MEDIVATION INC (MDVN) Earnings Report: Q1 2016 ...results to differ significantly from those...

CompanyName:MedivationIncCompanyTicker:MDVNSector:HealthCareIndustry:Drugs

EventDescription:Q12016EarningsCallMarketCapasofEventDate:10.00BPriceasofEventDate:60.795

©2014TheStreet,Inc.Al l R ightsReserved Page1of32

MEDIVATIONINC(MDVN)EarningsReport:Q12016ConferenceCallTranscriptThefollowingMEDIVATIONINCconferencecalltookplaceonMay20,2016,08:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

AnneBowdidge;Medivation;IRDavidHung;Medivation;President&CEOMarionMcCourt;Medivation;COORickBierly;Medivation;OutgoingCFOJenniferJarrett;Medivation;CFOMohammadHirmand;Medivation;InterimChiefMedicalOfficer

OtherPart icipants

GeoffMeacham;BarclaysCapital;AnalystSalveenRichter;GoldmanSachs;AnalystYigalNochomovitz;Citigroup;AnalystKennenMacKay;CreditSuisse;AnalystGeoffreyPorges;LeerinkPartners;AnalystJohnNewman;CanaccordGenuity;AnalystKatherineXu;WilliamBlair&Company;AnalystDoKim;BMOCapitalMarkets;AnalystMikeKing;JMPSecurities;AnalystEricSchmidt;CowenandCompany;AnalystBirenAmin;JefferiesLLC;AnalystPeterLawson;SunTrustRobinsonHumphrey;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometoMedivation'sfirst-quarter2016financialresultsconferencecall.

Thiscallisbeingrecorded.

(OperatorInstructions)

IwouldnowliketoturnthecallovertoAnneBowdidge,SeniorDirectorofInvestorRelations.Pleasegoahead.

AnneBowdidge (IR):

Thankyou.Thankyouforjoiningus.

Justafterthemarketclosedtoday,apressreleasewasissuedwithearningsresultsforthefirstquarter2016.Thepressreleaseandaslidepresentationwhichwillaccompanythiscallareavailableintheinvestorrelationssectionofourwebsite.




OnthecallwithmetodayfromMedivationareDr.DavidHung,Founder,President,andCEO;JenniferJarrett,ChiefFinancialOfficer;Dr.MohammadHirmand,InterimChiefMedicalOfficer;andMarionMcCourt,ChiefOperatingOfficer.

Beforewebegin,I'dliketoremindyouthatvariousremarksthatwemakeonthiscallcontainforward-lookingstatementsthataremadeunderthesafeharborprovisionsofthesecuritieslaws.Forward-lookingstatementscanbeidentifiedbywordssuchasmay,could,believe,intend,expect,project,anticipate,andsimilarexpressions.

Theseforward-lookingstatementsinvolverisksanduncertaintiesthatcouldcauseMedivation'sactualresultstodiffersignificantlyfromthosediscussedtoday.SuchrisksanduncertaintiesarediscussedinMedivation'sfilingswiththeSEC,includingourannualreportonForm10-QforthequarterendedMarch31,2016,whichwefiledwiththeSECtoday.

Medivationcautionslistenersnottoplaceunduerelianceonanyforward-lookingstatement.Allforward-lookingstatementsmadeduringthiscallarebasedoninformationavailabletousasoftodayandweassumenoobligationtoupdatethesestatementsasaresultoffutureeventsorotherwise.ThiscallisthepropertyofMedivationandanyreplayofthisconferencecallcannotbemadewithoutMedivation'sexpresswrittenpermission.

Wewillalsobeusingnon-GAAPfinancialmeasurestohelpyouunderstandunderlyingbusinessperformance.Thenon-GAAPtoGAAPreconciliationsareprovidedonourpressreleaseandwillbepostedonourwebsite.

Withthat,I'llturnthecallovertoDr.DavidHung,Founder,President,andCEOofMedivation.David?

DavidHung (President&CEO):

Thanks,Anne.Thankyouallforjoiningustoday.

Onthiscall,IwillupdateyouonthefactorsthatcontributedtoMedivation'slandmarkquarterandtheimportantopportunitiesthatwehaveinourpipeline.

Asyouknow,lastweek,ourBoardofDirectorsunanimouslyrejectedSanofi'sunsolicitedproposaltoacquireourCompanyfor$52.50pershareincash.Medivationhassignificantvalueasoneofthefewprofitablecommercial-stageoncologycompanies.

Wehavealeadingoncologyfranchisewithablockbusterassetaswellasanexcitinglate-stagepipelinewhereweholdwhollyownedworldwiderights.Therefore,webelievetheproposalsubstantiallyundervaluesourCompany.

Attheendofourearningsremarkstoday,Iwillbewalkingthroughafewkeypointsaboutwhywebelievethatbyexecutingonourcurrentstrategicplan,wewillbeabletodeliversignificantlygreatervaluetoourshareholdersandthepatientswehelpeverydaythanSanofi'shighlyopportunisticproposal.

Butfirst,IwanttobeginbydiscussingaverystrongquarterandourvisionforfuturegrowththatIbelievewarrantsyourattention.WehavethreeprimarypillarsofvaluegrowthatMedivation.Numberone:XTANDI,ourblockbusterprostatecancerdrugpartneredwithAstellas,whichismovingnicelyupstreamintourologyandalsobeingdevelopedinbreastcancer,livercancer,andpotentiallyotherindications.

Numbertwo:talazoparib,ourwhollyownedPARPinhibitor,whichshouldcompleteenrollmentinthePhaseIIIEMBRACAbreastcancertrialthisyear,whichwillreadoutinthefirsthalfofnextyear.Andnumberthree:pidilizumab,ournaturalkiller-cell-activatingantibody,whichisalsobeingdevelopedinapotentiallyregistrationaltrialinDLBCLasafirstindication.Anumberofpotentiallysignificantvalue-




enhancingmilestonesintheseprogramslayaheadinjustthenextfewquarters.

WithrespecttoXTANDI,injustthenexthalfofthisyear,weexpecttoone:receivewordfromFDAonorbeforeOctober22onwhethertheXTANDIlabelmightbeamendedtoincludeTERRAIN/STRIVEdatacomparingXTANDIhead-to-headagainstbicalutamide,whichcouldfurtherenhanceurologyuptake.

Two:receivedatafromourPhaseIItrialinbreastcancerpatientswhoareER/PR-positiveandHER2normal,whichcompriseshalfofallbreastcancerandthereforeconstitutesasizablecommercialopportunitybeyondprostatecancerandtriplenegativebreastcancer.Three:receivedatafromourPhaseIVPLATOtrial,whichwillinformuswhethercontinuingXTANDIupondiseaseprogressionmayleadtobetteroutcomesandresultinapotentialincreaseinthedurationoftherapy.

Four:receiveAstellas'sagreementtoinitiatePhaseIIIintriplenegativebreastcancer.Andfive:exceedenrollmentof1,200patientsinourPROSPERtrial--1,200patientsbeingthetargetedenrollmentnumberofJ&J'sSPARTANtrial.IfSPARTANresultpositively,wehavetheoptionofunblindingPROSPERearlyifwesochoose.IfSPARTANmisses,wecanwaittounblindtoincreaseourchancesofsuccess.

Withrespecttotalazoparibthisyear,inadditiontofinishingEMBRACAenrollment,weanticipatestartingtrialsinprostate,breast,lung,andovariancancerpendingcompletionofFDAdiscussionsaswellaspresentingnewclinicaldataatanupcomingmedicalconferencewhichwebelievehighlightsthedifferentiatedmechanismandprofileoftalazoparib.

Withrespecttopidilizumab,wehavemadesomestridesinclarifyingtheantibody'smechanismofaction.Andwhenandifrepeatedlyconfirmed,wemayannouncethemechanismofactionasearlyasthisyear,whichwebelievemaymakepidilizumabanevenmoreunique,exciting,aswellascombinableasset.

LetmestartwithXTANDIcommercialsales.We'vehadanextremelystrongstartto2016andIwillbrieflysummarizesomeofthehighlights.Tobegin,XTANDIsalesintheUSandtherestoftheworldaregrowing,reachingagrowthrateof53%inQ1onayear-over-yearbasisforatotalof$547.2millioninworldwidesalesinthequarter.

XTANDIcontinuestomeetourexpectation,andasourCOOMarionMcCourtwilldiscussinamoment,recentdevelopmentsgiveusfurtherconfidenceforthefutureasweaimtoextendXTANDI'sleadershippositioninbothurologyandoncology.Asyouknow,wehaveguidedtowardUSXTANDInetsalesof$1.425billionto$1.525billionin2016,whichrepresentsa28%increaseatthemidpointover2015.Webelievethatour7%unitdemandgrowthinQ12016overQ42015putsusontracktohitour2016USXTANDInetsalestarget.

AndasXTANDIisincreasingtheuseasfirst-linetherapyinmetastaticCRPC,weexpectthedurationoftreatmenttocontinuetoincreasebeyondthenearlyeight-monthaverageobservedlatein2015,whichwillleadtofurthersalesgrowth.

Aswelookatthebigpicture,wehavegrownXTANDI,ourfirstmarketedproduct,toachieveblockbusterstatusinjustafewshortyears.Only31/2yearsafteritslaunch,XTANDIisnowtheeighth-largestoncologyproductgloballybyrevenue,andbasedonestimatesfromEvaluatePharma,itwillbethefourth-largestoncologyproductby2021.EvaluatePharmajustpublishedareportonTuesdayprojectingthatXTANDIwillbethesecond-largestproductinEuropeacrossalltherapeuticcategoriesin2022andthebest-sellingoncologyproductinEurope.

Justlastmonth,wereachedanimportantmilestonewhentheCommitteeforMedicinalProductsforHumanUse,orCHMP,oftheEuropeanMedicinesAgencyissuedapositiveopinionrecommendinginclusionofdatafromthehead-to-headTERRAINtrialofenzalutamideversusbicalutamideinXTANDI'sEuropeanlabel.TheCHMP'sdecisiontoincorporatetheseimportant,clinicallymeaningfulcomparative




dataintheXTANDIlabelisasignificantdevelopmentthatwillfurtherenhanceclinicalunderstandingandwebelieveadoptionofXTANDIamongurologistsandoncologiststhroughoutEurope.

InFebruary,theUSFDAacceptedourSNDAfilingtoupdatetheclinicalsectionsofXTANDI'sUSproductlabeltoincludefindingsfromtheTERRAINandSTRIVEtrials.TheAgencyhasprovidedaPDUFAdateofOctober22,thisyearforadecision.

Includinghead-to-headdataofXTANDIagainstbicalutamide,thecurrentstandardofcare,intheUSlabelcouldbeanimportantcatalystforfurtherdrivingbothurologyandoncologyadoption.Marionwilldiscussinmuchmoredetailhowwearepreparingcommerciallyforthisimportantevent.

BeyondXTANDI,wearewellpositionedforlong-termsustainablegrowthwithapromisingpipelinethatincludestwolate-stagewhollyownedassets:talazoparibandpidilizumab.I'llspeakmoreaboutourvisionforthegrowthoftheCompanylaterinthecall.

Withthatintroduction,I'dliketoturnthecallovertoMariontogivesomeadditionaldetailsonthestrongcommercialperformanceofXTANDI.

Marion?

MarionMcCourt (COO):

Thankyou,David.Goodafternoon,everyone.

Firstletmesaythatthisquarter'scommercialactivitywasimpressiveandacleardemonstrationofXTANDI'svaluepropositionforbothshareholdersandpatients.Itsrobustworldwidesalesmademeaningfulcontributionstoourstrongoverallfinancialperformanceandasthemostexcitingproductinprostatecancertreatmenttoday.

XTANDIisaremarkableexampleofMedivation'scommitmenttoscientificadvancement.IjoinedthisCompanytobecomepartofanindustry-leadingteamdedicatedtoadvancingthecareandsurvivalofcancerpatients.Ourfirst-quarterresultsdemonstratethatwearedoingjustthat.Atthesametime,weareworkingtoexpandXTANDI'sfranchisewithinoncologyaswellisintoothertherapeuticareas,suchasurology,sothatwecancontinuetodosointothefuture.

Duringthefirstquarter,XTANDI'sworldwidenetsalesreachedapproximately$547million.Thisrepresentsanincreaseofover53%overthefirstquarterof2015.NowturningtotheUSnetsales,approximately$308millioninthefirstquarterof2016,whichrepresentsanincreaseof$84millionora37%increaseoverthefirstquarterof2015.

Inthenovelhormonaltherapy,orNHTmarket,whichisdefinedasXTANDIandabiraterone-treatedpatients,wecontinuetomakesignificantgainssecuringmarketandcompetitivesharegrowth.XTANDIcapturedover50%ofthetotalNHTmarketforQ1accordingtoIMSdataandcontinuestobethemarketleaderfornewprescriptions.Forthefirsttime,XTANDIhassurpassedabirateroneintotalprescriptionswrittenduringanyquarter.

Inaddition,USXTANDIunitdemandgrewapproximately7%toanestimated42,000prescriptionbottlesduringthefirstquartercomparedtothefourthquarterof2015.We'reencouragedbythesemetricsandourrecentmarketresearchgivesusevenfurtherconfidence.

ThetoptworeasonsphysicianschooseXTANDIasthepreferredagentintheNHTmarketaredemonstratedefficacyandease-of-use.Mostrecentsurveydatashowsthatapproximately65%ofoncologistsand77%ofurologistsindicateXTANDIistheirpreferredNHTproduct.Sincepreferenceisaleadingindicatoroffutureperformance,wearewellpositionedtoextendourleadershippositioninthe




growingNHTmarket.

