Business

SAC Capital Boosts Stake in The Medicines Company

SAC Capital Boosts Stake in The Medicines Company

Steve Cohen’s SAC Capital Advisors has boosted its stake in The Medicines Company (NASDAQ:MCDO) to 2,706,765 shares. The hedge fund owns slightly more than 5.0% of outstanding shares in the company. As of September 30th, SAC owned 2.93% of the Parsippany, New Jersey based company, or 1,577,798 shares. The stake is worth approximately $55 million, based on The Medicines Company (NASDAQ:MCDO)’s closing price today of 20.89.

Analysts at Oppenheimer research initiated coverage on the company today with an outperform rating. They note the following drugs and valuation for their view:

Angiomax—A Growing Asset Providing The Brunt Of Current Valuation. The Medicines Company (NASDAQ:MCDO)’s primary asset, Angiomax, is an anticoagulant used in patients undergoing PTCA and PCI procedures. Despite a declining number of these procedures, they project sales growth as Angiomax continues taking share from heparin, particularly in the STEMI setting, where Angiomax only has ~30% share.

Oritavancin Is A High-Risk But Under-appreciated Asset. Despite a bumpy clinical history, if approved, they believe that Oritavancin would have an important place in the ABSSSI treatment landscape, capable of >$400M in peak sales. They look for data from two ongoing Phase III studies in 1H13 to serve as potential catalysts for the stock.

? Cangrelor Data Offers Second Near-Term Clinical Catalyst. Another key pipeline asset which they believe is underappreciated by investors is The Medicines Company (NASDAQ:MCDO)’s Cangrelor, an antiplatelet agent being developed to prevent thrombosis in PCI patients. Phase III data by YE12/early 2013 should shed light on Cangrelor’s commercial prospects, which they currently value at $2/share.

They believe that The Medicines Company (NASDAQ:MCDO) Shares are Undervalued Relative To their  DCF And Sum-Of-The-Parts Analysis. Their $35 price target is based on the average of their sum-of-the-parts analysis ($36/share) and their DCF ($34/share). Their analysis suggests Angiomax is worth ~$19/share, implying that, at current valuations, investors are getting a free call option on The Medicines Company (NASDAQ:MCDO)’s remaining pipeline.

 

For the six months ended 30 June 2012, The Medicines Company revenues increased 13% to $262.3M. Net income decreased 40% to $21.3M. Revenues reflect United States segment increase of 10% to $239.8M, Europe segment increase of 52% to $18.8M. Net income was offset by Legal settlement increase from $18M (income) to $0K, Research and development increase of 31% to $65.7M (expense).

Disclosure: No position