Biotech Firm Wins Over Wall Street With Hopes for New Heart Drug

(Bloomberg) -- Medicines Co. is nearing the finish line in its journey to introduce a new type of cholesterol medicine that analysts expect to top $4 billion a year in sales.

A trio of late-stage studies over the next few months will show investors whether that target is achievable. The medicine, a twice-a-year injection called inclisiran, was designed as an add-on to statin therapy for high-risk patients who need something more powerful to reduce their LDL cholesterol. Medicines Co. estimates that at least 12.7 million patients in the U.S. could benefit.

“There is a genuine belief in the value proposition and what this drug can bring,” chief executive Mark Timney said in an interview at the company’s Parsippany, New Jersey, headquarters. “Being able to lower LDL on top of existing therapies while at the same time giving you that guaranteed adherence” with twice-yearly dosing. Two-thirds of cholesterol patients now stop taking their drugs after a year, he said.

Inclisiran’s use with other approved therapies could make Medicines Co. a prime takeout target for companies with cholesterol drugs that are looking to beef up their offerings.

“It’s a logical bolt-on for these mega-caps that need assets that have struggled with innovation and filling their pipelines,” Chardan Capital Markets analyst Gbola Amusa said in an interview. “MedCo gives them that shiny new product that makes them look great.” He gave Eli Lilly & Co. and Pfizer Inc. as examples before Pfizer agreed to combine its old blockbusters with generic drugmaker Mylan NV.

All 14 analysts following Medicines Co. recommend investors buy shares of the company. The average 12-month price target of $61 implies more than 60% upside from the stock’s last closing price. The company’s market value has already doubled since early January to $2.9 billion.

While Wall Street has swooned over the prospect of a blockbuster heart drug and a potential multibillion-dollar deal, there are still skeptics. The stock’s short interest remains elevated, with 30% of shares available for trading sold short, according to financial analytics firm S3 Partners. However, some short sellers covered their positions this month with short bets declining by more than 1.6 million, S3’s Ihor Dusaniwsky said in an email.

Medicines Co.’s $950 million in convertible debt could be attracting short-sellers but the stock also has a strong institutional following, according to Timney. Roughly 80% of the company’s shares are held by its ten largest holders, data compiled by Bloomberg show.

“We’ve seen an increased investment from existing investors, and what we’ve seen is a lot of new investors are coming in or wanting to,” Timney said. “That was highlighted” by Medicines Co. raising about $150 million through an equity offering at the end of June. That will fund the drugmaker through the second-half of next year and cover its planned regulatory filings.

“The last two quarters of this year will be critical as we approach filing for the U.S. and next year filing for Europe,” Timney said.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Morwenna Coniam

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