(bfilia/72 8/air
`
`January 22, 2013
`
`Medivation, lnc.
`Symbol:
`Price:
`Stock Rating:
`Company Profile:
`Price Target:
`
`MDVN (NASDAQ)
`$55.66 (52-Wk.: $25-$59)
`Outperform
`Aggressive Growth
`$67.00
`
`Dendreon Corporation
`Symbol:
`Price:
`Stock Rating:
`Company Profile:
`Price Target:
`
`DNDN (NASDAQ)
`$531 (52-Wk.: 34617)
`Underperform
`Aggressive Growth
`$4.00
`
`Equity Research
`Healthcare | Biotechnology
`
`Biotechnology
`
`Zytiga Fourth-Quarter Sales Imply Xtandi Strength
`
`On Tuesday morning, lanuary 22, 2013, lohnson &. lohnson UN] $72.87) reported
`fourth-quarter earnings. Zytiga sales in the United States trended down during
`fourth quarter for the first time since its launch in May 2011, while international
`sales growth continued. In 2012, Zytiga U.S. sales were $100 million in first quarter,
`$113 million in second quarter, $136 million in third quarter, and $114 million in fourth
`quarter. In contrast, Zytiga international sales maintained the growth trend in 2012,
`posting $100 million in first quarter, $119 million in second quarter, $129 million in third
`quarter, and $150 million in fourth quarter.
`
`We believe the decreased sales of Zytiga in the fourth quarter were largely due to
`Xtandi's U.S. launch in September. And since Xtandi is not yet approved or launched
`in Europe or other territories outside the United States, Zytiga's international sales
`continued to grow. This trend implies relative strength of Xtandi in the marketplace
`against Zytiga in the post-chemo mCRPC (metastatic castration-resistant prostate cancer)
`setting, as well as off-label in the chemo-naive setting, in our opinion.
`
`We currently estimate Medivation booking Xtandi sales of $17.4 million versus
`consensus of $16 million for fourth quarter of 2012. For 2013, we are the Street
`high at $175.7 million for Medivation's U.S. revenue booking versus consensus of
`$136.9 million. Medivation books one-half of Xtandi's U.S. net sales as part of the
`agreement with partner Astellas.
`
`We believe the following two issues will be interesting to watch in first quarter
`2013 for Zytiga, Xtandi, and Provenge of Dendreon.
`
`0 Will Zytiga U.S. sales rebound in first quarter 2013 after the label extension
`in December? Zytiga obtained approval for the chemo-naive mCRPC setting in
`the United States in December. Such label extension should boost growth of
`Zytiga sales in the United States; however, such growth might also be
`counteracted by off-label use of Xtandi in the same setting. Therefore, the growth
`trend of Zytiga in first quarter 2013 will be an interesting parameter to watch for
`Xtandi off-label use, as well.
`
`0 Will Zytigaflooding urologists’ oflices affect Dendreon's Provenge sales
`starting first quarter? Provenge posted a 4.7% growth in fourth quarter2012,
`reversing the negative growth trend for the previous two quarters. It is therefore
`important to see whether this turnaround could sustain going forward. The
`urology segment is what Dendreon focused its commercial efforts on, and it is
`the fastest-growing segment for Provenge. With Johnson & Iohnson starting to
`market Zytiga in urologists’ offices with virtually the same label as Provenge, it
`will be interesting to watch whether Provenge growth could sustain during first
`quarter and beyond. Provenge posted roughly $81.6 million in net sales in fourth
`quarter 2012 and needs to grow to $100 million per quarter for Dendreon to
`cash-flow breakeven.
`
`Y. Katherine Xu, Ph.D.
`+1 212 237 2758
`luru@williamblair.oom
`
`Filippo Petti
`+1 212 237 2741
`fpettJ'@williamblair.com
`
`ARGENTUM EX1062
`ARGENTUM EX1062
`Page 1
`Please consult the last page of this report for all disclosures.
`William Blair & Company, L.L.C. receives or seeks to receive compensation for investment banking services from Dendreon
`Corporation and Medivation, lnc. Investors should consider this report as a single factor in making an investment decision.
`
`Page 1
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`

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`William Blair & Company, L.L.C. 
`Key risks to our Outperform rating and attainment of our price target for Medivation include failure to meet efficacy endpoints 
`for the Phase III and Phase II programs of enzalutamide, unforeseen safety issues of enzalutamide in longer‐term studies, 
`setbacks in clinical and business development, and financing risk. 
