Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The Medicines Company (MDCO), AstraZeneca plc (ADR) (AZN): A Small-Cap Pharmaceutical Company With 2014 in Its Sights

Page 1 of 2

A few months back, Barron’s featured an intriguing pharmaceutical company that goes by the name The Medicines Company (NASDAQ:MDCO). This stock is said to have strong catalysts that could lift the share price over the years. The company was at $20.40/share in November 2012 and is now trading at $31.60. The company has reported a 52-week high of $37.40.

The Medicines Company (NASDAQ:MDCO)

The biggest catalyst for a pharmaceutical company is an FDA approval. The Medicines Company (NASDAQ:MDCO) is pending approval for four drugs and the verdict is expected by next year. Would it be worth investing in the company right away or wait it out until next year? Well, let’s find out.

Angiomax has been its trump card so far

Argatroban, Recothrem, Recothrem and company-favorite Angiomax are the four products The Medicines Company (NASDAQ:MDCO) markets. The products focus on a crowd that does not interest other pharmaceutical companies much.

More than 95% of the total revenue generated last year was through the sales of its key product, Angiomax. This product was able to generate $548 million in total revenue last year. The company seems to be investing this money into licensing partnerships and acquisitions to improve its overall drug portfolio.

Partnerships and prospects

A year ago, The Medicines Company (NASDAQ:MDCO) tied-up with AstraZeneca plc (ADR) (NYSE:AZN) with regards to selling and marketing AstraZeneca plc (ADR) (NYSE:AZN)’s oral-antiplatelet medicine known as BRILINTA. This four-year tie-up states that The Medicines Company (NASDAQ:MDCO) receives $15 million/year for sales and marketing, plus an extra $5 million/year if it manages to meet or beat its targets.

Last December, The Medicines Company (NASDAQ:MDCO) agreed upon a global licence with Bristol Myers Squibb Co. (NYSE:BMY) for its product called Recothrom. This is a product that deals with bleeding during surgeries. As per the two-year agreement, The Medicines will be in charge of the supply and Bristol Myers Squibb Co. (NYSE:BMY) will take care of the production of the drug.

With a dividend yield of 3.1%, Bristol Myers Squibb Co. (NYSE:BMY) has six compounds in its final stage of FDA approval. Investors should watch out for the cancer treatment drug “Nivolumab.” This drug has shown an 80% tumor shrinkage on patients and might be yet another breakthrough drug for the company.

The Medicines was keen on increasing its portfolio and hence went by this strategy. As per the agreement, The Medicines will make a payment of $150 million to Bristol Myers Squibb Co. (NYSE:BMY) with the option of acquiring Recothrom assets for an extra $10 million. This arrangement can help improve the EPS of The Medicines, but it wouldn’t help as much for Bristol Myers Squibb Co. (NYSE:BMY).

The Medicines’ pipeline

Among the four drugs that are in the final stages of FDA approval is a drug that goes by the name Cangrelor. This drug is an antiplatelet agent that was bought from AstraZeneca plc (ADR) (NYSE:AZN) a decade ago. At the time of purchase, The Medicines possessed the rights to develop and sell this drug globally, the only exception being specific markets in Asia.

The Medicines is set to grow with AstraZeneca plc (ADR) (NYSE:AZN) digging the gold

As of now, The Medicines has a market cap of approximately $1.7 billion. The company is valued at 3.1x sales and 35x its trailing earnings. With the absolute valuation at a high, the company’s PEG ratio is only at 0.7.

The Medicines’ partner Bristol Myers Squibb Co. (NYSE:BMY) is valued at a market cap of $67 billion, 3.8x sales and 35x trailing earnings. AstraZeneca plc (ADR) (NYSE:AZN) is worth a market cap of $63 billion, 3.8x sales and 10.3x trailing earnings.

AstraZeneca plc (ADR) (NYSE:AZN) seems to be investing a lot of its resources in its R&D segments.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!