XTANDIcontinuestoenjoybroadcoverageacrossUSMedicareandcommercialprescriptionplans.Themajorityofthird-partypayersreimburseXTANDIatparitywithoraloncologyproducts.

InMarch,wecompletedtheexpansionofourspecialtysalesforce,whichincludedtraininganadditional40salesrepresentativesandfurtherstrengtheningoursalesleadershipteam.Marketanalysissuggestedthatexpandingoursalesforceintodedicatedurologyandoncologyteamswouldadvanceoururologysales'impactandstrengthenourleadershipinoncology.

BecauseournewsalesrepresentativesdidnothitthegroundinasignificantwayuntilMarch,wewillseeincreasingimpactofthesalesforceexpansioninlaterquartersthisyear.

Inadditiontoprovidingtheframeworkforcustomizedcontentandmessaging,thisnewsalesfootprinthasallowedustosignificantlyincreaseourcallvolumereachandfrequencytothemostimportantprescribers.XTANDI'sshareofvoiceasmeasuredbythird-partysourceshassignificantlyincreasedinurologyandwearenowthemarketleaderinbothurologyandoncology.

WhiletodaymostXTANDIprescriptionsarewrittenbyoncologists,urologyisourmostsignificantnear-termgrowthopportunityandweareexcitedaboutourprogressinQ1.Inthisquarter,wesawarobust68%growthinurologyprescriptionsovertheprioryearasreportedbyIMS.

Totalandnewurologyprescriptionsgrewat14%and12%,respectively,versusthepreviousquarter.Currently,over20%ofXTANDIbusinessisinurology,withnewurologyXTANDIprescriptionsinQ1accountingforapproximately26%ofnewpatientstarts.

Inthisquarter,ouractivebaseofurologyprescribersgrewby62%toover1,300fromapproximately800inQ12015.WebelieveourexpandedsalesforcewillfurtherincreaseourreachandfrequencywithimportantmetastaticCRPCprescribersincomingquarters.

Today,XTANDIisthenumberonemostfrequentlyprescribednovelhormonetherapyinurology.Butletmetellyouwhyweseesignificantgrowthahead.Third-partydatashowsthatapproximately80%ofprostate-cancer-drug-prescribingurologistshavenotyetwrittenaprescriptionforXTANDI.

Barrierstourologyadoptionincludehabitandgenerallackofawareness,whichwebelievewecanparticularlyaddresswithTERRAIN/STRIVEdata,butwhichwecannotpromoteuntilwereceivealabelamendment.Webelievetheincreaseinoururology-focusedsalesforcesetsthestageforustoshiftthecurrenttreatmentparadigm.Andweareseeingearlysignsofsuccess.

Transitioningnowtooncology,thissegmentaccountsforthemajorityofourcurrentsales,andXTANDIcontinuestogrowinthisimportantlineofbusiness.Inthisquarter,wesaw19%growthinprescriptionsversusthesameperiodlastyearasreportedbyIMS.Totalandnewprescriptionsgrewthisquarterat6%and7%,respectively,versuspriorquarter.

Aswehaveoutlinedtoday,overallXTANDIsalesweredrivenbyincreasesinnewpatientstarts,competitivesharegains,andmarketgrowth.AnotherkeydriverforXTANDIisdurationoftherapy,oraveragenumberofmonthsontherapy.

Overthepastthreeyears,XTANDI'sestimatedoveralltreatmentdurationhasmorethandoubled,fromanaverageoflessthanfourmonthsin2013tonowgreaterthaneightmonths.GiventhatabirateronelaunchedaheadofXTANDI,abiraterone'scurrentdurationoftherapyislongerthanXTANDI's,estimatedtobe10monthsormore.WeexpectXTANDI'sdurationoftherapytrendtocontinuetoincreaseasXTANDImovesearlierintothetreatmentparadigm.




AtMedivation,ourfocusisonservingpatients.Andourmissionistohavearemarkableimpactontheirlives.Sincelaunch,approximately60,000patientshavebeentreatedwithXTANDIintheUSalone.We'redeliveringonourmissiontomakeadifferenceinthelivesofmenwithprostatecancerandtheirfamilies.

I'llnowturnitbackovertoDavid.


Thanks,Marion.BeforeJenprovidesanupdateonthefinancials,I'dliketoturnthecallovertoRickBierlyforafewwords.

Asyouknow,Rickhasmadeadecisiontoretire.Rickhasbeeninstrumentalinhelpingustobecomethestrong,fullyintegratedcommercialcompanythatwearetoday.I'dliketothankRickforhismanycontributionsandwishhimtheverybestfromallofus.

Rick?

RickBierly(OutgoingCFO):

Thanks,David.Goodafternoon,everyone.IwantedtofirsttakejustamomenttoextendmythanksandbestwishestoallofyouwhoI'vehadthepleasureofworkingwithoverthepastcoupleyearssinceIjoinedMedivation.Asmostofyouknow,IhaveannouncedmyretirementinthecomingmonthsandIlookforwardtoreturningtotheEastCoastlaterthisyear.

Medivationisatrulygreatcompanydoinggreatworktobenefitpatients,theircaregivers,andfamilieseveryday.AndithasbeenanhonorandprivilegetoworkcloselyalongsideDavidandtheteamheretomovetheCompanyforwardandtobringtheMedivationstorytoallofyou.

Atthispoint,IalsowishtowarmlywelcomeJenJarretttoMedivationasChiefFinancialOfficer.Jenwilltakeyouthroughthefinancialsectionofthepreparedremarks.

Jen?

Jennif erJarrett (CFO):

Thankyou,Rick.Goodafternoon,everyone.

IhaveknownDavidandtheMedivationteamforover10years,andI'mthrilledtobeworkingcloselywiththeexecutiveteamandpreparingtheCompanyforitsnextphaseofgrowthasweapproachthepotentiallabelamendmentforXTANDIinOctoberandlaunchoftalazoparibwithinthenexttwoyears.

Iwouldliketonowdirecteveryonetotheslidesonthewebcast.StartingwithUSsales,XTANDInetsalesasreportedbyAstellaswereapproximately$308millioninthefirstquarterof2016,a37%increaseoverthefirstquarterof2015.

Asareminder,our2016guidanceforXTANDIUSnetsalesatthemidpointrepresentsapproximately28%growthover2015.Basedonthisrobustfirst-quartergrowthrate,weareconfidentinreaffirmingour2016USXTANDInetsalesguidance.

Thesefirst-quarterresultswereconsistentwithourinternalexpectationandwiththeguidanceweprovidedonouryear-endcallthat2016first-quarternetsaleswouldbebelowthelevelreportedinthefourthquarterof2015duetoseasonalitemsthatwetypicallyexperienceinthefirstquarterandthatIwillnowwalkyouthrough.

First,grossdemandsaleswereapproximately$374millionbasedonunitdemandofapproximately




42,000.AsDavidmentionedearlier,thisrepresentsasequentialgrowthrateofapproximately7%.

Second,channelpartnerinventorydecreasedbyapproximately1/2week,whichoffsetunderlyingdemandgrowthby$11millionor3%.Thisisconsistentwithourhistoricalseasonalpatterns,whereweobserveadrawdownininventoryinthefirstquarterfollowingabuildupofinventoryinthelastquarteroftheyear.

Third,ourcurrent-periodgrosstonetaccrualratewasapproximately16%.Thehighergrosstonetaccrualrateinthefirstquarterof2016comparedtothefourthquarterof2015islargelyrelatedtotheannualresetoftheso-calleddonutholeassociatedwithMedicarePartD.Separatefromourcurrentperiodgrosstonetaccrualrate,netsalesbenefitedfroma$4.2millionfavorableadjustmentthisquarterrelatedtoatrue-upofprior-periodreserves.

OutsidetheUS,whereAstellasconductsallsalesmarketinganddistribution,netsaleswereapproximately$240millioninthefirstquarterof2016,anincreaseof80%comparedtothefirstquarterof2015.Theyear-over-yearincreasewasprimarilydrivenbygrowthinGermany,France,andJapan.

TurningnowtoMedivation'sincomestatement,totalnon-GAAPcollaborationrevenuewas$182.5millionforthefirstquarter2016comparedwith$127.8millionin2015,anincreaseof43%.CollaborationrevenuerelatesrelatedtoXTANDIUSnetsaleswas$153.8millionforthefirstquarterof2016comparedto$112millionin2015,anincreaseof37%.Asareminder,ourcollaborationrevenuerelatedtoXTANDIUSnetsalesisequaltoone-halfoftheUSnetsalesreportedbyAstellas.

Medivationcollaborationrevenuerelatedtoex-USsaleswas$28.7millionforthefirstquarterof2016comparedwith$15.8millionintheyear-agoquarter,anincreaseof82%.UnderourcollaborationwithAstellas,weearnatieredroyaltyratethatisbasedonsalesthatresetatthebeginningofeachcalendaryear.Assuch,ourroyaltyrateonex-USsaleswillincreasethroughouttheyear.

Asapointofreference,theeffectivequarterlyroyaltyratesfor2015were12%,14%,16%,and19%forQ1throughQ4,respectively.Andtheroyaltyratecantieruptothelow20's.

NowI'llturntooperatingexpenses.Non-GAAPR&DexpenseforthequarterendedMarch31was$68.4millioncomparedwith$37.9millionforthefirstquarter2015,anincreaseof81%.Theyear-over-yearincreaseinnon-GAAPR&DexpenseisprimarilyaresultofR&Dexpensesrelatedtotalazoparib,whichweacquiredinOctoberof2015,andourassumptionofexpensesforalltalazoparibactivities.Thequarter-over-quartergrowthinR&Dexpenseswas11%andthissequentialgrowthrateshoulddeclineinthesecondhalfoftheyear.

Non-GAAPSG&Aexpenseforthefirstquarter2016was$83.8millioncomparedwith$67.4millionforthesameperiodin2015,anincreaseof24%,whichwaswellbelowouryear-over-yearrevenuegrowth.ThismoderateincreaseinSG&Aexpenseisdespitetheexpansionofoursalesforce,whichMariondescribedearlier.

Ourfirst-quarterSG&AexpenseswereimpactedbyannuallyrecurringcollaborationexpensesincurredbyAstellasthatareexpensedwithalmostentirelyinthefirstquarteroftheyear.Youwillseeonslide11thatwewereimpactedbythesesameexpensesinthefirstquarteroflastyear.Assuch,weexpectthatournon-GAAPSG&Aexpenseswilldecreaseinsubsequentquarters,similartothetrendweobservedin2015.

Medivationreportednon-GAAPnetincomeof$18.8millionor$0.11perdilutedshareforthefirstquarterof2016comparedwithnon-GAAPnetincomeof$13.4millionor$0.08perdilutedshareintheprior-yearfirstquarter.Thisrepresentsyear-over-yearnon-GAAPEPSgrowthof35%.




Consistentwithwhatweobservedin2015,asyouwillseeonslide12,ourfirst-quarter2016non-GAAPEPSisgenerallylowerduetotheresettingoftheroyaltyrateonex-USXTANDIsales,thehigherGTNaccrualratebyAstellasonUSnetsales,theinventorydrawdown,andthepreviouslymentionedhighernon-GAAPSG&AexpensesduetothetimingofcertaincollaborationexpensesincurredbyAstellas,whichoccursprimarilyinQ1.

Assuch,weexpectourquarterlynon-GAAPEPStosignificantlyincreaseincomingquarters.Andarethereforereaffirmingour2016full-yearnon-GAAPEPSguidanceof$1.30to$1.40.

Turningquicklytoourbalancesheet,atMarch31,wehadcashandcashequivalentsofapproximately$317millioncomparedwithapproximately$226millionattheendof2015.Theincreaseofapproximately$92millionwasprimarilyduetothereceiptof$175millionsalesmilestoneforAstellas,whichwasearnedinthefourthquarterof2015andreceivedinthefirstquarterof2016,offsetbytherepaymentof$75milliononourcreditfacilityinJanuary.

Lastly,wearereaffirmingthe2016full-yearguidanceweprovidedonourFebruary25year-endconferencecall.The2016guidanceinformationisincludedinourpressreleasefiledtoday.Historicnon-GAAPinformationmaybefoundonourwebsiteatmedivation.com.

Withthat,I'llnowhandthecallbackovertoDavid.


Thanks,Jen.

Beforewestart,I'dliketoreferyoutoourforward-lookingstatements.Iwouldnowliketospendthenext30minutestalkingaboutSanofi'sunsolicitedproposalandourrejectionofit.

OurBoardunanimouslybelievesthatthecontinuedsuccessfulexecutionofourwell-definedstrategicplanwilldelivergreatervaluetoMedivation'sshareholdersthanSanofi'ssubstantiallyinadequateproposal.

Whilewewouldhopethatmanyofthenear-termvaluecatalystsareevidentfromthediscussionofourquarterlyresults,wewanttoprovidemuchmoredetailaroundourstrategyforthefutureandaddresswhyourBoardconcludedthatSanofi'sopportunisticallytimedproposalsubstantiallyundervaluesourCompanyanditsexcitingprospects.

AsImentionedatthebeginningofthiscall,wehavepostedapresentationonourwebsite,whichIwillnowwalkyouthrough.Slide20summarizeseverythingthatIwouldliketocoverwithyoutoday.Let'sstartwithslide22andwhatourmissionis.

