In mid-May 2009, The Medicines Company (MDCO) announced that an interim analysis review committee (IARC), along with the data safety monitoring board (DSMB), after conducting a review of the ongoing CHAMPION phase III program with Cangrelor, notified the company that the ongoing CHAMPION-PLATFORM program would not meet the primary endpoint of a persuasive evidence of clinical effectiveness that could serve as the basis for regulatory approval.

The IARC DSMB noted that the phase III CHAMPION-PCI program, a nearly fully enrolled 9000 patient program testing Cangrelor vs. Plavix (clopidogrel) in a non-inferiority, all-cause mortality (MI or IDR) study in patients undergoing PCI would also fail to show a meaning clinical difference. Management noted that the bleeding risk seen in the CHAMPION program was similar between Cangrelor and clopidogrel, so the trials were not stopped due to safety concerns.

The CHAMPION-PLATFORM program, initiated in October 2006, had enrolled approximately 5300 of the 6400 patients, testing Cangrelor plus usual care (clopidogrel) vs. usual care alone in a non-inferiority study looking at all-cause mortality (myocardial infarction or ischemia driven revascularization) in patients undergoing percutaneous coronary intervention (PCI).

Management has notified all clinical investigators to halt future testing of Cangrelor in the CHAMPION setting. Discontinuing CHAMPION will save The Medicines Company approximately $5 million in R&D costs during the second half of the year.

But the failure is significant to our forward-looking income statement. We had previously believed that Cangrelor would be on the market and posting sales of $125 million in 2012, growing to $185 million in 2013. The removal of all Cangrelor sales drops our 2012 EPS estimate from $1.02 to $0.53, and our 2013 estimate from $1.24 to $0.44.

Cangrelor is an incredibly important molecule to The Medicines Company, considering leading product, Angiomax, is expected to lose patent protection in September 2010. Management now believes that revenues may decline by as much as 25% in 2011 assuming a generic bivalirudin (Angiomax) is on the market shortly after the patent exclusivity is lost.  Our financial model assumes Angiomax sales, forecasted to be $405.5 million in 2009, drop to $145 million by 2012.

The IARC DSMB did provide a recommendation to The Medicines Company, however, on how Cangrelor may best be used (or tested) in the future. The IARC DSMB suggest that the short-half life and intravenous administration may fill a significant unmet medical need in patients who discontinue Plavix (clopidogrel) prior to cardiac surgery.

Plavix, manufactured by Bristol-Myers (BMY) and Sanofi-Aventis (SNY), is an oral molecule with a longer-half life. These are not desirable characteristics prior to cardiac surgery, so patients are taken off the drug a few days beforehand. A significant thrombosis risk exists for these patients during the Plavix withdrawal period.

Therefore, management will move forward with the BRIDGE study, a 200-patient program aimed at finding an appropriate dose for Cangrelor in patients preparing for cardiac surgery that will achieve 60% inhibition of platelet aggregation over a five day period. The goal is to show safe “bridging” of patients during the pre- and post-surgical period of risk. However, data from BRIDGE will not be available until 2010.

As noted above, the potential loss of Cangrelor is significant. Without an internal pipeline, management needs to continue to do acquisition to grow the business post-Angiomax in 2011. The Targanta deal does bring a phase III hospital-care product with $500 million peak sales worldwide.

However, the FDA’s complete response letter on oritavancin is concerning, and we believe that the drug will not be approved in the U.S. until 2012 or beyond. As such, we are not fans of the Targanta acquisition; we believe it will be a drag on earnings and a distraction from more important near-term drivers such as launching Cleviprex and developing Cangrelor.

Until visibility on: 1) The Angiomax patent situation 2) The Cleviprex ramp 3) or Cangrelor’s or Oritavancin’s future become clearer, we would continue to avoid the name. Our price target is $8. We would not recommend buying the name based on residual earnings power for Angiomax and Cleviprex until below $6. 

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