Description Of Business

3 Months Ended

Mar. 31, 2012

Description Of Business [Abstract]

Description Of Business

NOTE 1 — DESCRIPTION OF BUSINESS

Medivation, Inc. (the "Company" or "Medivation") is a biopharmaceutical company focused on the rapid development of novel small molecule drugs to treat serious diseases for which there are limited treatment options. Together with its collaboration partner, Astellas Pharma, Inc., or Astellas, the Company is developing enzalutamide (formerly MDV3100) for multiple stages of prostate cancer and for breast cancer. The Company has completed the Phase 3 AFFIRM trial in the latest stage prostate cancer patients – those who have already failed docetaxel-based chemotherapy – and is conducting an additional Phase 3 trial, two Phase 2 trials and a Phase 1 trial in men with earlier stages of prostate cancer, and a Phase 1 trial in individuals with breast cancer.

The Company has not generated any revenue from product sales to date. The Company has funded its operations primarily through private and public offerings of its common stock, the issuance of convertible debt and from the up-front, development milestone and cost-sharing payments under the Astellas Collaboration Agreement and its former collaboration agreement with Pfizer. The Company has incurred cumulative net losses of $249.9 million through March 31, 2012 and it expects to incur substantial additional losses for the foreseeable future as it pursues regulatory approval for, and, if approved, commercial launch of enzalutamide and continues to finance clinical and preclinical studies of its existing and potential future product candidates and its corporate overhead costs.

The Company reported net income of $0.4 million for the three months ended March 31, 2012 due to the acceleration of the recognition of revenue previously deferred under its former collaboration agreement with Pfizer, which was terminated in January 2012. The Company expects to return to a net loss position in the second or third quarter of 2012 after all remaining unamortized deferred revenue from the former Pfizer collaboration agreement has been recognized. The Company reported negative cash flows from operations during the three months ended March 31, 2012, and expects to incur continued negative cash flows from operations for the foreseeable future.

At March 31, 2012, the Company had $380.1 million of cash, cash equivalents and short-term investments to fund its operations. On March 19, 2012, the Company completed the sale of $258.8 million of 2.625% convertible senior notes due April 1, 2017, or the Convertible Notes. The Company received cash proceeds from the sale of the Convertible Notes totaling $251.0 million, net of $7.8 million of underwriters' discounts. Additional information regarding the Convertible Notes is included in Note 5, "Convertible Senior Notes Due 2017."

(a) Astellas Collaboration Agreement

The Company entered into a collaboration agreement with Astellas in October 2009, pursuant to which it received a non-refundable, up-front cash payment of $110.0 million in the fourth quarter of 2009. The Company subsequently received development milestone payments of $10.0 million and $3.0 million in the fourth quarter of 2010 and the second quarter of 2011, respectively. The Company recorded development and commercialization cost-sharing payments from Astellas totaling $13.3 million and $9.8 million during the three months ended March 31, 2012 and 2011, respectively, pursuant to the terms of the Astellas Collaboration Agreement, which is discussed further in Note 3, "Collaboration Agreements." The Company refers to its collaboration agreement with Astellas as the Astellas Collaboration Agreement.

In November 2011, the Company reported positive results from a planned interim analysis of its Phase 3 AFFIRM trial in advanced prostate cancer patients previously treated with docetaxel-based chemotherapy. In February 2012, the Company reported further positive results from the AFFIRM trial at the American Society of Clinical Oncology's 2012 Genitourinary Cancers Symposium. Based on the positive results from the AFFIRM trial, the Company elected to exercise its right under the Astellas Collaboration Agreement to co-promote enzalutamide in the U.S. market. Should enzalutamide receive marketing approval, the Company will provide 50% of the sales and medical affairs field forces supporting enzalutamide in the U.S. market.

(b) Former Collaboration Agreement with Pfizer

The Company entered into a collaboration agreement with Pfizer Inc., or Pfizer, in October 2008, pursuant to which it received a non-refundable, up-front cash payment of $225.0 million in the fourth quarter of 2008. The Company recorded development and commercialization cost-sharing payments from Pfizer totaling $1.3 million and $4.9 million during the three months ended March 31, 2012 and 2011, respectively, pursuant to the terms of the collaboration agreement, which is discussed further in Note 3, "Collaboration Agreements."

In January 2012, the Company reported negative top line results from its Phase 3 CONCERT trial of its former product candidate dimebon in patients with mild-to-moderate Alzheimer's disease. The Company previously had reported negative top line results from its Phase 3 CONNECTION trial of dimebon in patients with mild-to-moderate Alzheimer's disease and its Phase 3 HORIZON trial of dimebon in patients with Huntington disease. In January 2012, Pfizer exercised its right to terminate the collaboration agreement and the Company and Pfizer discontinued the development of dimebon for all indications as discussed further in Note 3, "Collaboration Agreements." The Company refers to its collaboration agreement with Pfizer as the former collaboration agreement with Pfizer.