SinceIfoundedMedivationin2003,ourfocushasbeenonpatients.LetmestartwiththestoryofGraeme,anXTANDIpatientandclosefriendofMedivation.In2010,Graemehadfailedallstandardofcaretherapies,includingchemotherapy,andwastoldthathehadthreeweekstolive.Youcanseehimontheleftinahospitalbed,hisfacebloatedfromthesteroidshehadtotakewithhischemotherapy.

Atthattime,weenrolledGraemeinAFFIRM,ourfirstpivotaltrialforXTANDI.Hehadaremarkableresponse.HisPSAwentfromabove55--normalwouldbelessthan4--tozero.GraemeisnowonhissixthyearofXTANDI,treatment,andasyouwillseeinthepictureontheright,Graemeisthriving.

Hehasseenallthreeofhiskidsmarriedandwitnessedthebirthofthreenewgrandchildren.HevisitedseveralMedivationseveralmonthsagotothankusforwhatwedidforhimandthenembarkeduponabackpackingtriptoCanadabyhimself.




GraemewasoneoftensofthousandsofpatientswhohavebenefitedfromXTANDIandoneofthemanyXTANDIpatientswhoIhavestayedintouchwith.Infact,IjustreceivedanemailfromGraemethisweekandhecontinuestodoextremelywell.HisPSAcontinuestowaverbetweenzeroand0.1,andheisgratefulforthemanyyearsthatXTANDIhasgivenhim.

Whilehelpingpatientsisatoppriority,wehavebeenandcontinuetobefocusedoncreatingvalueforourshareholders.Onslide23,IwanttosummarizesomeoftheextraordinaryaccomplishmentsthatwehaveachievedandhowwewillcontinuetobuildvalueforMedivationanditsshareholdersoverthecomingyears.

First,injustoverthreeyears,wehaveestablishedXTANDIastheworld'sleadingprostatecancertherapybasedonsales.XTANDIisnowgenerating$2.2billioninannualizedworldwidenetsalesandwein-licensedXTANDIandtookitfrompreclinicalleaddiscoverytofullFDAapprovalinjustsevenyears,oneofthefastestdevelopmenttimesinbiopharmaceuticalhistory.

OursuccesswithXTANDIhasallowedustomakestrategicinvestmentsinnewopportunitiesthatleverageourexistingstrengthsandcapabilities.Asaresultoftheseinvestments,wehavebeenabletoacquiretwoexcitingwhollyownedlate-stageoncologyassets:talazoparibandpidilizumab.

BycontinuingtoexecuteonourstrategytomaximizeXTANDI'spotentialanddeveloptalazoparibandpidilizumab,weexpectthatnon-GAAPrevenuewillgrowfrom$695millionin2015toover$2.5billionby2020orapproximately30%onacompoundedannualizedbasis.IamconfidentthatthevaluethatwecancreatewithjustthesethreecurrentassetsissignificantlyhigherthanSanofi'sproposal.

XTANDI'ssuccesshasbenefitedourshareholders.Becauseofasteadyrampinrevenue,asseenontheupper-leftgraphonslide24,andaveryshorttimetoprofitabilitycomparedtoourbiotechpeers,Medivationhasgeneratedover950%totalshareholderreturnoverthelastfiveyearsandover4,000%totalshareholderreturnoverthelast10years,significantlybetterthantheNASDAQBiotechnologyIndex.SinceourfirstpublicfinancinginDecember2004,Medivationhasgeneratedshareholderreturnsofmorethan15,000%.

Ialsowanttoemphasizehowconscientiouswehavebeenonbeingcapitalefficientandminimizingshareholderdilution.Ourlastequitycapitalraisewasoverfouryearsagowhenwecompleteda$225millionconvertibleoffering.

Infact,priortothisconvertibleofferingin2012,duringthefirsteightyearsoftheCompany'sgrowthfrom2004to2012,weraisedonlyapproximately$175milliontogenerateamarketcapin2012ofmorethan$3billion.Wehavesinceredeemedthisconvertiblewhenitwassignificantlyinthemoneyandhavenotraisedanyequitycapitalsincethatoffering.

Onslide25,XTANDI,aswehavediscussed,hassignificantpotentialtoservemuchlargerprostatecancerpatientpopulationsaswellaspatientswithbreastcancerandothersolidtumors.ThispipelinechartsummarizesallofourongoingtrialsforXTANDI,eachofwhichrepresentsaverysignificantcommercialopportunityforMedivation.

WhileweareclearlybestknowntodayforXTANDI,wearenowleveragingtheclinicalexpertisethatcontributedtothesuccessofXTANDItoadvancetherestofthepipeline.CurrentandfutureindicationsforXTANDI,talazoparib,andpidilizumabcombinedrepresentanaddressablemarketofmorethan$50billion.

Withalltheseongoingandplannedtrials,weareapproachinganinflectionpointinMedivation'sgrowthtrajectory.Wefindourselvesinafortunatepositiontodayandbelievethatourshareholders,notSanofi's,shouldbetheonestobenefitfromthefullvalueofXTANDI,talazoparib,andpidilizumab.




Eachofourproductshasmultiplenear-termmilestonesthatwillfurtherincreasetheirvalue.Asyoucanseeonslide26,manyoftheseareexpectedinjustthenext12months,withsomeofthemostsignificanthighlightedintheredboxesbeingtheOctober22PDUFAdatefortheXTANDIlabelamendment,top-linedataforXTANDIinER/PR-positiveHER2normalbreastcancer,andPhaseIIIdatafortalazoparibintheEMBRACAtrialinBRCA-mutatedadvancedbreastcancer.

Whilewehavehighlightedthreemilestoneshere,webelievethatalloftheeventsonthisslidehavethepotentialtocreatesignificantvalueforourshareholders.Sanofiisobviouslyawareofthesignificantsharepriceappreciationlikelytofollowtheseevents,whichiswhytheychosetomakeanopportunisticunsolicitedapproachafewweeksago.Iwilltalkmoreabouttheseimportantvalue-creatingeventslaterinmypresentation.

Turningtoslide27,let'stalkaboutXTANDIandourstrategyforcontinuingtomaximizethevalueandrevenuepotentialofourleadingoncologyfranchise.Onslide28,Itouchonthisonourearningscall,butIwanttoreemphasizehowsignificantaproductwehavecreatedwithXTANDI.

Asyoucanseeonslide28,in2015,XTANDIwastheeighth-largestoncologyproductbyworldwidesales.In2021,XTANDIhasbeenprojectedbyEvaluatePharmatobethefourth-largestoncologyproductgloballyinthemidstofoneofthemostexcitingandcompetitiveareasofdrugdevelopmentinoncology.Andimportantly,asweexpecttohavemorethan10yearsofprotectionfromtodayonourcompositionofmatterpatent,wecancontinuetogrowXTANDIwellintothefuture.

Slide29--justthispastweek,EvaluatePharmaforecastedthatby2022,XTANDIwillbethesecond-largestproductinEuropeacrossalltherapeuticcategories.Infact,XTANDIisprojectedtobebiggerthanseveralotherprominentoncologyproducts,suchasCelgene'sREVLIMID,whichhasbeenonthemarketmuchlongerthanXTANDI,andBristolMeyer'sOPDIVO.

I'llnowgetintothespecificsastowhywearesoconfidentinthegrowthprofileandcommercialpotentialofXTANDI.Slide30.Firstofall,wecontinuetotakeshareoftheNHTmarketfromourcompetitorJ&J.Asareminder,J&JlaunchedZYTIGA16monthsaheadofXTANDI.Despitetheirsignificantlead,wesurpassedthemintermsofmarketsharejustthislastquarter,whichyoucanseefromthedottedlinescrossingontherightoftheslide.

Thisisimportantbecausewhicheverdrugisusedfirstgetsalongerdurationoftherapy.HavingjustexceededZytigainmarketsharethislastquarter,webelievethatwearestartingtogetusedinfirstpositionmoreandmore,whichwebelievewillincreaseourdurationofuse.

AnotherpointtheleftgraphmakesishowmuchtheNHTmarkethasgrownduringthistimeperiod.Infact,theNHTmarket,definedasworldwidesalesofXTANDIandZYTIGA,hasgrownfromjust$1billionin2012to$4.1billionin2015.WeexpectthemarkettocontinuetogrowandMedivationtocontinuetotakesharefromJ&J,givenrecentsurveysshowingpreferenceofXTANDIoverZYTIGAduetoXTANDI'sclinicalefficacyandease-of-use--aprofileparticularlyimportantinurology.

Duringtheearningsportionofthecall,wediscussedhowXTANDI'ssalesweredrivenbyincreasesinnewpatientstarts,competitivesharegains,andmarketgrowth.NowIwanttoelaborateonanothercriticalandpowerfulgrowthdriverforXTANDI:durationoftherapy,ortheaveragenumberofmonthsontherapy.

Overthepastthreeyears,XTANDI'sestimatedoveralltreatmentdurationhasmorethandoubledfromanaverageoflessthanfourmonthsin2013toeightmonthstoday.HavingreachedthemarketbeforeXTANDI,abiraterone'scurrentdurationoftherapyisestimatedtobe10monthsormore.

Slide31.WeexpectXTANDI'sdurationoftherapytrendtocontinuetoincreaseasXTANDImovesearlierintothetreatmentparadigm.Physicians,especiallyurologists,oftencontinuetherapiesuntilPSA




progressionandthenswitchiftheybelieveapatientisfailing.

Asshownonslide31,mediantimetoPSAprogressionwas11.2monthsinPREVAILand19.4monthsinTERRAIN,bothmetastaticCRPCtrials,butTERRAINpatientswerelessclinicallyadvancedthanthoseinPREVAIL.Therefore,weanticipateXTANDI'sdurationoftherapywillovertimebeatleastinthemidpointoftherange,whichisapproximately15.3monthsinthemetastaticCRPCsetting.

Furthermore,themediantimetoPSAprogressionwasnearly25monthsintheM1populationofSTRIVE,andthemedianwasnotyetreachedintheM0populationofSTRIVE,suggestingatimetoPSAprogressionexceeding25monthsforthistrial.Clearly,movingfurtherupstreamaffordslongerpotentialtreatmentdurations,andthatisourgoal.AndasMarionsaidearlier,giventhatwehaveexceededJ&JintotalscriptsforthefirsttimeinQ1andthatwecontinuetohaveasubstantialcompetitiveleadinurology,itisbecomingthereality.

Slide32.Needlesstosay,thetotalmarketopportunityforusinjustprostatecancerismassive.Withinourcurrentlabel,theaddressablepopulationis73,000patientsintheUSalone.WebelievethataTERRAIN/STRIVEamendmenttoourlabelforXTANDIinmetastaticCRPCshouldaccelerateXTANDI'sadoptionbytheurologistswhomanagethemajorityofthesepatients.

Inaddition,wehaveanumberofongoingPhaseIIItrialstoevaluateenzalutamideevenearlierintheprostatecancertreatmentcontinuum.ThesestudiesincludePROSPERinnon-metastaticCRPC;EMBARK,anonmetastatichormone-sensitiveprostatecancertrial,whichincludesahead-to-headcomparisontoLupron,themostwidelyandearliest-usedprostatecancerdrug;andARCHES,ametastatichormone-sensitiveprostatecancertrialwhichAstellasisrunning,whichwillcompareenzalutamideplusandrogendeprivationtherapytoADTalone.

Thesethreetrialsincreasetheadditionalpatientopportunityby60,000patients,nearlydoublingthecurrentaddressablepatientpopulationforXTANDI.Butimportantly,becausethesestudiesaddressearlierstagepatientsinwhomthedurationoftherapycanbesignificantlylonger,labelexpansionsintotheseindicationscouldsignificantlyincreaserevenuefromdurationofuseaswellasfromincreasedpatientnumbers.

Slide33.Asyoucanseehere,webelievethatchallengingXTANDI'spositionasaleaderinthetreatmentparadigmforprostatecancerwillbeadauntingtask.Anypotentialnewcompetitorswhoaspiretodisplacecurrentagentswouldneedtogoupagainststandardcare.

ThestandardofcaremenuoptionslisthasincreasedsignificantlyrecentlyfromnonepostTaxoterejustsixyearsagotonowfivenewagentswithprovenclinicalbenefitsandindicationsrangingfrompost-chemotopre-chemo.ThesefiveareXTANDI,ZYTIGA,PROVENGE,Xofigo,andJevtana,withXTANDIandZYTIGAparticularlywidelyused.

Ofnote,ofthese[five](correctedbycompanyafterthecall)drugs,onlyZYTIGAandXTANDIhavedemonstratedbothoverallsurvivalandprogression-freesurvivalbenefitsinabroadlabelcoveringbothpre-andpost-chemopatients.Butonlyone--XTANDI--hasalsodemonstratedhead-to-headsuperiorityoverastandardofcareinurology,Casodex.

Asyoucanseeonthisslide,thisdifferentiatedprofileisalreadytranslatingintomarketleadershipbysales.Andforanynewpotentialcompetitors,tryingtoshowbenefitsovermultipleotherdrugswithrobustbenefitsisanexceptionallydifficulttask.AndwebelievelikelycontributedtotherecentPhaseIIIfailureofTAK-700,OGX-111,andtasquinomod.

By2016,XTANDIisprojectedtobethenumberoneagentforprostatecancer,with$2.9billioninsalesversus$2.3billionforZYTIGA.SowebelievethattheXTANDIfranchisewillcontinuetothriveand




generateandsustainhighvalueforalongtimetocome.

