Here's Hilary Kramer's take on MDV (the stock got a nice bounce today from her NBR interview yesterday):
Wednesday, January 31, 2007
Medivation Inc: A Miracle Cure?
If you're a cautious investor, Medivation Inc.(AMEX: MDV) probably isn't for you. The company has yet to bring in any revenues, and it will be operating at a loss for at least another couple years. Given all of this, you might be surprised to hear that the stock price rose more than 400% in 2006, and is still trading well above its 52-week low of $2.75.
Investors have been buying this company because of Dimebon, which recently finished very promising phase II testing for Alzheimer's. The patients taking Dimebon had improved memory and cognitive abilities, and if the drug continues to do well in its testing, it could become one of the most successful new drugs in a very long time. Right now the other Alzheimer's drugs can only slow down deterioration; a drug that reverses
these symptoms would be very popular, especially with a Baby Boom generation getting closer to its dotage.
MDV is planning a global phase 3 round of testing in 2008, and it hopes to have the drug up for marketing approval by 2010. Some investors are frustrated with this rather long schedule, and the stock lost some value
after MDV announced its plans. Some people feel the CEO, Dr. David Hung,overhypes his products, while others think he's a visionary scientist who could revolutionize the treatment of Alzheimer's.
Obviously, this is a risky stock and you're going to have to hold it for a while before MDV starts making money (its other main drug, which treats prostate cancer, is also in early stages of testing). But the upside is tremendous if things go well, and if you have some money to risk, this might be a great bet.
Type of stock: A small pharmaceutical company with a drug that could be a huge windfall.
Price target: If you're interested in buying this and holding for the long term, I think you need to buy at a time when you'll minimize your losses if things don't go well. Without any major testing coming anytime soon, it's possible some investors will get tired and sell, and we could see the price drop to near $10. I think if you can buy this for $12 or less, it's worth the risk.
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