I Know First Review

MDVN Sees Significant Gains Amidst Takeover Pressure

Medivation, Inc. (MDVN) is a biopharmaceutical company focused on the development and commercialization of medically innovative therapies to treat serious diseases for which there are limited treatment options. Medivation aims to transform the treatment of these diseases and offer hope to critically ill patients and their families.

Medivation stock prices were on the decline for close to a year, starting in March 2015 and ending with prices plummeting in January of this year. MDVN stock dropped more than 32% in January alone before starting to make a comeback in early February. The drop in January came as a phase II study of MDV9300 in relapsed or refractory large B-cell lymphoma (DLBCL) was put on hold when the company discovered that the drug does not work as a PD-1 inhibitor as was initially thought.

Medivation, Inc.’s top-selling drug for prostate cancer, XTANDI, experiences growth in global sales to $547 million in the fourth quarter of 2015. XTANDI’s main competitor is Zytiga from Johnson & Johnson and has been taking market share away from Johnson & Johnson. Currently, J&J is working on developing a new prostate cancer drug that will likely have a significant impact on current XTANDI sales. For this reason, Medivation has been working to diversify and bring new drugs to the market such as MDV9300.

In the earnings report for 4Q15, Medivation posted both GAAP and non-GAAP revenue and net income for the final quarter of 2015 and for the year in its entirety. GAAP revenue for 2015 was marked at $575.7 million, a 69% increase from the previous year, and non-GAAP revenue totaled $695.4 million, a 79% increase from 2014. The company also reported non-GAAP net income for the year to be $170 million ($1.01 per diluted share), a significant rise compared to the previous year when it was just $34.6 million ($0.22 per diluted share).

This earnings report was released on February 26^th, less than 3 weeks after MDVN share prices saw a trend reversal and began to climb. Shares prices at closing on February 7^th were $29.14 per share and have since reached to $61.91 per share as of market close on May 24^th. This represents growth of more than 112% in just slightly more than 3 months.

Such monumental stock growth did not result from increased revenue and net income alone. Starting in March, talk of a company takeover pushed MDVN stock to great heights. On April 28^th, Sanofi went public with an unsolicited $9.3 billion offer to buy Medivation. This comes down to an offer of $52.50 per share, which was just slightly above that day’s trading price and is much lower than the stock’s current price.

The company’s board of directors rejected the offer and refused to negotiate, saying that it undervalued the company. In response, Sanofi moved to replace the entire board and has since named 8 potential candidates that shareholders have the ability to name as replacements for sitting board members. Despite Medivation’s lack of cooperation, Sanofi CEO has continued to push the company to agree to negotiate on the subject of a takeover.

On February 24^th, 2 days ahead of Medivation’s release of 2015 earnings, I Know First’s state of the art algorithm forecasted growth for the company on the mid-term with a signal strength of 7.60 and a predictability of 0.33. In the three months since this forecast was sent to I Know First investors, MDVN stock saw gains of 96.91%.