LetmenowtalktoyouaboutacompletelydifferenttumortypethatwearetargetingforXTANDI:breastcancer,onslide34.Justlastyear,totalbreastcancerdrugsales,despitemanyofthesedrugsbeinggeneric,totaled$15billionworldwide.

WearepursuingmultiplesubtypesofbreastcancerwithXTANDI.Thefirstsubtypeistriplenegativebreastcancer,orTNBC,whichaccountsfor15%ofallbreastcancer.TNBCisoneofthemostaggressivetypesofbreastcancerandsurvivalstatisticsaresomeoftheworstofanytumortype.Thatiswhywearesoexcitedaboutthetrialdatathatwepresentedjustfivemonthsagoatthe2015SanAntoniobreastcancersymposium.

InthisPhaseIItrial,whichenrolled118womenwithadvancedTNBC,enzalutamideconferredanearly14monthlongermediansurvivalbenefitinwomenwhotestedpositiveforanoveldiagnosticsignatureversusdiagnostic-negativewomen.50%ofTNBCpatientsarepositiveforourdiagnosticsignature,potentiallyallowingXTANDItotarget7.5%ofallbreastcancer.

Weareparticularlyencouragedabouttheseresultsbecausethestandardtreatmentoptionforthesewomenischemotherapy.AndmostwomenwithTNBConchemoprogressveryrapidlyandhaveanextremelypoorprognosis.WethinkourTNBCdataareunprecedented.Inthesecondhalfof2016,weintendtostartaregistrationalstudyinTNBCuponreceivingagreementfromourpartnerAstellas.

14monthsago,wecompletedenrollmentinoursecondPhaseIIbreastcancertrialevaluatingenzalutamidein247womenwithadvancedbreastcancerthatisER/PR-positiveandHER2normal.Thispopulationcomprisesabout50%ofallbreastcancers,soasignificantlylargeropportunitythanevenTNBC.WeexpectdatafromtheER/PR-positivetrialtoreadoutinthesecondhalfthisyear.

Inaddition,enrollmentcontinuesinourPhaseIIstudyinHER2-amplifiedbreastcancer,whichcomprises15%ofallbreastcancer.Sowithourthreetrials,wearetargetingapproximately70%ofallbreastcancers.

Let'smovetoslide35.Thepatientswearetargetingwithourcurrentlyongoingorplannedbreastcancertrialsrepresentatotaladdressablepatientpopulationofatleast75,000intheUSalone.Inaddition,justfourmonthsago,AstellasenrolledthefirstpatientintoaPhaseIItrialevaluatingenzalutamideinapproximately140patientswithadvancedhepatocellularcarcinoma,orHCC.

HCCrepresentsmorethan75%ofalllivercancercases,anditcouldincreasetheaddressablepatientpopulationforXTANDIby15,000patientsintheUSalone.ThisPhaseIItrialisexpectedtoreadoutin2018andcouldidentifyyetanotherindicationtosupportfuturegrowthofXTANDI.Thisadditionalopportunityof90,000patientswithbreastcancerandlivercancerrepresentsatotalUSrevenueopportunityofgreaterthan$3.5billion.

Andasyetanotherpotentialopportunitywhichwehavenotputintoaslide,researchersfromtheNCIpresenteddataatAACRonApril19thatshowedthatXTANDIhaspotentialimmune-activatingpropertiesinprostatecancerandmaybesynergisticwithimmuno-oncologyagents.ThiscouldalsorepresentanothersignificantopportunityforXTANDI,particularlybyprolongingthedurationofresponseandtreatmentinpatients.

Slide36.BeforeweleaveXTANDI,Iwanttoremindeveryoneofalltherecentmilestoneswehaveachievedwiththisproductthatwearejustnowstartingtoseebenefitfrom.Forexample,wejustcompletedtheexpansionandbifurcationofoursalesforceinMarch,andweexpecttoseetheimpactofthatincreasedcallingeffortonXTANDIsalesinthecomingquarters.




OurTERRAINandSTRIVEdatawerepublishedintop-tierjournals.TheCHMPissuedapositiveopiniontoputTERRAINdataintotheEuropeanlabel.Wealsohaveanumberofverynear-termclinicalandregulatoryeventsthatwilldrivefuturesharepriceappreciationforMedivation,includingourOctober22PDUFAdateforTERRAINandSTRIVElabelamendment;exceedingenrollmentof1,200patientsinPROSPER,thetargetedenrollmentofJ&JSPARTANtrial;announcingtop-linedatafromthePLATOstudy,atrialthatwillevaluatewhethercontinuingenzalutamidethroughdiseaseprogressionmayprovidebenefittometastaticCRPCpatients,therebypotentiallyincreasingdurationofuse;announcingtop-linedatafromourER/PR-positivePhaseIIbreast-cancertrial;andinitiatingourPhaseIIITNBCtrial.

WeviewSanofi'sproposalasbeingveryopportunisticbycomingatatimewhenwearejuststartingtoseethebenefitsofoursignificantandthoughtfulinvestmentinXTANDIandjustaheadofanumberofotherimportantinflectionpointsforthisproduct.

Slide37.Andintermsoflonger-termgrowth,wearewellpositionedasweexpandXTANDIusesintootherindicationswithpotentialFDAapprovalsforPROSPERinTNBCin2019,EMBARKinER/PR-positivebreast-cancerin2020,ARCHESin2021,andlivercancerin2022.

Slide38.NowI'dliketospendsometimediscussingourtwowhollyownedlate-stageassetstalazoparibandpidilizumab.Solet'sgotoslide29(sic-39).I'llstartwithourPARPinhibitortalazoparib.

Youareallawarethatsevenmonthsago,weacquiredalloftheworldwiderightstotalazoparibfromBioMarin.WebelievethattalazoparibisadifferentiatedPARPinhibitorbaseduponitsmechanismofaction--namelyitsuniquePARP-trappingability.

Theclinicaldatageneratedinovarianandbreastcancerarecompelling.ThePARPinhibitorclasshasbeenvalidatedbytherecentapprovalofAstraZeneca'sOlaparib.Despiteonlybeingapprovedinonenarrowindication,O laparibisgeneratingapproximately$175millioninannualizedrevenuesapproximatelyoneyearafterlaunch.Sowelikethattalazoparib'smechanismhasbeenvalidatedbothclinicallyandcommercially.

Butmostimportantly,webelievethattalazoparibhasasuperiorprofilethatisstartingtobedemonstratedthroughclinicaldata.We'lldiscussthisinmuchmoredetailinabit.

IbelievestronglythattalazoparibhasblockbusterpotentialevengreaterthanXTANDI,giventhatwhileandrogenreceptorsignalingappearstobeimportantforcertaincancerslikeprostate,breast,andliver.DNArepairandreplication,whichtalazoparibtargets,isessentialforallcancers.

Also,giventhattwooftheinitialindicationswearetargetingwithtalazoparibarebreastandprostatecancer,thisassetisalsohighlysynergisticwithourexistingdevelopmentandcommercialinfrastructureandareasofexpertise.

Slide40.SowhydoIbelievethattalazoparibmightbeevenbiggerthanXTANDI?JusttoputthepowerofPARPinhibitioninsomeperspectiveforyou,arecentpublicationintheNewEnglandJournalofMedicineexaminedtheeffectsofPARPinhibitioninaveryheavilypretreatedpopulationofmetastaticCRPCpatients.Ofthe50patientsinthatstudy,100%hadreceivedoneormoreregimensofchemotherapy,96%hadreceivedtheZYTIGA,and28%hadreceivedXTANDI.

PARPinhibitioninthisstudyresultedinresponsesin16of49evaluablepatients.Andofthe16responders,13of16reducedtheircirculatingtumorcellcount,orCTCs,tozero,alevelofCTCreductioncorrelatedwithsurvivalbenefitsinotherpublishedstudies.Webelievethatpatientresponseslikethese,evenpostZYTIGAandXTANDI,isremarkableandspeakstothepowerofPARPinhibition.

J&JfurthervalidatedthepotentialofPARPinhibitioninprostatecancerwhentheyin-licensedthe




rightstojusttheprostatecancerindicationforTesaro'sPARPinhibitor.J&Jwillmakeupto$500millioninpayments,plusdouble-digitroyaltiesfortheserights.

Importantly,giventheuniquepropertiesoftalazoparib,particularlyitssynergywithchemotherapy,whichI'lltalkaboutsoon,andourleadershipintheprostatecancerfield,weareextremelywellpositionedtocapitalizeonthisopportunityinprostatecancer.Inafewminutes,I'lldiscussourplanstoinitiatetwolate-stageclinicaltrialsinprostatecancerbyyearend.

Butbeforegoingon,I'veheardsomeinvestorsexpressconcernthatPARPinhibitorshavefailedinthepast,citingSanofi'sfailedPhaseIIIdevelopmentofiniparib,whichSanofiacquiredandcharacterizedasaPARPinhibitor.Yes,Sanofitookiniparibintopivotaltrialsinbothbreastandlungcancerandbothtrialsfailed.

However,itwasdiscoveredin2012thatiniparibwasnotatruePARPinhibitor.Sotodate,theonlytruePARPinhibitorwhichhasappliedforFDAapproval,O laparib,hasreceivedit.WebelievethePARPinhibitorclassisvalidatedbythisrecentapproval.

AnotherquestionIreceivefrominvestorsisiftalazoparibissogood,howdidMedivationbeatalltheotherlargerpharmacompaniesforit?Andifthecommercialopportunityissolarge,howdidyougetitforthepriceyoupaid?

Webelieveitwasaverycompetitivebiddingprocessfortalazoparib,butwewereabletomovequicklyandexecutethetransactionpriortotheNewEnglandJournalofMedicinepublicationmentionedearlier,priortoFDAgrantingbreakthroughtherapydesignationforaPARPinhibitorinprostatecancer,andbeforeLYMPARZAwasgeneratingannualizedsalesofover$175million,despiteanarrowlabel.IalsobelievethatwehadaparticularappreciationforcertainscientificmechanisticdifferencesbetweentalazoparibandotherPARPinhibitorsthatothersmightnothavehad.

Furthermore,in2005,whenIin-licensedXTANDIfromUCLA,therewereotherlargepharmacompanieslookingatthatasset,butwemanagedtoacquirewhatbecameablockbusterproduct.IdobelievethatatMedivation,wehavebeenabletoidentifyunderappreciatedvalueinassetsandrapidlyandaggressivelyacquirethem,inspiteofacrowdedpharmaenvironment.

Let'sgotoslide41.SowhatisPARP?PARP,orpolyADPribosepolymerase,isaproteinthatallcancersrequireforoptimalDNArepairandreplication.BecausecancerstendtodividerapidlyandthereforeneedtoreplicatetheirDNAfrequently,theirrepeatedreplicationalsomakesthemlikelytoincurmoremistakesintheirDNA,whichcanleadtotheirdeathiftheyarenotrepairedbyPARP,oneofthemajorDNArepairpathways.TherearefivePARPinhibitorsinlate-stagedevelopmentandonlyoneisapprovedinBRCA-deficientovariancancer.

Sowhyistalazoparibdifferent?TherearetwoprimarypathwaysbywhichPARPinhibitorscankillcancercells.ThefirstpathwayisinhibitingPARPenzyme,andthesecondisPARPtrapping.

Ifyoulookatthegraphontheleft,whosey-axisgoesfromzeroto9,youcanseethattalazoparibinhibitsthePARPenzymeroughlythreetoeighttimesbetterthanotherPARPinhibitors.However,ifyoulookatthemiddlegraph,whichcomparestheabilityofdifferentPARPinhibitorsthatkillcancercells,they-axisheregoesfromzeroto2,000.AndhereyoucanseethattalazoparibisordersofmagnitudebetterthanotherPARPinhibitorsatkillingcancercells.

SowhyisthiscancerkilleffectsooutofproportiontothePARPenzyme-inhibitingabilityofdifferentPARPinhibitors?Well,itisbecauseYvesPommierattheNCIhasshownthatPARPtrappingappearstobemuchmoreimportantinkillingcancercellswithPARPinhibitorsthanjustinhibitingPARPenzyme.




SowhatisPARPtrapping?Normally,PARPbouncesaroundandfindssingle-strandedDNAbreaksandfixesthem.However,whentalazoparibbindstoPARPsittingonasingle-strandedDNAbreak,itislockedortrappedonDNAandthatDNAcannotreplicate.

Twoofthemostcommonwaysthatoncologistscreatesingle-strandedDNAbreakstodayiswithalkylationchemotherapiesandradiationtherapy.Oneofthemostwidelyusedchemotherapiesthatcreatessingle-strandedbreaks--sitesforPARPtrapping--istemozolomide,thestandardofcareinbraincancer.

Soifyoulookatthegraphonthefarright,whosey-axisgoesfromzeroto2,500,youareseeingthecomparativeabilityofdifferentPARPinhibitorstopotentiatecancercellkillbytemozolomide.ThisreflectstheabilityofdifferentPARPinhibitorstotrapPARP.AndhereyoucanseethattalazoparibisordersofmagnitudebetterthanotherPARPinhibitorsinthisregard.

AndwhereascellkillbyPARPaloneinthemiddlegraphdoesnotcorrelatewithPARPenzymeinhibitioninthefarleftgraph,itdoescorrelatebeautifullywiththeabilitytopotentiatetemozolomideonthefarrightgraph,whichreflectsPARP-trappingability.

