`
`These advances should have reduced uncertainty concerning which patients are
`appropriate for therapy and speed up the claims process, respectively, and
`Dendreon notes that reimbursement concerns are now beginning to fade.
`
`…But Demand May Be More To Blame
`
`As of Q2:11, Dendreon indicated that Provenge’s launch was in “full swing” with
`utilization limited only by how fast physicians could prescribe the drug. Dendreon
`ended Q1:11 with 135 “active” Provenge accounts, and the company guided to 225
`active accounts by the end of Q2, and roughly 500 active accounts by year end.
`Dendreon exceeded its guidance for opening new accounts during Q2 with more
`than 265 sites, but the average number of patients treated per center (0.8/month)
`was well below expectations (1-2/month). As a result, Dendreon missed its guidance
`for Q2 sales (reported sales of $49MM versus a target of $54-60MM) and withdrew its
`2011 sales projection. At the end of Q4:11 and Q1:12, the number of sites infusing
`Provenge increased to 595 and 723, respectively, but with similarly low numbers of
`average patients per site. In our view, visibility into identifying patients who are
`suitable for Provenge is lacking.
`
`There are several factors that could explain the lower than expected demand. First,
`patients with minimally symptomatic PRCA are not always closely followed by their
`physicians, and clinical practices have a difficult time recalling such patients in
`order to recommend a therapy like Provenge. Second, patients rapidly progress into
`and out of a metastatic, asymptomatic CRPC state of disease. Unless patients are
`caught while asymptomatic or minimally symptomatic, it may be too late to offer
`Provenge. Lastly, JNJ’s Zytiga may be gaining traction in Provenge’s market. Checks
`with consultants indicate increasing off-label prescribing in pre-chemotherapy
`patients, and although Zytiga’s mechanism is viewed as complementary to Provenge,
`it is clear that some physicians are satisfied giving only Zytiga based upon its
`convenience (oral), rapid onset, and symptomatic benefits. Provenge may also face
`future competition from Medivation’s enzalutamide, which is also being tested in
`metastatic CRPC. Our consultants expect earlier use of both Zytiga and enzalutamide
`to pressure Provenge, but overall expect sales growth to “stagnate” as opposed to
`decline.
`
`What Is The Potential Opportunity For Provenge In The U.S.?
`
`According to the American Cancer Society, approximately 217K new cases of
`prostate cancer were diagnosed in the U.S. in 2010, with an estimated 32K deaths.
`Patients’ disease is usually controlled for many years on anti-androgen therapies,
`eventually becoming refractory, or “castrate-resistant”. We estimate that roughly 30-
`35K patients in the U.S. develop metastatic CRPC each year.
`
`According to consultants, the large majority (80-90%) of patients with metastatic
`CRPC initially have few or no symptoms. Most CRPC patients are usually treated
`initially with a second-line hormonal agent (e.g. Casodex, ketoconazole, estrogens,
`steroids), and chemotherapy with Taxotere is usually delayed until patients develop
`symptomatic metastatic disease. Our consultants estimate that about 16K patients
`with CRPC are treated annually with Taxotere in the U.S., representing about half of
`all U.S. metastatic CRPC patients.
`
`In general, physicians expect to administer Provenge prior to chemotherapy, based
`on their view that Provenge takes time to manifest its effect, and because many
`patients refuse chemotherapy. We note that Dendreon’s marketing campaign is
`
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`Medivation
`
`Astellas has a strong commercial presence in urology, selling Flomax for benign
`prostatic hyperplasia (BPH) and Vesicare for overactive bladder on a global basis, so
`should be a good sponsor for enzalutamide in urology circles.
`
`JNJ’s Zytiga Is The Main Competitor
`
`There are a number of new entrants in the prostate cancer (PRCA) marketplace
`(Zytiga, carbazitaxel, Provenge) and several promising therapies waiting in the wings
`(Alpharadin, cabozantinib). However, JNJ’s Zytiga appears to be the main initial
`threat to enzalutamide given their related mechanisms of action and potential to be
`used in patients who are not yet truly androgen independent.
