Medicure — Building a cardiovascular franchise

Medicure — Building a cardiovascular franchise

Medicure has US rights to Aggrastat (tirofiban hydrochloride), an intravenously administered anti-platelet drug that acts as a glycoprotein IIb/IIIa (GPI) inhibitor. With Aggrastat sales having peaked, the firm is focused on expanding its product portfolio, such as through the recent launch of Zypitamag. We also expect it to deploy its cash resources to acquire or in-license new products to bolster its growth profile.

Written by

Pooya Hemami

Analyst - Healthcare

Medicure

Building a cardiovascular franchise

Pharma & biotech

QuickView

3 July 2018

Price

C$7.03

Market cap

C$112m

Share price graph

Share details

Code

MPH

Listing

TSX-Venture

Shares in issue

15.89m

Business description

Winnipeg-based Medicure is focused on advancing and marketing cardiovascular therapies for the US market. Its lead product, Aggrastat, is marketed in the US hospital segment and the recent launch of Zypitamag extends its footprint into the primary care cardiovascular segment.

Bull

Large cash balance provides opportunity to in-license or acquire new product rights, likely in cardiovascular or hospital market segment.

A global ReoPro (abciximab) shortage since early 2018 (potentially lasting through 2019) may provide an opportunity for Aggrastat to gain more share among GPI anti-thrombotic drugs.

Zypitamag and aNDAs adds growth opportunities beyond Aggrastat.

Bear

Aggrastat longer-term growth profile weakened by generic eptifibatide competition.

Lupin Pharma also received FDA 505(b)2 approval for its own generic pitavastatin (Nikita).

Alternative injectable platelet inhibitors (cangrelo.r) and methods of treatment (eg. use of bivalirudin) increase competition for Aggrastat.

Analysts

Pooya Hemami, CFA

+1 (646) 653 7026

Maxim Jacobs, CFA

+1 (646) 653 7027

Medicure has US rights to Aggrastat (tirofiban hydrochloride), an intravenously administered anti-platelet drug that acts as a glycoprotein IIb/IIIa (GPI) inhibitor. With Aggrastat sales having peaked, the firm is focused on expanding its product portfolio, such as through the recent launch of Zypitamag. We also expect it to deploy its cash resources to acquire or in-license new products to bolster its growth profile.

Aggrastat: A leading anti-platelet drug

Aggrastat is indicated to reduce the rate of thrombotic events in patients with non-ST elevation acute coronary syndrome. Medicure markets Aggrastat in the US, where it competes with two other GPIs, namely abciximab (ReoPro by Eli Lilly) and eptifibatide (Merck’s integrilin, but now also generic) as well other injectable platelet inhibitors (cangrelor) and to a lesser extent, oral drugs such as heparin. Despite having lower marketing resources than branded GPI competitors, Aggrastat has over 50% US market share in this segment. Net Aggrastat sales in 2017 was C$27.1m (down 7.4% year-on-year), as despite increasing market share and sales volumes, price competition from generic eptifibatide dampened net revenue.

Recent US launch of Zypitamag adds second drug

Medicure acquired US rights to Zypitamag (pitavastatin magnesium) from Zydus Cadila in late 2017 and launched it in H118. Like other statin drugs, pitavastatin inhibits HMG-CoA reductase to lower LDL-cholesterol, but it also provides superior increases in HDL-cholesterol to most statins and is less likely to raise blood sugar or diabetes risk. Medicure is initially positioning Zypitamag against Livalo (pitavastatin calcium, marketed by Kowa), which had over $250m in sales in 2017.

Three ANDAs in pipeline to further diversify sales

Medicure has three abbreviated new drug applications (ANDAs) in its pipeline, which are all in-hospital use injectable products allowing Medicure to leverage its existing sales infrastructure. Medicure anticipates receiving the approval of the first one in Q418, leading to potential launch in Q119.

Valuation: Current share price implies EV of C$44m

Medicure had C$72.4m net cash at 31 March 2018 and in the prior 12 months recorded C$26.2m in revenue and C$0.3m in Q118 operating cash flow. With the receipt of US$50m in Q118 from the final tranche of its Apicore divestiture, Medicure’s cash position now positions it to potentially embark upon product acquisitions or in-licensing deals to leverage its existing sales infrastructure.

Consensus estimates

Year
end

Revenue
(C$m)

PBT
(C$m)

EPS
(C$)

DPS
(C$)

P/E
(x)

Yield
(%)

12/16

29.3

3.8

0.21

0.0

N/A

N/A

12/17

27.1

2.4

0.63

0.0

N/A

N/A

12/18e

34.4

12.2

0.66

0.0

N/A

N/A

12/19e

55.8

31.5

1.52

0.0

N/A

N/A

Source: Company data, Bloomberg

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US

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Disclaimer

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison's solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are "wholesale clients" for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document.
A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a "personalised service" and, to the extent that it contains any financial advice, is intended only as a "class service" provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited ("FTSE") (c) FTSE [2014]. "FTSE(r)" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE's express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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