Basedupontalazoparib'suniquePARP-trappingmechanism,wemadethepointattheJPMorganconferencethisyearthatonemightexpecttoseesynergyintalazoparib-mediatedcancercellkillingincombinationwiththerapiesthatcausesingle-strandedDNAbreaks,whichbecomesitesforPARPtrapping.

Soonslide42,wewereverypleasedtoseeourPARP-trappinghypothesisvalidatedinpatientsatapresentationtwoweeksagoatAACRinNewOrleansby[Dr.ZebWainberg],AssociateProfessorofMedicineatUCLAandcodirectoroftheGIoncologyprogram.

Inthisstudy,in40patientswhowereveryheavilypretreatedacrossawidevarietyofadvancedmalignancies,talazoparibgeneratedaclinicalbenefitrateof58%whencombinedwithlow-dosechemotherapy,adosefarbelowstandardchemodoses.ItisnoteworthythattheonlyapprovedPARPinhibitor,O laparib,wasapprovedbaseduponanobjectiveresponserate,orORR,of34%inBRCA-deficientovariancancer.

InDr.Wainberg'sstudy,whentalazoparibwasusedincombinationwitheitherlow-dosetemozolomideorlow-doseirinotecan,theobjectiveresponserate,orORR,innon-BRCA-mutatedovariancancerpatientswas57%,withfourofsevenheavilypretreatedpatientsrespondingtotalazoparib.Sixofsevenindividuals,or86%,hadclinicalbenefitand86%ofpatientshada50%orgreaterreductioninabloodmarkercalledCA125,whichisamarkerinovariancanceranalogoustoPSAforprostatecancer.

Theseresultsareimportantsinceforthefirsttime,wenowhaveevidenceinpatientsthatsuggeststhattalazoparibincombinationwithlow-dosechemotherapyisactiveintumorswithdefectsinDNArepairthatextendbeyondBRCAdeficiency,alargermarketthanBRCA.Andinfact,onepatientwhorespondedtotalazoparibdidnotappeartohaveanydefectsinDNArepair,whichcouldrepresentanevenlargerpatientpopulation.

Slide43.Clinicaldatasupportstalazoparib'sbest-in-classpotential.Onthisslide,wehaveshownaveryintriguingtablecompiledbyBarclaysbiotechnologyanalysts.ThetablesummarizedtheresultsofseveralstudiesconductedforthreePARPinhibitors:O laparib,niraparib,andtalazoparibinmetastaticbreastcancerwithBRCAmutation.

Thedatademonstratesrobustresponseratesandprogression-freesurvivalfortalazoparib.AndwebelievetheyderiskourongoingEMBRACAstudy.

Sowhataboutsafety?Let'sgotoslide44.BioMarinputtogetheragraphcomparingthesafetyprofileof




talazoparibtothreeotherPARPinhibitorsindevelopment.Eachhorizontalbarrepresentsadifferentadverseeventclass,andthelengthofthebarshowsthepercentofpatientswiththeadverseevent.

The15%highlightedinredmeansthat15%ormoreofthesepatientsexperiencetheadverseeventslisted.Whereasthe10%highlightedontheleftmeansthatonly10%ormoreofthepatientsexperiencedtheadverseeventslisted.Overall,IwouldsaythattalazoparibcomparesquitefavorablytootherPARPsintolerability.

Slide45.WeareconfidentinthesuccessoftheEMBRACAtrialforseveralreasons.Firstofall,inBioMarin'stalazoparibPhaseI/IItrial,BRCA-mutatedadvancedbreastcancerpatientstreatedwithourPhaseIIItalazoparibdoseof1milligramperdayexperiencedan86%clinicalbenefitrateand50%objectiveresponserate.36%ofthesepatientswerestillontherapyoneyearlater.

Secondly,EMBRACAisrolling430patients,whichissignificantlymorethantheBRCAbreasttrialsforTESARO'snirapariborAstraZeneca'sOlaparib.

AndifalltheprimaryendpointofthesethreePhaseIIIstudiesisPFS,becauseofthelargerpatientpopulationbeingenrolledinEMBRACA,webelievethatEMBRACAispoweredtopotentiallydemonstrateasurvivaladvantage.Eventuallyhavingoverallsurvivaldatainthelabelwouldobviouslyprovideuswithasignificantcommercialadvantage.

Slide46.TheEMBRACAstudyisjustthebeginning.WerecentlymetwiththeFDAandalignedonaclinicaltrialdesignwiththepotentialforacceleratedapprovalinprostatecancer,testingtalazoparibasmonotherapyingeneticallyselectedpatients.

Wealsoplantostartin2016asecondprostatecancertrialstudyingtalazoparibincombinationwithlow-dosechemotherapyinanall-comerspatientpopulation.Thatisinpatientswithoutgeneticselection.

Thisquarter,wewillalsomeetwithFDAtoalignonaregistrationalprogramforsmallcelllungcancer,testingtalazoparibincombinationwithlow-dosetemozolomideinallcomers.Basedonpublicdisclosuresatthemoment,therearenopivotalstudiesongoingwithaPARPinhibitorineitherprostateorsmallcelllungcancer.Sowebelievethatwemayhaveanopportunitytobeadevelopmentleaderinthesetwoimportantcancerindications.

Furthermore,wealsoplantoinitiateaclinicaltrialinadvancedbreastcancerbeyondBRCAmutationsin2016.Weareconsideringbothmonotherapyincombinationlow-dosechemotherapyinbeyondBRCA-mutatedbreastcancer.Weareunawareofanyothercompanieswithongoingregistrationaltrialsinthisindication.SowebelieveagainthatwemayhavetheopportunitytobefirstinclassinthebeyondBRCA-advancedbreastcancerpopulation.

Wealsoplantoinitiateaclinicaltrialinovariancancerin2016.GivenourrecentAACRovariancancerdata,webelievethatcombinationtalazoparibandlow-dosechemotherapymayimproveoutcomesinovariancancerpatientsoverthecurrentstandardofcare.WealsobelievethatthisstrategymayeventuallysupporttalazoparibuseinalargerpatientpopulationthanOlaparib.

Finally,wearealsoconsideringdevelopmentstrategiesfortalazoparibinnon-smallcelllungcancerandglioblastomamultiformebraintumorandothermalignancies.

Slide47.Weareapproachingourtalazoparibclinicaldevelopmentplaninastrategicanddisciplinedway,seekingoutindicationswherewebelievewehaveanadvantageandwherewecanyieldthehighestreturn.

Asanexample,thisisagraphshowingthegrowthofsmallcelllungcancerxenografts.Thebluelineisuntreatedsmallcelllungcancer,andclearlythattumorisgrowingveryrapidly.Theredlineisaverylow




doseoftemozolomideandagain,thetumorgrowsrapidlybecausethat'sadoseoftemozolomidewellbelowstandardchemodoses.Thegreenlineisalsoaverylowdoseoftalazoparib.

Butwhenyoucombinetalazoparibwithtemozolomide,whichcreatessitesforPARPtrapping,youcanseethatyougetthepurpleline:anearlyflatlinecancercellkillinpurple.Clearlythereisimpressivesynergywithcombinationtalazoparibandlow-dosetemozolomideinsmallcelllungcancer,whichpublishedliteraturesuggestsisduetothePARP-trappingpotencyoftalazoparib.

Ourplannedregistrationalcombinationtalazoparibandlow-dosetemozolomidetrialinsmallcelllungcancernotedpreviouslyistargetingallcomersbecauseofrobustpreclinicaldatashowingsynergyinsmallcelllungcancercellswiththecombinationthatyoucanseeonthisslide.AndbecausewebelievethatwecanbethefirstPARPinhibitorapprovedinthisindication,andbecausewefeelthatitisworthwhiletotakesomeriskinbeingfirstinsuchalargecommercialopportunity.

However,inotherindications,weplantotakeamoreconservativeandderiskedapproach.Asanexample,inprostatecancer,weplantofurthertestourcombinationtalazoparibandlow-dosechemotherapyhypothesisinPhaseIIbeforefullycommittingtoPhaseIIIdevelopment.

Webelievethatwemaybeabletohavedatafromthistrialasearlyasnextyeartohelpguideoursubsequentdevelopmentdecisions.Therefore,wearetryingtobalanceriskandpotentialrewardintheportfoliotrialsthatweareconductingtofullyexploreandexploittalazoparib'spotential.

Inadditiontoourclinicaldevelopmentplans,therearemultipleongoinginvestigator-sponsoredtrialsfortalazoparib,highlightingthesignificantinterestinthisproductintheoncologycommunity.Ialreadymentionedthecombinationtalazoparib/low-dosechemodatafromtheISTconductedatUCLA,whichwasjustpresentedatAACR.

Slide48.Sohowbigisthemarketopportunityfortalazoparib?WebelievethattheaddressablemarketopportunityhereforMedivationisgreaterthan$30billionforjusttheUSandEurope.

Slide49--pidilizumab.Thenextlate-stageassetinourpipelineispidilizumab,whichwelicensedfromCureTechinthefourthquarterof2014.AsIalludedatthebeginningoftheearningsportionofthecall,wehavemadesomeimportantstridesinclarifyingtheantibody'smechanismofactionandwhenandifrepeatedlyconfirmed,wemayannouncepidilizumab'smechanismofactionasearlyasthisyear.

Webelievethishasthepotentialofmakingpidilizumabanevenmoreunique,exciting,aswellascombinableasset.PidilizumabisalreadygeneratingclinicaldatainbothfollicularlymphomaanddiffuselargeBcelllymphoma,orDLBCL,thatareverycompelling.Forexample,the52%completeresponserateinfollicularlymphoma.Bothofthesedatasetshavebeenpublishedinprominentmedicaljournals.

Webelievethatdefiningamechanismofactionwillfurtherenhancepidilizumab'svaluebygivingpotentialpartnersmorecomfortinhowthedrugisworkingandinwhichcombinationsitwouldmakesensetouse.WehaveinitiatedapotentiallyregistrationalPhaseIItrialforpidilizumabinrelapseorrefractoryDLBCL.

Thistrialwillenroll180patientsintotwoparallelcohorts:onewithpatientswhohavereceivedanautologousstemcelltransplantandtheotherwithpatientswhohavereceivedsalvagechemotherapybutaretransplant-ineligible.Basically,theseareDLBCLpatientswhohaveexhaustedalltreatmentoptions.

Becauseweareusingaprimaryendpointofoverallresponserate,thisstudycouldreadoutrelativelyquickly.Wewillalsobepreparingtomoveforwardwithpidilizumabinmultiplemyeloma.Sopleasestaytuned.




Slide50.Asyoumightimagine,giventhesignificantgrowthopportunityandpotentialvalueinherentinallthreeofourassets,weareconfidentthatwecancreatesignificantlymorevaluethanwhathasbeenpubliclyannouncedinSanofi'sproposal.

Slide51.AsourBoardevaluatedSanofi'sproposalandunanimouslydecidedtorejecttheproposal,theyconsideredseveralfactors.Firstofall,Medivationisauniqueopportunityasoneofthefewprofitableandsizableoncology-focusedbiopharmacompanies.Thefactthatweareandhavebeenhighlyprofitablefurtherincreasesourscarcityvalue.

Second,theSanofiproposaldoesnotappropriatelyvalueourrapidlyexpandingmultibillion-dollarXTANDIfranchise.WejustovertookZYTIGAinmarketshareinQ1.Aswediscussed,webelieveXTANDIalonecangenerateover$2.5billionofrevenuesforMedivationby2020,atwhichtimewewouldstillhavesevenadditionalyearsofpatentprotectionormore.

Third,theSanofiproposaldoesnotrecognizethevalueofourwhollyownedpipelineoftwootherdifferentiatedlate-stageoncologyassets.Lastly,thisproposalwasextremelyopportunisticintiming.Sanofiapproachedusduringaperiodofsignificantmarketdislocationforbiotech.Theproposalwaswellbelowour52-weekhigh.

SanofialsoactedaggressivelyanddidnotevenwaittwoweeksforourBoardtocompleteitsevaluationoftheirproposalbeforemakingitpublic.Mostimportantly,Sanofiisactingbeforeanumberofkeymilestonesandvalue-creatinginflectionpointsforMedivation.ThisproposalifacceptedwouldpreventMedivationshareholdersfrombenefitingfromanyoftheseeventsandwouldresultinasignificanttransferofvalueawayfromourshareholderstoSanofi'sshareholders.

Slide52.AsItouchedoninthepriorslide,thetiminghereiskey.AndSanofi'sbidcoincidedwiththebottomofthebiotechmarketandwasmadejustafteraperiodofsignificantmarketdislocationintheindustry.Asyouprobablyremember,Sanofi'sproposalreferencedapremiumtoanunaffectedprice,whichwasbasedonatwo-monthVWAP.

Asyouwillseeonthisslide,thereferencepriceperiodthatSanofiusedalmostexactlycoincidedwiththebottomingofthebiotechmarket.WethereforeviewSanofi'sapproachasextremelyill-timedforMedivationshareholders.Atwo-monthVWAPisalsoacompletelyartificialandsubjectivetimeperiodthathasnorelevanceforpurposesofcalculatinganimpliedpremium.

Slide53.Medivationisuniqueasanoncologycompany,withbothacommercialstageblockbusterproductandalate-stagepipelinethatincludestwowhollyownedlatestageassets.TheonlycompanyonthispagethatwebelieveiscomparabletoMedivationforhavingablockbusteroncologyproductisPharmacyclics,althoughPharmacyclicsdidnothaveapipelinewithtwootherlate-stageoncologyassetslikeMedivation.

