Yahoo Finance Why Did Medivation’s Share Price Increase so Much after Earnings?
Medivation's Earnings Disappointed, so Why Did the Stock Rise?
Share price performance
Medivation (MDVN) announced its earnings for fiscal 2015 on February 25. Investors reacted well, and the share price jumped to $35.6 on February 26 from $32.7 the previous day. Since February 25, the stock has already appreciated 91%. It closed at $62.5 on May 9. Let’s look at the major drivers of this eye-catching performance.
Behind the share price surge
In February 2016, the U.S. Food and Drug Administration (or FDA) accepted the “supplemental new Drug Application (or sNDA) for Xtandi to include findings from the TERRAIN and STRIVE trials. The agency has provided a the Prescription Drug User Fee Act (or PDUFA) date of October 22, 2016, for a decision.”
On April 17, the company presented talazoparib phase 1 study data at the American Association for Cancer Research (or AACR) Annual Meeting 2016. Reception was positive, resulting a share price jump.
Acquisition news
On April 15, Medivation received an “unsolicited, non-binding proposal from Sanofi (SNY) to acquire all outstanding shares of Medivation common stock for $52.50 in cash.” Medivation’s Board of Directors rejected Sanofi’s proposal, which substantially undervalued the company.
Already there were rumors that Medivation could be an attractive opportunity for big pharmaceuticals operating in oncology space. The buzz that Sanofi might acquire Medivation started in March, causing a surge in MDVN’s share price. For details on Sanofi’s interest in MDVN, please see Is Sanofi Trying to Acquire Medivation?
So not just acquisition news but also positive news relating to the promising pipeline contributed to the share price performance. To avoid the risk of Medivation’s product failure while enjoying the appreciation in its share price, you can invest in ETFs. One option is the SPDR S&P Biotech ETF (XBI). XBI invests 3.1% of its assets in Medivation. The fund also holds AbbVie (ABBV), Baxalta (BXLT), and Alexion Pharmaceuticals (ALXN) with respective weights of 2.2%, 2.2% and 2.1% of its total portfolio.
Next, we’ll discuss MDVN’s performance in 1Q16.
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