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Sep 08, 2008
 |  BioCentury  |  Finance

Medivation's polarizing effect

Tension between long and short investor strategies has provided some interesting trading for neurology and cancer company Medivation Inc. (NASDAQ:MDVN). Only gradually over the course of three days did the stock pick up even the minimal recognition that the company would receive $225 million up front from Pfizer Inc. (NYSE:PFE) for a partnership on its dimebon Alzheimer's disease candidate.

The biotech also is eligible for up to $500 million in development and regulatory milestones, plus undisclosed commercial milestones (see "Motivation for Medivation," A6).

On Wednesday, when it announced the partnership, Medivation gained $3 (12%) to $29.03. That translated into only $90 million of market cap. The shares tacked on $2.34 to $31.37 on Thursday, adding $70.2 million to its valuation.

For most of Friday, the shares continued to hover at or below that level. But in the last two hours of trading, the price jumped $2.43 to $33.80, adding another $74.9 million in market cap.

The last-minute move put the post-deal gain at $232.2 million in market cap, roughly the value of the upfront, and left Medivation valued at $1 billion.

Friday's move came on a small volume of 861,000...

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