Slide54.Wearecontinuingtoseeproofofthesignificantvalueofourassets.RoyaltyPharma's$1.14billionacquisitionofaportionofUCLA'srightstothe4%royaltyonsalesofXTANDIhasprovidedthird-partyvalidationbyaverywell-respectedinvestorofXTANDI'sgrowthprospects.

AndJ&J'srecentin-licensingoftheworldwiderights,excludingJapan,toTESARO'sniraparibforjustprostatecancerfor$500millioninequityinvestmentupfrontpaymentsandmilestonesplusdouble-digitroyaltiesonsalesindicatesasignificantvalueofaPARPinhibitor.

Slide55.I'vespentsignificanttimetodaydiscussingallofourupcomingmilestonesandgrowthdrivers.Ontheleft-handsideofthisslide,I'veoutlinedsomeofthekeyvariablesthataccountforthedifferencesbetweenourinternalrevenueexpectationsfor2020versusStreetconsensus.Thedifferencebetweenourinternalexpectationsforrevenuegrowthandconsensusishighlightedtotheright.




I'vespentthelast30minutestellingyouwhywearesoconfidentaboutcapitalizingonalloftheopportunitiesoutlinedontheleft.Whyshouldourstockholdersbeaskedtoacceptaproposalthatdoesnotappropriatelyvaluethepotentialofallofourupcomingmilestones?

SoIwanttocloseonslide57byreiteratinghowwellweperformedasanindependentcompany,developingtheworld'sleadingprostatecancerdruganddeliveringextraordinaryshareholderreturnsthathavedwarfedanyindex.

Ialsowanttoreinforcehowexcitedandconfidentweareinthegrowthopportunitieswe'vediscussed.Simplyput:weareexecutingonaplanthatisdeliveringrealandsuperiorvaluetoshareholders.WeareextremelyconfidentthatourstrategywilldelivermorevaluetoyouandothershareholdersthanSanofi'sproposal,whichsignificantlyundervaluesourpotentialandishighlyopportunistic.

Withthat,weappreciateyourcontinuedsupportandtheexcitementaboutourperformanceandthefuturethatwehopeyoushare.Andwelookforwardtoupdatingyouonourcontinuedprogressoverthecomingweeks.

AndnowIwillturnthecallovertotheconferencecoordinatortoopenthelineupforQ&A.

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)

GeoffMeacham,Barclays.

Geof f Meacham(Analyst-BarclaysCapital):

Thanksforallthedetail.It'skindofadrop-the-micpresentation.Iwantedtotalktoyoualittlebit,David,aboutthe2020assumptionsbecausetheydefinitelysortofunderliealotofthevalue.

CanyoutalkalittlebitaboutwhatpercentofyourrevenueassumptionsareindicationsforXTANDIyoudon'thavetoday,sayM0ortalazoparib?AndthenforM0prostate,wheredoyouthinkthatyoucouldgettowithrespecttothedurationoftherapyandadoption?Justgiventhefactthaturologists'adoptiontodayhasbeenlimited,buttheoreticallywithanM0label,youcouldgetamajorityofthemarket?Thankyou.


ThisisJen.I'llstarttryingtoansweryourquestion,andthenI'llturnitovertoDavidmaybetotalkalittlebitaboutduration.We'renotgoingtoprovideanymoreofarevenuebreakoutthanwedid,sowe'renotgoingtobreakdownthecomponentsofthe$2.5billion.

Youcanlookatthetimelinethatweprovidedintermsofwhenweexpectapprovalsfortheongoingstudies.AndthatwillgiveyouasenseintermsofwhendifferentrevenuestreamsmightstarttokickinforXTANDIaswellasotherproducts.Butwe'renotpreparedtoprovideanydetailbeyondthat.


Andwithregardtothedurationoftherapy,Geoff,asyouknow,asyoumoveupstream,XTANDIappearstobeworkingalotbetter.AndifyoulookatjustthenumbersIoutlined,thePREVAILattimeofPSAprogressionwas11.2months;TERRAIN,19.4.Soifwejusttakethemidpointofthatrange,that'sover15months.




Somethingthatmaynotbeapparentisthatwhoevermovesfirstgetsthelion'sshareofthat.Becausewhoevergetssecondhasamuchshorterdurationoftherapy.SowebelievethatjustintheM1population,we'relookingat--atsomepoint,we'regoingtoreachatleastthemidpointofthatrange.AndifweevergettoapatientpopulationthatarelessadvancedlikeTERRAIN,weshouldbeapproachingthe19-monthmark.

ButifyoulookattheSTRIVEtrial,thattrialenrolledbothM0andM1.AndtheywereevenlesssickthanTERRAIN.SoifyoulookattheM1portionofSTRIVE,thosepatientswerealmost25monthsoutandwedidn'tevenhitmedianfortheM0population.

SoifyoulookatthatoverallSTRIVEtimetoPSAprogression,overall,wedidn'tevenreachmedian.Soyouarelookingatconceivablyverylongtimes.AsIexplainedearlier,whenGraemestartedXTANDI,hestarteditsixyearsagoandhestillonthedrug.AndhisPSAbouncedaroundabit,asIsaid,betweenzeroand0.1.Soheneedstokeepthisdrug,buthe'sonitforalongtime.

Andwe'vehadanumberofpatientsonthedrugforyears.Sowethinkthatasyoustart--andhewasapost-chemopatient.Sowethinkthatasyougettoearlierstagesoftherapy,thereisquiteasignificantpotentialforlongduration.

Geof f Meacham(Analyst-BarclaysCapital):

Okay.Great.Thankyouverymuch.

Operator :

SalveenRichter,GoldmanSachs.

SalveenRichter (Analyst-GoldmanSachs):

Thanksfortakingmyquestions.David,couldyouhelpusunderstandthepotentialOctoberlabelupdateandhowthatwillimpactKOLsversuscommunityurologists?Shouldthatdifferintermsofthemessaginghereversusdatathatwouldcomein2018andbeyond?

Andthenfortalazoparib,couldyoutalkaboutsynergiespotentiallywithPD-1sandPD-L1s?Andwhataboutuseinmicrosatelliteinstabilitycolorectalcancerorothertumortype?AndIhaveafollow-up.Thanks.


Imayhavetoaskyoutorepeatthesecondpart.Butonthefirstpart,I'llstartandImayturnitovertoMarion.ButwethinkthatthePDUFAdatecouldbesignificantforusbecauserightnow,thebiggestmarketopportunityisinurology.

AndurologistsreallyuseCasodexalot.OverhalfamillionscriptsinjusttheUSalonearewrittenforCasodexandmostofthatisurology.Peoplemaynotbeawareofthis,butCasodexhasnotbeendemonstratedtoconferasurvivalbenefitforpatientsandyet,itstillwidelyused.

SobeingabletopromoteinalabelthatwehaveadrugthatissuperiortoCasodexintermsofPFSwouldbeasignificantthingthatwecandointhefield.Ibelievethatthatwouldbequitecompellingtourologistsandhavingfield-testedthat,thatseemstoresonatewithurologists.

Marion,doyouwanttoaddsomecomments?





Sure.I'mhappyto.Soyouknow,theinclusionofTERRAIN/STRIVEdatainthelabelwouldbeareallyimportantcomponenttoourfuturepromotionandsalesforceactivity,inparticularwithurologists.WearepleasedwithwhatweareseeingsofarintermsofurologyuptakeandthesourceofgrowthtodayinXTANDIprescribing,butthatwouldbeapivotpointforus.Andcertainlywelookforwardtothepotentialforpromotioninthatarea.


AndthenSalveen,IbelievethatyoursecondquestionwasaboutcombinationofXTANDIwithimmunotherapy.Thereisactuallysomeprettycompellingdata--Idon'tknowifyouarefamiliarwithapaperbyJenniferBishopthatwaspublishedlastyearshowingthatpatientsafterXTANDIseemtoupregulatePD-L1.

Sooneoftheissuesforimmunotherapyandprostatecanceristhatprostatetumorsdon'tappeartoexpressalotofPD-L1.ButafterXTANDI,theydoappeartoupregulatethat.SothepossibilityofcombiningXTANDIwithPD-1makesalotofsense.Andinfact,there'sanongoingtrialatHopkinsrightnowlookingatthat.Sowethinkthatthatispotentiallysignificant.Andifyoulookatbreastcancer,itmaybethesamestorythere.

SowedothinkthatXTANDIhaspotentialapplicationinimmunotherapy.There'salsoverygoodliteraturethatwhenyouinhibitandrogen-receptorsignaling,thatprocessaloneupregulatestheactivityofthethymusgland.We'veshownthatthymusfunctionandsizeandweightareincreasedbyXTANDItreatment.

Whyisthethymusimportant?Thethymusiswhereallyourwhitecellsgotodifferentiateandlearnwhattoattackandnottoattack.SotherearemanypreclinicalstudiesshowingthatXTANDIupregulatesTcellactivityandimprovestheabilityofthosecellstokillcancercells,evenprostatecancercells.Weactuallyhadaslideonthatatinoneofourinvestordecks.

Andwhat'simportantaboutAACRisthatwe'renowseeingthoseeffectsinpatients.Soallthatotherpreclinicalliteratureisnowbeingsupportedinpatients.SowedothinkthatXTANDIhaspotentialasanimmunotherapyagent,especiallyinthosecancersthatdon'thavealotofPD-L1.BecauseyouneedthattoseePD-1activity.


Thanks.Andthen,David,there'sspeculationinthepressorreportsinthepressthatmanycompaniesareinterestedinMedivation,apartfromSanofi.Sowouldyoubeopenheretoenteringanauctionprocesstoattainthevaluethatyoulaidout?Orareyoulookingtokindofdrivethislongerterm?Justanythoughtswouldbehelpful.


Ijustcan'tcommentonrumorslikethatandwhattheintentionsofothersare.We'reheretorunourbusinessandcreateasmuchvalueaswecanforourshareholders.


Allright.Thankyou.

Operator :

YigalNochomovitz,Citigroup.

YigalNochomovitz (Analyst-Citigroup):




Thanksfortakingmyquestion.DavidorJen,ifyoucouldjustspeakregardingtheguidancefor2016.HowmuchofthatrangeisleveredtoassumptionsofapriceincreaseforXTANDIthisyear?

Andsecondly,howmuchofthatguidanceisleveredonanassumptionofincreasingthedurationforXTANDIabovetheeightmonthsthatyou'vecited?Thankyou.


SothisisMarion.I'mhappytostartthecommentonpricingfirst.Asapolicy,wehaven'tbeencommentingonpricing.AndIremindeveryonethatAstellascontrolspriceforXTANDI.WhatIwillabsolutelyconfirmforyou,andJenandDavidmightwanttoaddtothis,butthatwearecommittedtotheguidancethatwasaffirmedtoday.


Andjusttoaddonthat,ourguidanceisreallybasedonamixofbothdurationandvolume.Soit'sreallyamixofthosetwothings.(multiplespeakers)overtime;that'swhyweincludedtheslideinthepresentationthatshowsthedurationoftherapiesforthedifferentstudies,justtogiveyouasenseforhowwethinkdurationcouldtrendduringthecourseoftheyearaswellasintothefuture.


Okay.Thankyou.Andthenswitchingovertobreastcancer,we'vebeengettingalotofquestionsfrominvestorsonthedifferenttrialsthatareongoing.ItmightbehelpfulifyoucouldspendafewminutesjustgivingussomemorescientificrationaleonthepotentialforXTANDIintheHER2normalER/PR-positiveandthenHER2positive?

Specificallywithrespecttothepercentageordegreeofandrogenreceptorexpressioninthosepatientstohelpusthere?Thankyou.


SoI'llstartwithTNBC.SoTNBCistriplenegative.ThatmeansERnegative,PRnegative,andHER2negative.Andacancercellhasgottogrowwithsomething,soifyouarenotbeingfueledbyestrogen,progesterone,orHER2,you'vegottogrowwithsomething.Itturnsoutthatalotofthosepatientsaredrivenbyandrogenreceptor,sothat'swhytherationalethereisstrong.

Butifyoulookatthestructureofestrogenandtestosterone,theyareremarkablysimilar.Soifyoulookat--allsteroids,theyhaveanA,B,C,Dring.Andifyoulookatthedifferencebetweenthemaleandfemalehormones,threeofthosefourringsareidentical.TheyonlydifferintheAring,andit'sbyaverysubtledifference.

Sothereissuggestionthatpossiblytheremightbecrosstalkbetweendifferenthormonesanddifferentreceptors--crosstalkbetweenestrogenandandrogenreceptors.Butthere'salsopublisheddatabyaprofessorattheUniversityofColoradonamedJenniferRicher.Andshedidaveryinterestingexperiment.

Sosheshowed,asyouwouldexpect,ifyoutakebreastcancercellsandyougivethemtestosteroneinacertainsubsetofthem,theycanbefueledbythat.AndifyougivethemXTANDI,youcanblockthatgrowth.Thatmakessense.

Butifyougivethemestrogenwithoutgivingthemtestosterone--yougivethemestrogen,theygrow--ofcourse,theydo.ButthenyougivethemXTANDIandnowyoublocktheirgrowth.SothatdoesnotappeartobeARmediatedbecausetheeffectofestrogenisanestrogen-signalingeffect.

