Medivation Targets Prostate Cancer

02/06/2014 8:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

This featured recommendation is a biotech company that acquires, develops, and sells biopharmaceuticals, targeting drug candidates for limited or unmet medical needs, suggests Mike Cintolo, editor of Cabot Top Ten Trader.

Medivation (MDVN) continues to be a thorn in the side of several big-name competitors in the treatment of prostate cancer.

Its Xtandi, which was developed in partnership with Astellas, has seen strong and steady sales growth, with revenue rising 32% in the third quarter to $108 million.

By comparison, Johnson & Johnson's market leading prostate cancer treatment, Zytiga, saw quarter-over-quarter sales growth of only 3.4% in the fourth quarter.

This marked the second consecutive quarter of single-digit sales growth for Zytiga, hinting that Xtandi is continuing to gain market share in the treatment of prostate cancer.

And Xtandi poses another potentially major threat to Johnson & Johnson, as the drug could receive FDA approval for pre-chemotherapy treatment.

With Xtandi continuing to gain market share at the expense of bigger players in the prostate cancer market, Medivation has plenty of room for growth. Medivation is set to release results on February 27.

Technically, after being stuck in a trading range near 10 for the better part of 2011, MDVN soared nearly 500% in the 12 months following the FDA's approval of Xtandi, in November 2011.

The stock topped out near 60 in late 2012, and spent 2013 chopping around in a 20-point range between $40 and $60.

News that Xtandi was gaining market share sent the stock skyward again three weeks ago, and shares are up nearly 20% year-to-date, with MDVN hitting a fresh all-time high near $80, despite weakness in the broader market.

The stock is currently digesting these gains, as it consolidates support at its 10-day trendline in the $75 region. We suggest buying between $70 and $75 per share.

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