assign much value to the potential of their Alzheimer's drugs.

What's left to value Medivation on? The company has just one other drug in the clinic: prostate cancer treatment MDV3100. The drug is in a pair of phase 3 trials, one of which is fully enrolled with potential for interim results this year.

If you assume dimebon has no value, Medivation's entire $500 million enterprise value is tied up in MDV3100, which seems about right. With no other drugs to fall back on, Medivation is about as high-risk, high-reward as they get.

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