SothereisliteraturethatsuggeststhatXTANDIhasnotonlyanti-androgensignalingeffects,butalso




anti-estrogensignalingeffects.Nowwhetherornotthatmadebeduetocrosstalkoracommonpathwaydistaltobothreceptors,wedon'tfullyunderstand.ButtherearecleareffectsinthepreclinicalliteraturethatsupportthatXTANDIwouldworkorhaveeffectsinestrogensignaling.Sowethinkthat'simportant.

Theotherthingthat'simportanttonoteisthattherearecurrentlynoandrogenreceptorantagonistsindevelopmentinbreastcancer.Sothisisauniqueclassforthefield.Sowethinkthatthiscouldbequiteadifferentiatedproduct.Theresoweareexcitedaboutthat.

HER2--wedon'treallyknow.There'snotalotofliteratureonit.Butagain,breastcancerstendtoexpressalargevarietyofreceptors.Andbecausetheyarehormonallydrivensincepuberty,theytendtobedrivenbyhormonalreceptors.

SowhetherornotitwillworkinHER2amplified,again,wedon'tknow.Butwethinkit'scertainlyworthashot.WearecertainlyseeingrobusteffectsinpatientsinTNBCandatleastsofarinpreclinicalmodelsoftheER/PR-positivesubset.


Okay.Thankyouverymuch.

Operator :

KennenMacKay,CreditSuisse.

KennenMacKay(Analyst-CreditSuisse):

Thankyoufortakingmyquestion.Areallygoodpresentation,andIagreethattheofferfromSanofireallysubstantiallyundervaluedthebusinessandthepipelineandespeciallytalazoparib.

Obviouslywhenwearethinkingaboutvaluation,wehavetoapplyriskandtimediscountstoforecastedsalesestimates.David,specificallyrelatingtoXTANDI,maybecanyoutalkalittlebitabouthowtheriskfromZYTIGAgoinggenericandtheJ&JSPARTANtrialmightbeoverstated,especiallyinsomeinvestors'eyes?


Socertainlywe'reawareofthepossibilityofZYTIGAgoinggeneric.Andfromourpatentcounsel,wethinkthattheearliestthatcouldbewouldberoughlysometimelatein2018.

Butfirstofall,ifwegetaexpandedlabel--amendedlabeltoincludesuperioritytoCasodex,andthat'ssomethingthatgenericZYTIGAwillneverhave.SoIthinkthatthatwouldbequiteabigdifferentiator.

Andsecondly,just--Idon'tknowifyouarefamiliar.SoXTANDIinhibitstheAR,asdoesCasodex,whichisafirst-generationsortofXTANDI.AndZYTIGAinhibitsanenzymecalledCYP17,butit'snotthefirstdrugtodothat.There'sanotherdrugcalledKetoconazolethatinhibitsCYP17andit'sbeenaroundforyears,andthatdrugisgeneric.

AndlastyearintheUS,therewas120timesmorebicalutamideuseamongurologythanKetoconazoleuse.SoeventhoughKetoconazolehasbeengenericforalongtime,urologistsjustaren'tusingit.TouseaCYP17inhibitor,you'vegottodealwithsteroids.There'slivermonitoring.Thereareotheradverseeventsandurologistsjustdon'tlikethat.

Sowethinkthatwearereallypushingourfranchiseintourology.It'swheremostofthepatientsare;yougetlongertherapy.Butonceyouareinurology,historyhasalreadyshownusthaturologistsdon'tuseketoconazole.Theydon'tuseagenericCYP17inhibitor--orwedon'tbelievethatonceweareinurology




thattheurologistwillchangetheirhistoricalpracticewhichspansdecades.


AndthenmaybejustrelatingtotheSPARTANtrial?


TheSPARTANtrial--soARN-509,asyouknowisdoingasimilartrial.OurtrialiscalledPROSPER;theirtrialiscalledSPARTAN.Ourtrialisover1,550patientsandSPARTANisenrollingabout1,200patients.

Numberone:SPARTANhasnotdoneanysurvivalstudies.SowealreadyhavetwoPhaseIIIstudieswhichhavedemonstratedrobustsurvivalbenefitinAFFIRMandPREVAIL.SPARTANisnotgoingtohavethat.

Secondly,theendpointforboththeSPARTANandPROSPERtrialsismetastasis-freesurvival.Andwedon'tknowexactlywhenJ&Jwillunblindthatstudy,butyoumightrecallthatwhenweconductedPREVAIL,whichisover1,700patients,andJ&Jdidtheirpre-chemostudy,whichwascalled302.302unblindedfirstandmissedandwewaitedonPREVAILandhitit.Sowewereabletouseourcompetitor'smovetodecidewhatweweregoingtodo.

PROSPERsimilarlyissignificantlylargerthanSPARTAN.SoasIalludedtoonthecall,thisyear,weweregoingtoexceedthetargetnumberofenrollmentforSPARTAN.SoifJ&JpullsthetriggeronSPARTANandiftheymissit,well,wewilljustsitonPROSPERandcontinuetofollowthatstudy,enrollit,andtoaccrueforpatientsandpowerourstudyevenhigher.

Iftheypullthetriggerandtheyhitit,wehavetheoptionofunblindingearlyandmatchingthem.Andifweweretomatchthem,wecan'timaginedoingworsethanthem.Wewillhaveadrug--bothwillhaveMFSbenefits,butonlyonewillhavealsooverallsurvivalandprogression-freesurvivalandamanyyearheadstartinthemarket.


Thankssomuch.Ithinkthat'sincrediblyhelpful.Appreciateyoutakingthequestions.

Operator :

GeoffreyPorges,Leerink.

Geof f reyPorges (Analyst-LeerinkPartners):

David,appreciatethequestionsandwonderwhereallthisinformationwasforthelastthreeyears.It'sveryhelpfulnow.

Firstofall,justintermsofthePDUFAdateTERRAINandSTRIVE,isyourbasecaseassumptionthatM0isincludedinthatlabel?Andthatit'sbrokenoutseparately,thecomparisonthere,oralternativelyisitexcluded?I'mjustwonderinghowyouarethinkingaboutthat.

Andsecondly,couldyoucommentonhowthefactthatyou'vereceivedthisunsolicitedofferaffectyourrelationshipandyourobligationstoyourpartnerAstellas?Andthenthirdly,couldyoujustcomment--tomakesurethatIunderstandthepointofyourpresentation,isitthattheofferunderdepreciatesthevalueorthatyoucancreatemorevalueindependentlyofSanofiorindeedanyoneelse?

Andifso,couldyoujustsummarizewhatitisthatyouthinkyoucanuniquelydoasanindependentMedivationthatanacquirercouldn'tdowiththeseassets?





Okay.SonumberoneontheM0andM1,Ithinkwe'vebeenprettyconsistentinsayingthatweareanticipatingalabelamendmentinOctober,butwe'vealwaysfocusedonM1.It'swithinourlabel.Sothat'swhatwe'vealwaysbeenconsistentlysaying.

SoifwegotM0,thatwouldbeunbelievable,butwearenotcountingonthat.We'venotreallytalkedaboutthat.Thatwouldbetotalicing.SowearelookingatM1.WithregardtoAstellas,Ican'treallycommentonwhatthisdoestoAstellas.

Andonyourlastquestion--whatcouldbedothatalargercompanycouldn'tdo?Well,numberone,ifyoulookatthenumberofcompanies,IfoundXTANDIin2005.Andthatdrugwas--actually,wedidn'tevenhaveareallead.Wewereactuallylookingforaleadandwewerestillinscreeningincells.AndwetookthatcompoundfromcellscreeningtoFDAapprovalinsevenyears.

ThereisanicereviewinTufts--fromTuftsabouttheaveragetimeofdrugdevelopmentforalargepharmacompany.Andifyoulookatthat,theaveragetimeofdrugdevelopmentforalargepharmaisintherangeof10to15-plusyearsforanaveragecostofabout$2.6billion.

AsItoldyou,forthefirsteightyearsofMedivation'shistory,ourtotalcapitalraisewas$175milliontogenerateamarketcapofabout$3billion.AndtogetourdrugintopatientsandanFDAapprovalinsevenyearsafterlicensingit.SoIjustdon'tthinkthey--andIwouldchallengeanyonetofindalotofbigpharmacompaniesthatcanmovethatquickly.That'sthefirstthing.

Thesecondthingiswhatcouldwedodifferentlythatabigcompanycan'tdo?Well,wecanpickaPARPinhibitorthatworks.Sanofipickediniparibanditfailed.Andwe'vegotclinicaldataalreadyshowingactivitywithtalazoparib.Andmanykeyopinionleadersbelievethatabest-in-classopportunity.

Andwebelievewecanmovethatalotfasterthanlarger,less-agilecompanies.Sowethinkthatwecancreatealotmorevalueforourshareholders,andwe'veprovenitbyourpastperformance.

Geof f reyPorges (Analyst-LeerinkPartners):

Great.Thanksverymuch,David.

Operator :

JohnNewman,Canaccord.

JohnNewman (Analyst-CanaccordGenuity):

Thanksfortakingthequestion.Justtwoquestionshere.SothefirstoneisifyouthinkbackbeforewesawthefirstpivotaldatareadoutforXTANDIandyouthinkaboutthesimilaritiesintermsofthemechanismofactionofXTANDIandCasodexinprostatecancer.Andfast-forwardtowherewearetoday.Andthenifyoualsoconsiderthatinterestinglyenough,itseemsthatthere'ssomeevidencethatCasodexalsohasactivityinbreastcancer,doesitmakesensemechanisticallythatthereismaybealowerriskthanpeoplethinkthatXTANDIalsoworksinbreastcancer?

AndthenthesecondquestionIhadisjustregardingyourcollaborationagreementwithAstellas.IthinkthecollaborationagreementwithAstellasinitiallyhadastandstillinplaceuntilSeptemberof2016.Andobviouslyjustaskingyoutospeculateabithere.

DoyouthinkitisjustcoincidentalthatSanofidecidedtocomeoutwhentheydid,giventhattheyknewiftheydidn't,Astellaswasn'tgoingtobeabletopotentiallyactuntilthen?Thanks.





SoIthink,John,you'rerightthatthereissomeliteraturethatsuggeststhatCasodexhassomeactivityinbreastcancer,eventhoughweknowthatifyoulookatpreclinicalstudies,thepotency--ifyoulookatoursciencepaper,asanexample,CasodexpotencyagainstARisaboutoneloglessthanours.SoIthinkyou'reright,though,thatifCasodexcanshowanyactivityatall,wethinkthatthatdoessupportfurthertheuseoftherationaleforgoingafterbreastcancerwithXTANDI.

Andclearly,wewouldn'tbemakingthesizableinvestmentifwedidn'tthinkitwasgoingtoyieldreturnforus.SoIthinkyou'reright.WethinkthattheliteratureisstrongtosupporttheuseofanARantagonistinbreastcancer.

Andjustanotherpointofdifferentiation:thisisnotatargetwebelievethatyoucangoafterwithZYTIGA.BecausewhenyouinhibitCYP17,oneofthereflexhormonalalterationsisthatyougetanincreaseinprogesterone.Insomecases,uptoseveralhundredfold.Andthat,ifyoulookatbreastcancerthathasaprogesteronereceptor,thatmaynotbeagoodidea.

SowebelievethatXTANDI--itmaybeuniquelysuitedasanandrogensignalinginhibitorinbreastcancer.Sothat'sadifferentiator,too.ButwithregardtowhatSanofiisthinkingabouttheAstellasstandstill,Ihavenoidea.Ican'tspeculateonthat.

JohnNewman (Analyst-CanaccordGenuity):

Okay.Great.Well,thankyou.

Operator :

KatherineXu,WilliamBlair.

KatherineXu (Analyst-WilliamBlair&Company):

Goodevening.I'mjustwonderingalsoontheAstellasagreement.Sothere'sastandstilluntilSeptember,butdoesthatexpireonanactivebidfromathirdparty?That'smyfirstquestion.

Andthesecondoneisfromyourmarketprojections,ifyoulookatprostatecancer,youhaveabout$15billionmarketopportunity.Andthenyoulookatbreastcancer,youarelookingatabouthalfoftheprostatecanceraddressablepopulationandyouarelookingabout$3.5billionoreven--ifyoudon'tcounttheHTC,itisprobablylessthanthat.

SoI'mjustwonderingwhatwerethedifferencesintheunderlyingassumptionsthere?Thankyou.


SoIreallycan'tcommentontheAstellasstandstill.Whatwehavefiledaboutitinourfilings,youcanreadabout.I'mnotsureIquiteunderstandthesecondquestion.Butmaybe,Jen,ifyou--?


Yes.Wehadalittlebitofahardtimeunderstandingyoursecondquestion.Maybeyoucanrepeatit?


SoI'mjustlookingatyourslides--theaddressablepopulationontheprostatecancerside.Anditlookslikebreastcancerlookslikeisit'stwiceasmanypatientpopulationforbreastcancer--sorry,forprostatecancerversusbreastcancer.Butthemarketopportunityassessmentisalmostfivetimedifference.SoI'mjustwonderingwhatwerethemajorassumptionsthatunderliethosekindofdifferences?





Ithinkprobablythekeydifferences--withinbreast,weareobviouslygoingaftersubsegmentsofthebreastcancerpatientpopulation.Soit'snot100%ofallbreastcancerpatients,likeitisforprostate.

Wetriedtolayoutsomeofthedetailintheslidepresentation.Forexample,TNBCis20%ofthebreastcancerpopulation.Andthenweareassumingthatwecanaddress10%ofthatpatientpopulation.Doesthatmakesense?


Okay.Andthenanydurationassessmentassumption?