`
`JNJ’s Zytiga (abiraterone) demonstrated a 3.9 month median overall survival benefit
`at the interim analysis and a 4.6 month benefit at the final analysis Study 301
`(chemotherapy-refractory CRPC). Patients in the abiraterone/prednisone arm had a
`median survival of 14.8 months, vs. 10.9 months for the control arm (HR 0.65;
`p<0.0001). Zytiga also improved time to disease progression (10.2 vs. 6.6 months;
`p<0.0001). Hence the efficacy of Zytiga and MDV3011 appears comparable.
`
`In March, Zytiga’s pivotal COU-AA-302 trial in chemotherapy-naive prostate cancer
`patients was halted due to convincing efficacy of Zytiga relative to the standard-of-
`care control arm. The interim data through December 2011 showed a statistically
`significant improvement in radiographic progression-free survival (rPFS) in patients
`receiving Zytiga plus prednisone compared to the placebo plus prednisone in the
`control group (p<0.0001). The median rPFS in the control group was 8.3 months, but
`as of the December 2011 interim look, median rPFS had not yet been reached in the
`Zytiga treatment group (n=150 progression events in the Zytiga treatment group vs.
`251 in the control group; HR = 0.43; 95% CI = [0.35, 0.52]; p<0.0001). Zytiga showed a
`strong trend in favor of an overall survival benefit, but did not achieve statistical
`significance on OS at the interim look. (HR=0.75, p=0.0097 vs. prespecified p-value
`of 0.0008).
`
`Zytiga works through a similar anti-androgen-based mechanism, and at this stage
`there is little data on its combinability with enzalutamide. There is also some
`anecdotal evidence to suggest that sequential therapy may not be ideal. In other
`words, once a patient becomes resistant to one, he is more likely resistant to the
`other. As a result, it was important that enzalutamide produce survival data that are
`at least on par with Zytiga, allowing Medivation and Astellas to position
`enzalutamide as a therapy that could be used ahead of Zytiga.
`
`Zytiga was approved by the FDA in April 2011 and EMA in September 2011. JNJ
`posted $301MM WW sales in 2011. Enzalutamide’s major advantage relative to
`Zytiga appears to be its superior tolerability. Zytiga requires co-administration of
`prednisone, a steroid which over time is difficult to tolerate. This is less of an issue
`in the post-chemotherapy setting where many men receive prednisone with
`Taxotere and never come off. However, in the pre-chemotherapy setting, where
`patients could stay on drug for multiple years, enzalutamide could have a natural
`advantage. Enzalutamide (once daily, no food restrictions) may also be somewhat
`more convenient to administer than Zytiga (BID, with food).
`
`Consultants Give Enzalutamide The Nod Over Zytiga
`
`In May we hosted a physician consultanting call on prostate cancer. The two clear
`“winners” from our call were MDVN’s enzalutamide and JNJ’s abiraterone (Zytiga).
`
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`Medivation
`
`Our specialists view JNJ’s Zytiga (abiraterone) and Medivation’s enzalutamide as
`having comparable efficacy in the treatment of post-chemotherapy CRPC. However,
`they noted that the two drugs have differences in their activity on androgens and
`that a differential mechanism is reflected in the side-effect profiles. While both
`drugs are viewed as far safer than chemotherapy, clinicians indicated that
`enzalutamide may have a modestly better side-effect profile, terming it “amazingly
`clean”, and suggesting its low seizure risk was a bit more acceptable than Zytiga’s
`requirement for concomitant steroid dosing. In terms of seizures, doctors indicated
`that those observed were mild, and not necessarily all drug related. They think the
`important thing is not to use enzalutamide in combination with other agents that
`lower seizure risk. One of our specialists has been dosing Zytiga with a lower (“sub-
`physiologic”) dose of prednisone (5mg QD rather than 5mg BID), and has seen no
`change in the side-effects related to Zytiga but an improvement in the prednisone-
`related side effects. Still this consultant believes that enzalutamide’s overall
`tolerability profile remains superior to that of Zytiga.
