The Medicines Company (MDCO): 2019 Top Picks' Mid-Year Update

07/08/2019 5:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

John McCamant, editor of The Medical Technology Stock Letter, chose The Medicines Co. (MDCO) as his top speculative idea for 2019. The stock has since risen 90%. Here's his latest update on this biotechnology play.

After the positive ORION-3 update at the National Lipid Association (NLA) meeting on 5/18, The Medicines Company presented analyses of two additional clinical studies of inclisiran at the 87th European Atherosclerosis Society (EAS) Congress in Maastricht, Netherlands.

A combined analysis (n=279) from the Phase II ORION-1 and Phase I ORION-7 trials demonstrated that patients across a range of renal function levels given inclisiran achieved consistent reductions in low-density LDL-C with no dose adjustment necessary for patients with renal impairment. Results from the Phase II ORION-2 pilot study were presented as a late-breaking abstract.

In the small trial (n=4), inclisiran provided durable reductions in LDL-C levels up to day 180 (~6 months) in patients with homozygous familial hypercholesterolemia (HoFH), a genetic disorder characterized by very high levels of LDL-C and early onset of cardiovascular disease, without the need to increase the dose of inclisiran.

As we head into the Phase III readouts due in Q3, based upon 3 years of exposure, >3000 patient lives and 6 independent looks on safety, expectations are rising that the data will be positive.

Despite being a good stock in 2019 to date, MDCO shares in our view remain grossly undervalued. The stock reached the mid-50s back in 2017 after the initial positive LDL lowering results of inclisiran at 90-days were released.

With the stock sitting in the mid-30s after long-term safety and efficacy follow-ups, plus the PCSK-9 MAbs markets beginning to picking. Combine that with an activist Board of Directors (BOD) with unparalleled success in delivering biotech company sales at huge premiums, in our view, MDCO is next.

In fact, the Company just raised another $150 million in a follow-on offering (@$33 per share) that the insiders including Alex Denner, Chairman of the MDCO BOD participated in. The Company is now well financed leading into the unblinding of the data due in Q3 and the subsequent BLA filing, expected by year-end.

While the biotech stock market has been focused on and placing tremendous value on new treatments for oncology and rare diseases, cardiovascular diseases remains, by far, the single leading cause of death in developing nations.

As a result, we believe the stock is still undervalued at current levels. With positive Phase III data due in the third quarter of this year, likely this July or August, in our view MDCO shares will continue their ascent.

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