Market Overview

Biotech Stock On The Radar: Medicines Company, A Cardiovascular Pure Play With A Potential Blockbuster

Biotech Stock On The Radar: Medicines Company, A Cardiovascular Pure Play With A Potential Blockbuster

The Medicines Company (NASDAQ: MDCO) stock has staged a nice recovery in the first half of 2019 after a steep 60% pullback in the second half of 2018 that dragged it to a 52-week low of $16.69 on Dec. 21.

From the low, the stock rallied to an intraday peak of $38.96 on July 11, 2019, a 133% gain, only to retreat along with the broader market. 

Will the stock weather a market-wide downturn and resume its uptrend?

Medicines Co. is a biopharma with a single-point focus of tackling cardiovascular diseases. Does this make the shares a risky bet? 

Chasing A Promising Opportunity

About 17.3 million deaths occur globally due to cardiovascular diseases, with 854,000 of these in the U.S., according to the company, which cited WHO estimates.

About 50% of atherosclerotic cardiovascular disease can be prevented by low density lipoprotein-cholesterol, or LDL-C, management.

The challenges in treating cardiovascular diseases include a majority of people not achieving LDL-C goals and poor adherence to current therapy.

Medicines Co.'s product candidate inclisiran addresses these two concerns.

Inclisiran is a small interfering RNA, or siRNA, therapy that has the potential to lower LDL-C by preventing the production of a protein, proprotein convertase subtilisin/kexin type 9, or PCSK9, in the liver.

Inclisiran is being evaluated in multiple studies dubbed ORION. Administration is fairly simple and easy: it is given as a twice-a-year subcutaneous injection by health care professionals. This ensures strict adherence, according to the company. 

The Medicines Company licensed inclisiran from Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), and under a 2013 agreement between the companies, Alnylam completed certain pre-clinical and Phase 1 studies.

Subsequently, the Medicines Co. has assumed the responsibility for the further development and commercialization of the drug.

It's a potentially disruptive player in the high-potential anti-PCSK9 lipid management market, valued at $23.6 billion in 2030, according to Gbola Amusa, head of health care research at Chardan.

The analyst estimates that Inclisiran can capture $5.1 billion of the market. 

Competitive Dynamics

If approved, inclisiran will compete with other currently approved and marketed PCSK9 inhibitors such as Amgen, Inc. (NASDAQ: AMGN)'s Repatha and Sanofi SA (NASDAQ: SNY)'s Praluent, both of which are approved for treating hypercholesterolemia in the U.S.

Repatha fetched Amgen sales of $550 million in fiscal year 2018, up 72% from $319 million in 2017.

For the same period, Sanofi reported sales growth of 56.1% for Praluent.

Sanofi has a collaboration with Regeneron Pharmaceuticals Inc (NASDAQ: REGN) for Praluent. Repatha and Praluent, though PCSK9 inhibitors like inclisiran, are monoclonal antibodies that bind to PCSK9 protein, while inclisiran acts by blocking the expression of genes that encode the protein.

The investigational RNAi therapy is cheaper to produce than the monoclonal antibodies and it does not require refrigeration, offering convenience in distribution.

Some of the oral LDL-C lowering products currently in development include Esperion Therapeutics Inc (NASDAQ: ESPR)'s bempedoic acid and Gemphire Therapeutics Inc (NASDAQ: GEMP)'s gemcabene.

Amusa said inclisiran could generate substantial returns for Medicines Co. in light of a recent rise in prescription trends for Repatha and Praluent; inclisiran's convenient biannual subcutaneous dosing; sound safety data; and the potential for usage as a front-line monotherapy in the long run, given its unprecedented response rates.

A biannual dosing of 300mg of inclisiran led to "consistent" LDL-C lowering of "more than 50%" with overall follow-up of up to three years, according to interim results from Group 1 of the Phase 2 ORION-3 study, an open-label extension study of the Phase 2 ORION-1 program.presented 

In Chardan's view, Medicines Co. can price Inclisiran at $4,000, lower than the prices of monoclonal antibodies such as Repatha, which is priced at $5,850 even after a recent reduction.

Clinical Programs

The Medicines Co. has 12 programs in development.mdcophase3.png Source: 10-K filing

Upcoming Key Catalysts

  • Presentation of Phase 3 data from the ORION-11 program in ASCVD at the European Society of Cardiology's 2019 Congress in Paris: Sept. 2.
  • Topline data from the Phase 3 ORION-9 program in HeFH: second half of the third quarter. 
  • Topline data from the Phase 3 ORION-10 in ASCVD: second half of the third quarter.
  • Regulatory submission in the U.S.: fourth quarter of 2019. 
  • Regulatory submission in Europe: first quarter of 2020. 

Following the recent seventh planned review of unblinded safety and efficacy data from the ORION-9, ORION-10 and ORION-11 programs, the Independent Data Monitoring Committee recommended continuation of the trials without modification.

The company said an ongoing review of blinded data from the Phase 3 trials shows no material safety issues, with favorable emerging data.

B Riley FBR analyst Mayank Mamtani expects Medicines Co. shares to move higher in reaction to the press releases on the top-line data readouts.

Financial Fundamentals


Source: 10-K Filing

*Net revenues were from branded Angiomax; In August 2018, the company sold its rights to Angiomax in the U.S. to Sandoz for $9.9 million. Hence, the company currently has no commercial products.

For the second quarter ended June 30, 2019, the company reported no revenue and a loss per share of 80 cents.

At the end of the June quarter, cash, cash equivalents and short-term investments totaled $323.68 million.

Stock Take

The recent weakness has pushed the shares of Medicines Co. below a long-term support around the $33-$35 area.

The stock is nestled between its 50-day SMA, currently at $35.75, and its 200-day SMA, currently at $27.95.

MDCO Chart

Source: Y Charts

Short interest in the stock is higher, with 21.4 million of the 69.65-million float being shorted, translating to a short percentage of float of 30.7%.

Taking the average volume of trading of 1.54 million, the short ratio, or the number of days required to cover the short positions, is roughly 14.

Heavy bets are being made on the stock falling in the future despite fairly decent fundamentals and pipeline prospects. A short squeeze could be around the corner if the catalysts pan out favorably, which could impart further momentum to the stock. 

Chardan has designated Medicines Company as its Top Pick for 2019.

The firm has a Buy rating for the shares and a $90 price target, suggesting roughly 180% upside potential.

B Riley FBR rates the share a Buy with a $61 price target.

Related Links:

David Einhorn's Q2 Letter To Greenlight Investors Shows New Stakes In Dillards, Chemours, Scientific Games

Medicines Company Rallies On Positive LDL Cholesterol Study Results

Latest Ratings for MDCO

Nov 2019SVB LeerinkDowngradesOutperformMarket Perform
Nov 2019Chardan CapitalDowngradesBuyNeutral
Nov 2019OppenheimerDowngradesOutperformPerform

View More Analyst Ratings for MDCO
View the Latest Analyst Ratings


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