We recently upgraded The Medicines Company (MDCO) to Outperform based on our improved outlook on the stock. In August 2010, The Medicines Company received good news when the US District Court for the Eastern District of Virginia ordered the US Patent and Trademark Office (PTO) to treat the company’s patent term extension application for lead product Angiomax as having been filed on a timely basis.
Following this ruling, the PTO granted a one-year interim extension of the principal US patent that covers Angiomax. The extension will provide exclusivity until August 13, 2011 (February 2012 including 6-month pediatric exclusivity). With the US Solicitor General and the Government deciding against appealing the Court’s ruling, a major overhang on The Medicines Company has been removed.
Previously, we were expecting Angiomax to start facing generics from late 2010. But, the interim patent extension removes this concern. We have, therefore, raised our revenue and earnings estimates for both 2010 and 2011. While our 2010 earnings estimate for The Medicines Company has gone up by 13 cents to $0.97, we now expect 2011 earnings in the range of $1.11, a significant increase from our earlier estimate of $0.93.
Angiomax, The Medicines Company’s lead product, continues to impress. Angiomax is a specific and reversible direct thrombin inhibitor that was launched in early 2001. The product is indicated for use in unstable angina patients undergoing percutaneous transluminal coronary angioplasty (PTCA) or percutaneous coronary intervention (PCI). Other potential uses for the drug include acute coronary syndrome (ACS), coronary artery bypass graft (CABG), and peripheral artery disease (PAD).
Despite the challenging economic scenario, which has led to hospitals and patients cutting down on costly procedures, Angiomax volume increased by 11% in the US in 2009. US sales were up 14.6% year over year. Although we expect revenues to remain under pressure as hospitals, physicians and patients opt for low cost options in the PCI segment, we believe the encouraging data on Angiomax will help drive growth.
In fact, data from the ACUITY trial, which proves the cost-effectiveness of the drug, has allowed Angiomax to gain market share in the US. The Medicines Company’s goal is to continue to increase PCI market share. Key to this will be increased marketing and promotion and the demonstration of key clinical data.
We are also pleased with The Medicines Company’s efforts to grow its pipeline through acquisitions and in-licensing agreements. Recent deals include the acquisition of Germany-based Curacyte Discovery GmbH, the acquisition of Targanta Therapeutics and the acquisition of worldwide rights to MDCO-316 from Pfizer (PFE).
Going forward, we expect investor focus to remain on the extension of the Angiomax patent, the Cleviprex supply situation and The Medicines Company’s pipeline.
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