We recently downgraded
The Medicines Company
) to Neutral from Outperform with a price target of $25.00.
The company reported second quarter earnings of 38 cents per
share, well above the year ago earnings of 18 cents. Lead product,
Angiomax, continues to perform well. The settlement agreements with
) and APP regarding Angiomax are also positive events.
Moreover, we are pleased to see management actively pursuing
in-licensing deals and acquisitions to drive growth. The
) deal is a smart move by the company. The worldwide development
and collaboration agreement with AstraZeneca for acute ischemic
heart disease compounds including Brilinta, Angiomax and Cangrelor
is a positive for The Medicines Company.
The Medicines Company's sales force is promoting AstraZeneca's
anti-platelet treatment, Brilinta, which is already being promoted
by AstraZeneca's sales force in the US.
The Medicines Company's strong presence in the hospital setting
should help drive Brilinta sales. During the 4-year co-promotion
period, The Medicines Company will receive $15 million per year for
accomplishing pre-agreed commercialization activities.
The company could receive up to an additional $5 million per
year on the achievement of performance thresholds. We are pleased
with this deal, which should bring in additional revenues without
the company being required to increase its sales force.
We are also pleased with the signing of the Gaining Antibiotic
Incentives Now (GAIN) Act as it should ensure an additional five
years of exclusivity for oritavancin.
While pleased with all these positive developments and the
company's efforts to develop its pipeline, we were disappointed to
hear about the discontinuation of the development of phase II
candidate, MDCO-2010. Shares were down more than 5% on the
Earlier this month, The Medicines Company announced the
discontinuation of an ongoing study being conducted with MDCO-2010.
MDCO-2010 was being developed for the reduction of blood loss
The company decided to discontinue the study voluntarily
following the emergence of serious unexpected patient safety issues
during the phase IIb dose-ranging study. Although the company is
yet to establish a link between the cause of the safety issues and
the candidate, the development of MDCO-2010 has been discontinued
due to the evidence of risk to patients.
MDCO-2010 became a part of The Medicines Company's pipeline
following its August 2008 acquisition of Curacyte Discovery GmbH.
MDCO-2010 was considered to be a promising candidate given the
positive phase IIa data reported by the company in October 2011.
The discontinuation of the candidate is, therefore,
The Medicines Company has important pipeline events lined up for
later this year. We prefer to remain on the sidelines until we see
data on oritavancin and Cangrelor, which should be out by year end.
The Medicines Company carries a Zacks #3 Rank (short-term Hold
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