Nov 082016

Special Update – The Medicines Company (MDCO) (MDCO) –  Discontinues ‘216 – AHA Meeting Next Week 

News – MDCO Stops MDCO-216 After Pilot Trial Unsuccessful – The pilot trial did not show efficacy – there was no positive effect on atherosclerosis. Safety was fine. The data calls into question the viability of APO-A1 Milano as a target and the positive implications of HDL as well. Nonetheless, we will see details (and more from competitor CSL’s APO drug) at the AHA meeting next week.

Impact – Very Little, If Not Positive… – Ever since the August update that the initial ‘216 cohort did not stop the pilot study early, expectations for this compound have steadily declined.  On the recent quarterly call, management indicated that it needed very positive data to make a serious investment in ‘216 going forward.  It is a complicated compound to manufacture, and it would have been a very expensive and risky clinical program had the early data been successful.

…Moreover, PCSK-9’s Do The Same Thing – More importantly than today’s announcement, on September 20th Amgen announced that a Phase III trial for Repatha – “Positive Top-Line Results From The Phase 3 GLAGOV Imaging Study Of Repatha® (Evolocumab)” – met both primary and secondary endpoints of modified atherosclerotic plaque build-up in the coronary arteries of patients already treated with optimized statin therapy.  This is the same kind of results that were possible (and hopeful) with ‘216.  As a result of the positive AMGN GlaGOV study, MDCO shares reached $41+ that day. Of course this was before the non-related ALNY clinical trial setbacks, the biotech bloodbath in October as well as today’s news.  Details of AMGN data will be presented at the same AHA session above and, we believe, will continue to have a favorable impact on MDCO-PCSK9si.

Back in September, we wrote that the AMGN IVUS data makes MDCO PCSK-9si much more valuable and also makes MDCO-216 basically a waste of money.  In our most recent MTSL Issue #839 that was released yesterday, we wrote the following:

“AHA Approaching
The final 90-day ORION data is due November 15, at the AHA meeting in New Orleans.  The attention will be on MDCO PCSK9si a) safety; b) efficacy; and c) duration (2-3 shots/year).  There will be other results at the meeting from AMGN (IVUS), CSL (APO) and REGN/SNY, but the key new data is the actual details on ORION.  MDCO’s 216 results will also be part of the late-breaker session, but with the positive AMGN IVUS data boding quite well for MDCO’s PCSK9si too, in our view, MDCO’s decision to proceed or not with a ‘216 Phase III trial may be more due to economics.  If PCSK9si can do the same thing to narrow the artery walls, then an expensive and risky trial of ‘216 – which has sizable manufacturing costs and hence, way lower margin/higher COGSs than the “si” – may not be in the best interests of either partners, acquirers and/or shareholders.”

Conclusion: With ’216 Out Of The Way, The Focus Is Clearly on MDCO-PCSK9si – While the data is negative, based upon the above analysis is hard for us to call the results for MDCO-216 surprising or even disappointing.  It saves the Company hundreds of millions of dollars in R&D for a risky, long and expensive project.  And with the ORION data and details coming in just a week, in our view, the remainder of news going forward for MDCO will be positive.  The current market cap is now just a little over $2 billion, and with a crown jewel in PCSK9si – the largest cardiovascular drug market in the world – and the Company is about to debut its data at the most visible industry stage at the American Heart Association annual convention (11/15).  In our view the additional pullback over ‘216 is a keen opportunity to initiate new positions or add MDCO at current levels.  

MDCO is a BUY under 50 with a TARGET PRICE of 75.