Wearenotgoingtodiscloseourdurationassumptionbyindication.Weobviouslyhavedifferentdurationassumptionsdependingontheindication.


Okay.Thankyou.

Operator :

DoKim,BMOCapitalMarkets.

DoKim(Analyst-BMOCapitalMarkets):

Thanksfortakingmyquestion.JustontheCHMPrecommendationfortheEuropeanlabelupdate,wastheSTRIVEdataalsosubmittedforconsideration?AndwhataspectsoftheTERRAINdatacouldweexpecttobeincludedinthelabel?Andifyoucouldgiveusatimeframeofwhenthelabelupdatewillactuallyhappen?

MohammadHirmand (InterimChiefMedicalOfficer):

SothisisMohammed--thanksforthatquestion.Asyouknow,AstellashascommercialresponsibilitiesinEurope,sowecan'treallygoingtodetailandcommentontheactivitiesinEurope.ButwhatwewereveryhappywithwastheEuropeanauthoritiesagreementwithusthatheadtoheaddatawereimportanttoincludeintheEuropeanlabelafterwelookforwardtoourPDUFAdatewiththeFDA.AndhopefullyseeasimilarassessmentintheUS.

ForEurope,actuallytheEuropeanupdatecangointoeffectimmediately.It'sbasicallytheprimarycomparativedatathatwillbeintheFMPC,whichistheEuropeanlabel.


Okay.Thankyou.Mynextquestionisonthepipeline.AndthePhaseIItrialinER/PR-positiveandHER2normalbreastcancer,youarehavingasubgroupanalysisbyARpositiveversusnegative.

Howshouldwethinkaboutthatcomparison?CouldwetakethatasavalidationthatyournoveldiagnosticassayisreliableforpredictingXTANDIbenefit?AnddoesXTANDI--ordoestheeffectthatXTANDIhasontheestrogenreceptorsortofmuddlethatresult?


Andthanksforthequestion.Soobviously,it'shardtokindofspeculateonwhattheresultswillbe.Whatwewilllookafterweunblindthestudy,andweexpecttodothatinthesecondhalftheyear,istolookat




thetotalityofthedata.

Andobviously,wearegoingtospecificallyinterrogatethedataforanypatterns,includingthediagnosticthatwehavedevelopedinTNBCtoseehowwemightbeabletooptimizeanyresponses.Soagain,kindofhardtospeculatewhatthedatawillshow.Socertainlyregardinglookingattotalityofdataandifnecessaryinterrogateseveralapproachestothat.


Okay.Great.Thankyoufortakingmyquestions.

Operator :

MikeKing,JMPSecurities.

MikeKing (Analyst-JMPSecurities):

Thankyou,guys,fortakingthequestion.AndletmealsocommendyouguysfordoingsuchathoroughanalysisoftheCompanyandpresentingitinsuchacompellingway.IguessmyquestionsarekindofrelatedtothepointsthatGeoffPorgeswasgettingatearlier,whichwaskeepinginmindthewantsandneedsoftheothershareholders.

Andsotwoquestionsrelatedtothat.One,David,isthatistherenotapricethatwhichyouwouldconsideringasaleoftheCompanytoanythirdparty?Andsecond,whatcommunicationshaveyouhadwithyourlargeshareholderslatelyaboutwhattheirdesiresandintentionsare?


WeareallaboutvalueandweandourBoardbelievethatwecandeliversignificantlymorevaluebyexecutingonourstrategicplanversusSanofi'sproposal.Sothat'sourfocusrightnow.Wethink$52.50isjustacompletelylowballproposal.Andwe,asI'vehighlighted,wethinkthatthisisnotthebasistocommenceanydiscussions.Andwethinkthatwearegoingtocreatealotofvalue.


Well,obviously,themarkethastoldyouyou'rerightonthe$52.50.But--soweknowthatnothingisgoingtogetdoneatthatprice.ButI'mnottalkingabout$52.50;I'mtalkingaboutsomethingwellabovethat.


I'mnotgoingtospeculateonthat.Wearenosesdownandtryingtogetasmuchdoneaswecantocreatethemostvaluewecanforourshareholders.


Andyourconversationswithyourlargestshareholders,youfeelthattheyareconfidentinthat?


Theconversationswe'vehad,they'vebeenverysupportive.SoIwouldsaythatwefeelverygoodaboutwhereweareandwethinkthatourshareholdersagreewithusthatwecancreatealotmorevalueforthemthanSanofi'sproposal.Sothat'swhereweare.





Okay.Thankssomuchagainfortakingmyquestions.

Operator :

EricSchmidt,TheCowenCompany(sic).

EricSchmidt (Analyst-CowenandCompany):

Thanksfortakingmyquestions.InthegrosstonetdiscountinQ1,Ithinkyousaiditwas16%--isthatcorrect?Andwheredoyouthinkthat'sgoingtogofortheremainderoftheyear?


Itwasapproximately16%forthefirstquarter.Andconsistentwithwhatwe'veseenoverprioryears,it'salwaysthehighestinthefirstquarter.Andagain,consistentwithprioryears,itwillbe1or2percentagepointslowerfortheremainderoftheyear.Weobviouslyfeelgoodabout(inaudible)andit'ssignificantlylowerthanwhatsomeofourpeersareexperiencing.


Andmaybefor,David,theJCOeditorialthataccompaniedtheSTRIVEtrialsuggestedthatmaybethedoseofbicalutamidethatwasusedasacomparatorarmtherewasn'tnecessarilyideal.Idon'tknowifyouhaveanythoughtsscientificallyonthat?


It'sthedosethat'sused.Sothat'swhatwasusedintheclinic,andwethinkthatthisisthefirstdatasetevertoshowasuperiorityofanydrugoverastandardcareinurology.Soweareprettythrilledwiththat.


Lastquestion.Youpointedoutthatyouthinkthetop-lineexpectationsfor2020amongsttheconsensusanalystsaretoolow.Doyoualsobelievethattheconsensusestimateof--Ithinkit's$3.89in2020EPSistoolow?


Wereallycan'tcommentonour2020earnings.Weprovidedrevenueguidancetodayfor2020,butthat'sallthatwearereallypreparedtoprovideintermsofspecificguidance.


Thankyou.

Operator :

BirenAmin,Jefferies.

BirenAmin (Analyst-JefferiesLLC):

Thanksfortakingmyquestions.Maybe,David,IthinkyoumentionedontheSPARTANtrialthatJ&Jislookingatdoinganinterim.What'sthebaronthatonahazardratio?


ThisisMohammed.Idon'tthinkweareawareofwhereJ&Jisintheirenrollmentandwhetherthereisaninteriminvolved.IthinkwhatDavidwasalludingtoisthatincasetheyunblindbeforewedo,ifthey




succeed,thenobviouslythat'sgoingtobeveryhelpfulinformationforus.Andthatmightgiveusanopportunitytoalsoexpediteourplantounblindandalsosucceed.

Andiftheymiss,thatwouldalsobegoodinformationforustoseewhetherweneedtopotentiallychangeourplans,perhapsenrollmorepatients,ordelayourunblindingtrigger.Soagainatthisstage,wecan'treallyspeculatewhereSPARTANisandwhattheirplansare.Butcertainlywearegoingtobelookingatthat.

BirenAmin (Analyst-JefferiesLLC):

Andmaybeafollow-upforDavid.Regardingyour2020revenueprojection,whatdoyouthinktheStreetismissingversusyourrevenueprojectionfor2020?


Ithinknumberone,IthinktheStreethasbeenskepticalaboutourmovementintourology.Wedobelievethatwewillmoveintourologyverynicely.IthinkMarionisshowingyouthatwearegettingsignificanttractionthere.SoIthinkthat'snumberone.

Ithinkthatontalazoparib,whenIacquiredtheassetsixmonthsago,allIheardfrommostpeoplewasthattheyareallthesame.AndIdon'tthinkthattheyareallthesame.Idon'tthinkthere'sawideappreciationforhowdifferenttheseassetsareandhowsignificantPARPtrappingisasadifferentiatingfactor.

IfyoutalktoYvesPommier,whohasdonealotofthiswork,hethinksthatPARPtrappingisasignificantlymoreimportantmechanismincancercellkillwithPARPsthanPARPenzymeinhibition,asIshowedyouonthatslide.SoIthinkthat'sbeingreallymissedbytheStreet.

AndasIsaidinthecall,XTANDIisafantasticdrug.ButARsignalingit'srelevanttoprostateandbreast,liver,maybeafewthings.ButeverycancercellhasDNAandtheyhavetoreplicatetheirDNAortheyaregoingtodie.Allcancersdividerapidlyandthey'vegottoreplicaterightortheyaregoingtodie.

SowethinkthatthemechanismofactionoftalazoparibcoversalotmorecancersthandoesevenXTANDI.AndifyoulookatthatTOPARPstudy,thedataIshowedonPARPinhibitionintheNewEnglandJournalofMedicinestudy.

Justtoappreciatethesignificanceofthat,100%ofthosepatientsfaileddocetaxel.Andontopofthat,58%failedcabazitaxel.Andontopofthat,96%failedabiraterone.Andontopofthat,28%failed--hadreceivedenzalutamide.

Sowejustthinkthatthat'saboutassickapopulationasyoucanimagineandtoseea33%responserate--the16to49.Andofthose16responders,have13of16droptheirCTC'stozero,wethinkisaremarkableeffect.WethinkthatthatreallyspeakstothepowerofPARPinhibition.AndthisisaPARPinhibitor,bytheway,whichisordersofmagnitudeweakerthantalazoparibinPARPtrappingandcancercellkill.

Sowethinkthattalazoparibhasthepotentialtobebestinclass.Wethinkourmechanismisdifferentiated.WethinkthatthemechanismisalotmoreuniversalpotentiallythanXTANDI.Sowethinkthat'sbeingmissed.

Onpidilizumab,Iappreciatethatwithoutcompleteclarityonmethodofaction,itmaybehardforsomepeopletoassess.ButwhatDonBensonandSaatvaNeelapuatOhioStateandMDAnderson,respectively,haveshownpidilizumabactivatesnaturalkillercells.




Andwemadethepointearlieronothercallsthatifyoulookattheimmunesystem,itisdividedintokindoftwobuckets.Thereistheinnateimmunitysideandadaptiveimmunityside.Andthereareveryfewagentsontheinnateside.

Sotherearemorethan100immuno-oncologyagentsoutthere,butthevastmajorityareontheadaptiveside.Andtoourknowledge,therearefew--likeBMSishereandInnatePharma'sdrugontheinnateside.Buttheyareordersofmagnitudelessontheinnatesidethantheadaptiveside.

Sowe'reprettyconfidentthatatsomepoint,immunotherapiesaregoingtorequirecombinationtherapy.Anditwouldmakealotofsensetocombine--ifyouwanttoreconstituteyourentireimmunesystem,whywouldyouhavetwoagentsontheadaptiveside?Wethinkitmakesalotmoresensetocombineaninnatesideagentandanadaptivesideagent.Thenyoureconstituteyourentireimmunesystem.

Sowethinkthatbeingoneofafewagentsontheinnatesidemakesthatreallyattractive.Wethinkthatoneoftheissuesforanypartnerthatwecanunderstandisthat(technicaldifficulty)aroundthat.

Operator :

PeterLawson,SunTrust.

PeterLawson (Analyst-SunTrustRobinsonHumphrey):

David,justwonderingifyoucouldtalkthroughthemoraleofthesalesforce,ifthere'sbeenanychangewiththeSanofibidandifyou'velostanybody?


Whatwasthequestion?


ThisisMarion.Iwouldbeveryhappytotakethequestionrelatedtooursalesforce.Andwearereallypleasedwithhowoursalesforceisoperating;thetractioninmarket.

AsImentionedearlier,wehad40newrepresentativesjoinus.TheyarenowfullytrainedasofMarch.AndIwouldsharethatmyobservationisthatoursalesforceisincrediblyeffective.I'vebeenvery,veryimpressedwiththegroup,manyofwhomhavebeenwithMedivationfor,many,manyyears;builtXTANDI'ssuccess.Andthenewteammemberswe'veaddedareabsolutelytop-notch.


AndIwouldagreewiththat--withMarion.SoMarionandIhadacallwiththesalesforcejustafewdaysago.Andtheyarejustthebestofthebest.Soweloveoursalesforceandwethinkthattheyaredoingagreatjob.


Andspecifictothequestionyouaskedabouthavewelostanyonefromoursalesforce?Andabsolutelynot.


Okay.Andthere'sbeennodistractionfromthisSanofibid?





OurteamiscommittedandtheyareverymuchfocusedonXTANDIpromotioninmarket.Andcertainly,wehaveaveryfinegroupofsalesleadersthatareworkingcloselywiththeteam.


Just--finalquestion.Onthenon-GAAPSG&A,theuptick,isthatasensiblenumbertobethinkingaboutfortherestoftheyear?Arethereanyone-timersinthere?


Therearesomeone-timeexpensesthatarerelatedtoourAstellascollaboration.TheyareannualexpensesthewaytheyhitourP&Larealmostentirelyinthefirstquarter.SoIwouldnotuseourfirst-quarterSG&Anumberasabase.

AndyoucanlookatthetrendthatwesawlastyeartogetasenseforwhatthedeclinefromQ1SG&AtoQ2mightbe.Youaregoingtoseeprobablyaverysimilartrendfor2016.


Perfect.Thankyousomuch.

Operator :

Ladiesandgentlemen,thisconcludestoday'sconference.

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