`
`Comparison Between MDVN’s Enzalutamide And JNJ’s Abiraterone
`MDV3100 VS. ZYTIGA POST-CHEMO CRPC COMPARISON
`
`p-values
`(HR 95% CI)
`
`placebo
`Zytiga 1,000mg QD
`+ 5mg prednisone BID + prednisone
`(n=797)
`(n=398)
`15.8 months
`11.2 months p<0.0001 (HR=0.74)
`4.6 months
`5.6 months
`10.2 months
`29.1%
`
`3.6 months
`6.6 months
`5.5%
`
`p<0.001
`p<0.001
`p<0.001
`
`Key Endpoints Measured
`
`Overall survival (OS)
` net improvement in OS vs. PBO
`radiographic PFS (rPFS)
`time to PSA progression (TTPP)
`soft tissue/PSA response rate
`PSA declines of ≥50%
`PSA declines of ≥90%
`Safety Profile
` Common Grade 3 or greater AEs:
` seizure incidence
` fatigue
` cardiac disorders
` myocardial infarction
` liver function test abnormalities
` joint swelling/discomfort
` muscle discomfort
` edema
` hypertension
` diarrhea
` dyspepsia
` urinary tract infections
` upper respiratory tract infections
` arrhythmias
` chest pain or discomfort
` cardiac failure
`Label Warnings
`
`MDV3100 160mg QD
`(n=799)
`18.4 months
`4.8 months
`8.3 months
`8.3 months
`28.9%
`54.0%
`24.8%
`
`p-values
`(HR 95% CI)
`
`placebo
`(n=400)
`13.6 months p<0.0001 (HR=0.631)
`
`2.9 months
`3.0 months
`3.8%
`1.5%
`0.9%
`
`p<0.0001 (HR=0.404)
`p<0.0001 (HR=0.249)
`p<0.001
`p<0.0001
`p<0.0001
`
`53.1%
`45.3%
`0.0%
`0.6% (5 patients)
`7.3%
`6.3%
`2.0%
`0.9%
`0.5%
`0.3%
`0.8%
`0.4%
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`---
`TBD (currently seeking approval in post-chemo CRPC)
`
`Pregnancy Category
`Source: Cowen and Company; Company Data
`Source: Cowen and Company, ASCO Abstract 2010
`
`TBD (currently seeking approval in post-chemo CRPC)
`
`---
`---
`---
`---
`4.2%
`3.0%
`1.9%
`1.3%
`0.6%
`0.0%
`2.1%
`0.0%
`1.1%
`0.5%
`1.9%
`
`0.0% (0 patients)
`---
`---
`---
`---
`29.5%
`26.2%
`26.7%
`8.5%
`17.6%
`6.1%
`11.5%
`5.4%
`7.2%
`3.8%
`2.3%
`- mineralocorticoid excess
`- adrenocortical insufficiency
`- hepatotoxicity
`- food effect
`Category X (not indicated for use in pregnant women)
`
`
`
`Post-Chemotherapy Setting Is Relatively Modest
`
`Between 30-35K U.S. patients succumb to metastatic PRCA each year. Roughly 60% of
`these patients are believed to receive Taxotere and are therefore likely to be eligible
`for enzalutamide. We assume that Zytiga’s entrenched status and enzalutamide’s
`less differentiated profile in this setting will allow these drugs to share this market
`roughly equally. However, the more successful enzalutamide becomes in the much
`larger pre-chemotherapy setting (see below), the less likely it will be used in post-
`chemotherapy patients as patients are unlikely to get two courses of the drug. We
`
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`Medivation
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`model U.S. sales of $75MM in 2013 and $225MM in 2017 in the post-chemotherapy
`CRPC setting. We view Europe as a similar sized opportunity on which we estimate
`MDVN will receive escalating royalties in the 15-22% range.
`
`U.S. Post Chemotherapy Revenue Model
`United States
`Post-chemotherapy Setting
`Incidence of metastatic CRPC
`Penetration of Taxotere
`# patients who receive first-line chemotherapy
`Penetration of MDV 3100 into second-line
`# patients who receive MDV 3100 post-chemotherapy
`MDV 3100 price per patient
`MDV3100 sales in post-chemotherapy setting ($MM)
`Source: Cowen and Company
`
`2013
`
`2014
`
`2015
`
`2016
`
`2017
`
`31.0
`60%
`18.6
`27%
`5.0
`$50,000
`$250
`
`31.3
`60%
`18.8
`48%
`9.0
`$50,000
`$450
`
`31.7
`60%
`19.0
`37%
`7.0
`$50,000
`$350
`
`32.0
`60%
`19.2
`26%
`5.0
`$50,000
`$250
`
`32.4
`60%
`19.4
`23%
`4.5
`$50,000
`$225
`
`Pre-Chemotherapy Is Where The Money Lies
`
`Many more patients fail androgen deprivation therapy and develop metastatic CRPC
`each year than receive Taxotere. We estimate the pre-chemotherapy market might be
`5x larger than the post chemotherapy market. In theory, both MDV3011 and Zytiga
`are likely to work in this patient subset. Both drugs rely on the fact that there are
`several ways through which prostate tumors become resistant to androgen
`deprivation therapy. These include through the overproduction of adrenal
`androgens, the development of androgen receptor mutations, amplifications in the
`androgen receptor, and the outgrowth of cells no longer sensitive to androgens.
