Wedbush Previews Medivation's Q2 Earnings; Sees Takeout In Mid- To High-$60 Range

Wedbush’s David M. Nierengarten believes that a likely takeout price for Medivation Inc MDVN would be in the mid- to high-$60 per share range, including the probable realized value of any CVR for Talazoparib.

Nierengarten reiterated an Outperform rating on the company, while raising the price target from $63 to $66.

Takeout Expectation

“A takeout exceeding $70/sh could be possible, given what appears to be a competitive sales process and the potential for a bidding war, although we note the absence of a competing bid thus far reflects difficulties acquirers might be having in justifying a premium,” the analyst mentioned.

2Q Expectations

The 2Q retail sales of Xtandi, as tracked by Symphony, after adjusting for capture rate discrepancy, was lower than expected.

Nierengarten now estimates 2Q Xtandi sales in the U.S. at $344 million, down from the earlier estimate of $355 million.

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The 2Q ex-U.S. sales estimate for Xtandi has also been lowered from $280 million to $256 million.

Medivation increased the price of Xtandi by 6 percent in the week ended July 1. This takes the monthly cost from the earlier $8,848 to $9,370.

The peak penetration estimates have been slightly raised to reflect the impact on uptake, which in turn has led to a slight increase in the FY16 worldwide Xtandi sales estimate from $2.672 billion to $2.641 billion.

Nierengarten continues to expect peak worldwide sales of Xtandi at $6 billion in 2021/2022.

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