Medivation's Earnings Disappointed, so Why Did the Stock Rise?

(Continued from Prior Part)

Xtandi’s 1Q16 performance

Xtandi is Medivation’s (MDVN) only commercialized asset. During the first quarter of 2016, the drug recorded revenue of $547.2 million around the globe—53% year-over-year growth.

Net US sales recorded by Astellas stood at $308 million while the drug’s non-US sales totaled $240 million. For more detail on the drug, please see Xtandi: A Major Prostate Cancer Drug.

Xtandi US sales

Rising demand drove US sales of the drug. Sequentially, Xtandi’s revenue fell in 1Q16. The main reasons were the “annual reset of the so-called donut hole associated with Medicare Part D and a decrease in inventory at channel partners compared to Q4 2015.”

Xtandi non-US sales

The drug experienced a whopping 80% annual sales jump in 1Q16. Revenue increased in Germany, France, and Japan, supporting strong non-US sales growth for the drug.

To further boost sales, Medivation is conducting additional clinical trials for the drug. To understand label expansion opportunities, please see Opportunities For Xtandi, Medivation’s Key Drug and Could Xtandi’s Use for Breast Cancer Be a Valuation Driver?

Expanding labels for a key drug isn’t a new strategy. Alexion Pharmaceuticals (ALXN), Vertex Pharmaceuticals (VRTX), and Mallinckrodt (MNK) have used this kind of approach to drive sales growth.

Company-, industry-, or economy-specific events can lead to stock price volatility. To gain equity exposure while avoiding excess risk, you can opt for ETFs. One option is the iShares Russell 1000 Growth ETF (IWF). It invests 0.09% of its portfolio in Medivation.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Why Did Medivation’s 1Q16 Earnings Disappoint?

• Part 2 - Why Did Medivation’s Share Price Increase so Much after Earnings?

• Part 3 - The Story behind Medivation’s Rising Collaboration Revenue