`Key risks to our Underperform rating for Dendreon include better‐than‐expected uptake of Provenge in the U.S. market; 
`failure of clinical studies and regulatory approval from competitive agents such as Zytiga (abiraterone), Xtandi (enzalutamide), 
`and Prostvac; straight approval in the European Union; and commercial uptake on the continent better than our expectations.
`
`2  |  Y. Katherine Xu, Ph.D.  +1 212 237 2758
`
`Page 2
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`360
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`:50
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`no
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`:30
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`szo
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`:10
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`$0
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`11/3! 1 - PT:$21
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`$50
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`S40
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`$30
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`$20
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`$10
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`William Blair & Company, L.L.C.
`
`William Blair 8: Company, L.L.C. was a manager or co-manager of a public offering of equity securities for Medivation, Inc. within the prior 12
`months.
`
`William Blair & Company, LLC. is a market maker in the security of Dendreon Corporation and Medivation, Inc. and may have a long or short
`position.
`
`Additional information is available upon request
`
`Medivation Inc. (MDVN)
`Current Rating: Outperform
`Previous close: $54.94
`Jan 13, 2010 - Jan 13, 2013
`9I15I11 - I-O - PT:$17.50
`
`Dendreon Corp. (DNDN)
`Cunent Rating: Initiation
`Previous close: $31
`Jan 13, 2010 - Jan 13. 2013
`9I15I11 - I41 - P'I':$8
`
`‘°°
`
`12131112
`12130111
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`
`80
`
`Current Rating Distribution (as of 12/31/12)
`Coverage Universe
`Percent
`
`luv. Banking Relationships*
`
`Percent
`
`Outperform (Buy)
`Market Perform (Hold)
`Underperform (Sell)
`
`62
`33
`1
`
`Outperform (Buy)
`Market Perform (Hold)
`Underperform (Sell)
`
`9
`2
`0
`
`*Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has
`received compensation for investment banking services within the past 12 months.
`
`Y. Katherine Xu attests that 1) all of the views expressed in this research report accurately reflect his/her personal views about any and all of the
`securities and companies covered by this report, and 2) no part of his/her compensation was, is, or will be related, directly or indirectly, to the
`specific recommendations or views expressed by him/her in this report. We seek to update our research as appropriate, but various regulations
`may prohibit us from doing so. Other than certain periodical industry reports. the majority of reports are published at irregular intervals as deemed
`appropriate by the analyst.
`
`Stock ratings, price targets, and valuation methodologies: William Blair & Company, L.L.C. uses a three-point system to rate stocks. Individual ratings
`and price targets (where used) reflect the expected performance of the stock relative to the broader market (generally the S&P 500, unless
`otherwise indicated) over the next 12 months. The assessment of expected performance is a frmction of near-, intermediate-, and long-term
`company fundamentals, industry outlook, confidence in earnings estimates, valuation (and our valuation methodology), and other factors.
`Outperform (O) — stock atpected to outperform the broader market over the next 12 months: Market Perform (M) — stock expected to perform
`approximately in line with the broader market over the next 12 months; Underperform (U) — stock expected to underperfonn the broader market
`over the next 12 months; not rated (NR) — the stock is not currently rated. The valuation methodologies used to determine price targets (where
`used) include (but are not limited to) price-to-eamings multiple (P/E), relative P/E (compared with the relevant market), P/I-I-to-growth-rate (PEG)
`ratio, market capitalization/revenue multiple, enterprise value/EBITDA ratio, discounted cash flow, and others
`
`Company Profile: The William Blair research philosophy is focused on quality growth companies. Growth companies by their nature tend to be more
`volatile than the overall stock market Company profile is a fundamental assessment, over a longer-term horizon, ofthe business risk oftire company
`relative to the broader Wrlliarn Blair universe. Factors assessed include: 1) druability and strength of franchise (management strength and track
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`Fimdamental risk is approximately in line with the broader William Blair universe; Aggr'essive Growth (A) — Ftmdamental risk is higher relative to
`the broader William Blair universe.
`
`3 I Y. Katherine Xu, PlI.D. +1 212 237 2758
`
`Page 3
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`William Blair & Company, L.L.C. 
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`4  |  Y. Katherine Xu, Ph.D.  +1 212 237 2758
`
`Page 4