`Neither Zytiga nor enzalutamide will work in patients who harbor tumors that are
`truly insensitive to androgens. However Zytiga and enzalutamide ought to work in
`patients who overproduce androgens, or develop androgen receptor mutations/
`amplifications that make their cancer cells more sensitive to low concentrations of
`testosterone for growth.
`
`PREVAIL Fully Enrolled
`
`In September 2010, Astellas and Medivation initiated the Phase III PREVAIL trial
`evaluating enzalutamide in CRPC patients who are chemotherapy naïve. PREVAIL is
`testing the hypothesis that enzalutamide improves OS and PFS in these patients. In
`June 2012 Medivation announced that this trial is fully enrolled. PREVAIL is modeled
`off Zytiga’s Study 302 (for which JNJ received an SPA), but is designed to enroll more
`patients (1,700 vs. 1,000). The inclusion of more patients could allow events to
`accrue faster, enabling Medivation and Astellas to close some of the gap in timing.
`JNJ’s Study 302 began in April 2009.
`
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`Medivation
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`PREVAIL Trial Design
`
`Source: Medivation
`
`
`
`The trial costs for PREVAIL will be allocated to Medivation and Astellas in the same
`proportion as the AFFIRM trial (roughly one third : two thirds). The PREVAIL study is
`enrolling patients in North America, Europe, Australia, and Israel. The co-primary
`endpoints of the study are overall survival and progression-free survival (PFS). The
`secondary endpoints in the PREVAIL study include time to first skeletal-related
`event and time to initiation of chemotherapy.
`
`We Have High Expectations For Enzalutamide In Pre-Chemotherapy
`
`Biologically there appears to be limited differences between a CRPC patient who has
`failed chemotherapy and one who has not. Moreover, enzalutamide’s Phase I/II
`experience suggests the drug is highly active in pre-chemotherapy patients. In
`addition, as noted above, pre-chemotherapy is the setting in which enzalutamide’s
`tolerability advantages relative to Zytiga could have the most benefit. Lastly, there is
`some scientific basis to support why enzalutamide may have greater efficacy
`relative to Zytiga in this setting (though in the end, the proof will be in the pudding).
`
`While Phase III data in the pre-chemotherapy setting are unlikely before 2013 or
`2014, we are comfortable adding significant estimates for enzalutamide in pre-
`chemotherapy patients to our model. At peak, we believe U.S. sales of enzalutamide
`in this setting could approach $1.5B. We also model ex-U.S. sales of nearly $1.5B in
`this setting.
`
`U.S. Pre Chemotherapy Revenue Model
`United States
`Pre-chemotherapy setting
`# patients on hormonal therapy (000)
`% patients who progress on hormonal therapy
`# patients who fail hormonal therapy
`% patients who advance to second-line hormonal therapy
`# patients who receive second-line hormonal therapy
`Penetration of MDV 3100 into second-line hormonal therapy
`# patients who receive MDV 3100 in pre-chemotherapy setting
`MDV3100 price per patient
`MDV3100 sales in HRPC ($MM)
`Source: Cowen and Company (All figures estimated.)
`
`2013
`
`2014
`
`2015
`
`2016
`
`2017
`
`675.0
`23%
`155.3
`50%
`77.6
`1%
`0.6
`$80,000
`$50
`
`682.4
`23%
`157.0
`50%
`78.5
`1.6%
`1.3
`$80,000
`$100
`
`689.9
`23%
`158.7
`51%
`80.9
`7%
`5.6
`$80,000
`$450
`
`697.5
`23%
`160.4
`53%
`85.0
`11%
`9.4
`$80,000
`$750
`
`705.2
`23%
`162.2
`55%
`89.2
`13%
`11.3
`$80,000
`$900
`
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