A Spoonful of Medicine
09/22/2006 12:00 am EST
Long-term successful investor Jim Collins puts his expertise to work on the coming-back-into-vogue biotech industry. Here he uncovers a biotech company with an already-successful product plus two more coming through the pipeline with stellar potential.
"The Medicines Company (MDCO NASDAQ) acquires acute care pharmaceutical products in the late stages of development or already approved products, with an anticipated time to market of four years or less and that come with existing clinical data providing reasonable evidence of safety and efficacy and the potential for high investment returns. The company's lead product, Angiomax is approved in the US and in Europe, Australia, Canada, countries in Central America, South America, and the Middle East, for use as an intravenous anticoagulant in combination with aspirin in patients undergoing angioplasty.
"Approximately one million of these procedures are performed in the US each year. Clinical trials of Angiomax are now being conducted for additional uses, including treating patients with acute coronary syndromes, or ACS, and patients undergoing cardiac surgery.
"In March 2002, The Medicines Company acquired clevidipine, an intravenous compound for the short-term control of high blood pressure, from AstraZeneca. Nearly 20 million surgeries in the US are performed annually on patients with high blood pressure. The hope is that clevidipine will reduce the need for multiple drugs and speed recovery time. On September 11, The company announced the completion of a series of Phase III safety evaluations of clevidipine in the perioperative treatment of hypertension. It expects to review the completed data in the 4Q 2006 and if it meets objectives, The Medicines Company anticipates submitting an application to the FDA for approval in the first half of 2007.
"The second potential product, cangrelor, is an anticoagulant that prevents platelet clotting factors from activating, which The Medicines Company believes has potential uses in coronary angioplasty and cardiac surgery.
"For the second quarter, revenues rose 39% to $59.4 million from the same period a year ago and net profit was $10.6 million, or $0.22 per share, a dramatic improvement over last year's $1.3 million, or $0.02 per share. Due to higher than anticipated sales of Angiomax, full-year revenue guidance is now forecasted at $205-212 million versus previous guidance of $200-210 million.
"Since its most recent low in June, the stock has produced a strong uptrend. Daily volume averages approximately 475,000 shares or 1.1% of the float. Banks and mutual funds own approximately 34% of the shares available for trading and management owns 5%, often a good indication that management will be aligned with shareholders' interests. The Medicines Company receives an A- for accumulation/distribution and has a relative strength of 85."