J.P. Morgan Reiterates Overweight Rating on Medivation Following Aragon Pharmaceuticals Acquisition Announcement

In a report published Monday, J.P. Morgan analyst Geoff Meacham reiterated an Overweight rating on Medivation MDVN.

In the report, J.P. Morgan noted, “This morning, JNJ announced the acquisition of Aragon Pharmaceuticals for $650M with a $350M contingent development milestone (transaction expected to close 3Q). The focus is on lead asset ARN-509 an androgen receptor antagonist currently in a phase 2 trial for castrate resistant prostate cancer (CRPC). Recall, ARN-509 is viewed as a key potential competitor to Medivation's Xtandi longer-term. While JNJ's resources will likely contribute to the ongoing legal dispute, and clearly will optimize the development of ARN-509, based on physician feedback, the development of the agent still has many outstanding questions/hurdles. Overall, given that ARN-509 is a known long-term competitor of Xtandi, we do not believe that the competitive landscape for prostate cancer has been significantly altered because of the JNJ/Aragon deal. We continue to believe that Xtandi remains very competitively well positioned (especially given what we think will be highly positive PREVAIL results in 2013) with significant clinical, regulatory, and commercial hurdles for earlier stage prostate cancer agents. We reiterate our Overweight rating on MDVN shares and would be buyers on weakness.”

Medivation closed on Friday at $50.86.