We recently upgraded our recommendation on The Medicines Company (MDCO) to Neutral from Underperform. Despite the economic slowdown and cost-cutting by hospitals, The Medicines Company’s lead product Angiomax continues to perform well. We expect Angiomax sales to remain strong with The Medicines Company continuing to present encouraging data. Moreover, new guidelines issued by the American College of Cardiology / American Heart Association (ACC/AHA) supporting the use of Angiomax should help boost product sales.
Meanwhile, we are also pleased to see that Angiomax (trade name: Angiox) is performing well in Europe. Sales in Europe are beginning to benefit from trial data demonstrating the economic and clinical benefits of Angiomax/Angiox. We expect a slow but steady ramp in international Angiomax/Angiox sales over the next few quarters.
The Medicines Company recently received positive news in the form of a label expansion for Angiomax/Angiox in the EU. The European Commission granted approval for the use of Angiomax/Angiox as an anticoagulant in patients with heart attacks [ST-segment elevation myocardial infarction (STEMI)] undergoing percutaneous coronary intervention (PCI).
The new indication should expand the market for Angiomax/Angiox significantly. According to The Medicines Company, about 150,000 primary PCIs are performed in Europe every year. We believe data from the HORIZONS-AMI study will help Angiomax/Angiox gain share and acceptance. The Medicines Company intends to launch Angiomax/Angiox for the new indication in January 2010.
Encouraging clinical data, new formulary wins and approval in the EU should help drive revenues of Cleviprex, which is the second marketed product at The Medicines Company.
Our biggest concern with The Medicines Company is that Angiomax will most likely lose patent exclusivity in the U.S. in September 2010 – the entry of generics would be devastating for the company.
Therefore, the onus is on management to acquire and develop the next generation of products to drive the top-line once Angiomax loses exclusivity.
The Medicines Company has been very active on the deal-making front over the past few quarters. While the products acquired/in-licensed by the company are still in different stages of clinical development, the successful development and commercialization of these candidates would help sustain long-term growth following the genericization of Angiomax. We are moving back to a Neutral recommendation on The Medicines Company.
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