On August 6, 2015 Medivation, Inc. (NASDAQ: MDVN) reported its financial results for the second quarter ended June 30, 2015 (Press release, Medivation, AUG 6, 2015, View Source [SID:1234507094]). U.S. net sales of XTANDI (enzalutamide) capsules, as reported by Astellas Pharma Inc., were $298.4 million for the quarter (+108% vs. prior year). Second quarter U.S. net sales increased by 33% compared with first quarter 2015 net sales of $224.0 million. We estimate second quarter 2015 unit demand increased by a low- to mid-teens percentage rate, compared with unit demand in the first quarter 2015. In addition, based on information provided by Astellas, a lower gross-to-net discount rate was applied to second quarter gross sales (compared with the first quarter rate), and a $2.8 million favorable adjustment was recorded in the second quarter by Astellas with respect to gross-to-net discount related to previous period gross sales.

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Ex-U.S. net sales of XTANDI, as reported by Astellas, were approximately $188 million for the quarter (+121% vs. prior year). Second quarter ex-U.S. net sales increased by 42% compared with first quarter 2015 net sales of approximately $133 million. U.S. dollar equivalent net sales for the quarter ended June 30, 2015, were adversely affected by a strengthening U.S. dollar vs. other currencies by approximately $3 million, or 2% compared with net sales in the quarter ended March 31, 2015.

"XTANDI’s performance, in both the U.S. and outside the U.S., demonstrates continued traction toward becoming a foundation of therapy for the treatment of metastatic castration-resistant prostate cancer," said David Hung, M.D., president and chief executive officer of Medivation. "Medivation will continue to pursue innovative programs that have the potential to make a meaningful impact in the quality of life of patients with serious disease."

Medivation reported GAAP net income of $25.8 million, or $0.31 per diluted share, for the quarter ended June 30, 2015, compared with GAAP net income of $47.9 million, or $0.60 per diluted share, for the same period in 2014. Non-GAAP net income for the second quarter of 2015 was $48.7 million, or $0.58 per diluted share, compared with non-GAAP net income of $4.4 million, or $0.05 per diluted share, for the same period in 2014.

Medivation’s collaboration revenue for the second quarter of 2015 was $175.7 million on a GAAP basis compared with $148.1 million for the same period in 2014 (+19% vs. prior year). Non-GAAP collaboration revenue, which excludes collaboration revenue related to upfront and milestone payments, was $174.8 million for the second quarter compared with $81.9 million for the same period in 2014 (+114% vs. prior year).

Medivation’s collaboration revenue consists of three components: collaboration revenue related to U.S. XTANDI net sales, collaboration revenue related to ex-U.S. XTANDI net sales, and collaboration revenue related to upfront and milestone payments.

Medivation’s collaboration revenue related to U.S. net sales of XTANDI for the second quarter 2015 was $149.2 million compared with $71.9 million for the same period in 2014 (+108% vs. prior year).

Medivation’s collaboration revenue related to ex-U.S. net sales of XTANDI for the second quarter 2015 was $25.6 million compared with $10.0 million for the same period in 2014 (+156% vs. prior year).

Medivation’s collaboration revenue related to upfront and milestone payments for the second quarter 2015 was $0.8 million compared with $66.2 million for the same period in 2014 (-99% vs. prior year). In the three months ended June 30, 2014, Medivation earned $62.0 million of development milestone payments from Astellas. Upfront and milestone payments are excluded from non-GAAP collaboration revenue.

Operating expenses were $122.0 million for the quarter ended June 30, 2015 on a GAAP basis compared with $93.1 million for the same period in 2014. Non-GAAP operating expenses were $98.8 million for the quarter ended June 30, 2015 compared with $73.3 million for the same period in 2014.

Selling, general and administrative (SG&A) expenses for the second quarter of 2015 were $74.7 million on a GAAP basis compared with $52.8 million for the same period in 2014. Non-GAAP SG&A expenses for the second quarter of 2015 were $57.5 million, compared with $43.6 million for the same period in 2014. The increase in non-GAAP SG&A expenses primarily relates to higher sales, marketing, medical affairs, administrative expenses, and personnel-related costs (excluding stock-based compensation).

Research and development (R&D) expenses for the second quarter of 2015 were $47.3 million on a GAAP basis compared with $40.3 million for the same period in 2014. Non-GAAP R&D expenses for the second quarter of 2015 were $41.3 million, compared with $29.6 million for the same period in 2014. The increase in non-GAAP R&D expenses primarily relates to higher MDV9300 costs, certain pre-clinical expenses for other programs, and higher facilities and technology costs and personnel-related costs (excluding stock-based compensation).

At June 30, 2015, cash, cash equivalents, and short-term investments were $497.5 million, compared with $502.7 million at December 31, 2014. In the second quarter and in July 2015, respectively, Medivation utilized approximately $93 million and $168 million of its cash balances to redeem the remaining outstanding Convertible Notes.

Enzalutamide Development Program

Reported positive top-line results in April 2015 from the Phase 2 STRIVE trial comparing enzalutamide with bicalutamide in patients with non-metastatic or metastatic prostate cancer whose disease progressed despite treatment with a luteinizing hormone-releasing hormone (LHRH) analogue therapy or following surgical castration. Presented additional results in May 2015 from the Phase 2 STRIVE trial at the 2015 Annual Meeting of the American Urological Association.

Reported new data in June 2015 from a Phase 2 trial evaluating the investigational use of enzalutamide as a single agent for the treatment of advanced androgen receptor (AR) positive, triple-negative breast cancer at the 2015 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting.

Enrolled first patient in TRUMPET (Treatment Registry for Outcomes in CRPC Patients), a prospective observational patient registry designed to better understand the unique needs and treatment patterns for patients with castration-resistant prostate cancer (CRPC).

In July 2015, the U.S. Food and Drug Administration (FDA) approved a label update for XTANDI based on an updated overall survival analysis of the Phase 3 PREVAIL trial.

Initiated start up activities for a Phase 2 study evaluating enzalutamide in hepatocellular carcinoma.

Corporate Developments

Issued a notice of redemption in June 2015 to redeem all of Medivation’s outstanding 2.625% Convertible Notes due 2017. In July, Medivation paid approximately $168 million in cash and issued 1.77 million common shares related to the redemption of the remaining outstanding Convertible Notes.

Appointed Andrew Powell as senior vice president, general counsel and corporate secretary. Mr. Powell brings to Medivation more than 25 years of leadership experience in the life sciences industry.

Announced a two-for-one stock split of Medivation’s common stock to be effected through a stock dividend. Shareholders of record as of August 13, 2015, will receive one additional share of Medivation common stock, par value $0.01, for each share they hold as of the record date. The share distribution is scheduled for September 15, 2015.