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Astellas Pharma Inc. (ALPMY) - A Stock Flying Under The Radar?

Astellas Pharma Inc. (ALPMY) seems to be making all the right moves, from targeted acquisitions to issuing upbeat guidance, notwithstanding recent FDA approvals. The stock is trading close to an all-time high. Yet, one cannot help wondering if the stock merits more attention that it actually receives.

The most recent good tiding for the company is the accelerated FDA approval of PADCEV, its experimental drug to treat Metastatic urothelial cancer, a devastating disease with few treatment options. Approved for patients who have already received cancer therapies chemo, and a PD-1/L1 inhibitor, PADCEV targets Nectin-4, a protein on the surface of cells that is highly expressed in bladder cancer.

The Accelerated Approval is based on tumor response rate in a phase 2 study of 125 patients treated with PADCEV. In about 12% of patients no cancer could be detected at the time of assessment, and in 32% off patients there was a decrease in tumor size or extent of cancer in the body.

If a drug fills an unmet medical need or a serious condition, the FDA can allow accelerated approval, upon the drug hitting a surrogate endpoint. However, continued approval may be contingent upon verification and description of clinical benefit in confirmatory trials. A global phase 3 confirmatory clinical trial is underway.

Astellas and Seattle Genetics are partnering on PADCEV. A complete course of Padcev may cost between $110,000 and $120,000, with government rebates for the elderly bringing it down to $90,000, according to Seattle Genetics CEO Clay Siegall.

In yet another interesting move, Astellas paid a 110% premium to acquire Gene therapy company Audentes. The deal looks pricey, but may be well worth it, as Audentes brings cutting-edge gene therapy modalities to the table and may aid Astellas realize its objective of becoming a leader in Gene therapy. At least, that's what Astellas' President and CEO Kenji Yasukawa believes.

His timing may be right, as the proposed acquisition subject to antitrust clearance, gives Astellas quick access to Audentes' lead program AT132 for treating XLMTM or X-linked myotubular myopathy. XLMTM is a serious, life-threatening, rare neuromuscular disease that is characterized by extreme muscle weakness, respiratory failure and early death. In early November, Audentes said that it is on-track to submit a Biologics Licensing Application (BLA) for AT132 in the U.S. in mid-2020 and a Marketing Authorization Application (MAA) in Europe in the second half of 2020.

Earlier this week, the FDA approved the Supplemental New Drug Application (SNDA)for Pfizer and Astellas Pharma's prostate cancer treatment Xtandi, expanding the scope of the treatment to patients with metastatic hormone-sensitive prostate cancer (mCSPC), a form of prostate cancer that spreads to other parts of the body.

This approval makes XTANDI, the first and only oral treatment approved or treating three distinct types of advanced prostate cancer - non-metastatic or a cancer form that does not spread to other parts of the body, and metastatic castration-resistant prostate cancer (CRPC) that spreads and continues to grow despite hormone therapy.

The expanded approval is based on results from a randomized Phase 3 study which evaluated 1,150 men with mCSPC. The study results demonstrated that the use of XTANDI plus androgen deprivation therapy (ADT) significantly reduced the risk of radiographic progression or death by 61% compared to placebo plus ADT. XTANDI was first approved in 2012, and has been prescribed to more than 420,000 patients worldwide ever since, the company said in a press release.

XTANDI generated revenues of 195 billion yen to Astellas for the first six months ended September 30th this year, a 19% growth from year-ago numbers of 164 billion yen. Astellas' FY19 ends on March 31, 2020. The company raised FY19 sales forecast for XTANDI to 383.9 billion yen from prior projections of 364.2 billion yen. In FY18, XTANDI revenues to Astellas totaled 333.1 billion.

Looking ahead, the company sees total revenues of 1256 billion yen and eps of 111.37 yen, higher than initial forecasts of 1224 billion yen in revenues and 96.51 eps. The stock closed yesterday's trade at $17.28 on a volume of 34k shares vs. average trading volume of 65k.

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