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The Medicines Company (NASDAQ:MDCO)

JPMorgan Healthcare Conference

January 14, 2014 05:00 PM ET

Executives

Clive Meanwell - CEO

Analysts

Cory Kasimov - JPMorgan

Cory Kasimov - JPMorgan

All right, Good afternoon everyone, we will keep going here. My name is Cory Kasimov, a Senior Biotech Analyst at JPMorgan and it’s my pleasure to introduce our next speaker. It will be The Medicines Company and here to present is the Chairman and CEO, Clive Meanwell and following Clive’s presentation there will be a breakout session just down the hall to the right in the Yorkshire room. So, with that I will turn it over to Clive.

Clive Meanwell

Thanks very much Cory and thank you to JPMorgan for inviting us to your astonishing conference. It’s a pleasure for me to present The Medicines Company to you today. My name is Clive Meanwell. I am the Chairman and Chief Executive Officer. Before I begin though, I am going to point out that I will be using certain forward looking statements and for a complete account of the risks and uncertainties associated with our stock, I would advise you to consult our most recent SEC filings.

The investment thesis for The Medicines Company is based upon our strategy for growth over the next five years. We have around 580 people and we are moving forward with a purpose which is to serve concentrated, yet growing markets in the world which are the 3,000 leading intensive and critical care hospitals. We expect over the next couple of years to launch six new products, anticipate driving revenue growth well in excess of 20%, and we believe we can build an efficient global organization which becomes very profitable.

We are also still adding products which fit our strategy, which I’m going to describe in just a moment. But before we go forward, it’s always fun at JPMorgan Conference to look back and four years ago, five years ago at this conference we reported annual net revenue of $404 million and all eyes were on Angiomax because it looked as if it was about the fall of the face of the planet but since that time we have approximately doubled revenue. We have also more than doubled the intellectual property lifecycle for Angiomax and that has given us the opportunity to move forward our medicine portfolio.

Of the products on this chart which we showed then, all but one have advanced and four of them have got through Phase III trial successfully and some of them have actually got approved. But our purpose remains the same, which is to save lives, alleviate suffering and improve the economic efficiency of healthcare by focusing on 3,000 acute and intensive care hospitals worldwide.

Now, there may be some discussion as to what we mean by acute and intensive care medicine and we have defined it for ourselves and I will give you our definition here; it’s constant complex care for patients with acute life threatening conditions with specially trained personnel in units with equipment and materials to treat and monitor illness, injury or recovery from procedures including surgery.

This is not your primary care market for sure and a lot of the time we spend is in intensive care units, surgical units and coronary care units. We believe that more than 70% and probably nearer 80% of all the work of that kind that’s done in the world is undertaken in approximately 3000 hospitals and that is a zone of comfort if you will and that’s what we’re trying to build our organization to reach.

And within those hospitals, we recognize an architecture, which is increasingly based on horizontal integration rather than vertical integration of their businesses, whereby they talk about pathways of care or lines of service. This graphic, which we first made in 2006, reflected the then current database from Verispan, in which if you had a cardiac cath lab as is shown in the center of the picture, then 74% of hospitals have at least 10 of these other lines of service nearby. We felt that was adequate concentrate for us to grow into and we developed three lines of activity, one in acute cardiovascular, one in surgery in perioperative and more recently we have built an infectious disease, acute care business and our main aim is to improve the jobs that hospitals do.

The business structure now looks like this is a consequence of that work. In acute cardiovascular care we have of course Angiomax or Angiox which is the number one selling product in U.S. hospitals by dollars as a pure play hospital product, Brilinta which we co-promote with our friends at AstraZeneca on their behalf and most recently the Promus Premier Stent, which we also co-promote together with and on behalf of Boston Scientific.

So, our activities in the cardiac cath labs are certainly very prominent. I will talk about Cangrelor in just a moment and further back in our portfolio in the acute cardiovascular space, we have two potentially blockbuster products, those being ApoA-1 Milano, if you like good cholesterol drug and together with our friends at Alnylam, we have a PC SK9G Knockdown Program, which would hopefully knockdown the bad cholesterol.

In surgery and post-operative care or perioperative care, we have products on the market, but all eyes at the moment are on our NDA candidates IONSYS for severe pain control following surgery and Fibrocaps which is a bleeding control system. We also have earlier stage assets in anesthesia and sedation. We built a large chunk of our anti-infectious disease business in the last year and I will come back to that towards the end. But these three lines of business are all into the same 3000 hospitals and highly leveragable in our view.

Now, if you trace now the activities of the company, we have six product launches anticipated in the next 24 months. I’ve worked in the industry a long time, including at large pharma and biotech companies that are very successful. I don’t recall a time when I was facing six product launches in two years. If we look first at the activities that are currently ongoing, there is a lot of MAA and NDA filings in the cardiovascular space, in Magenta, in the surgery space and in the infectious disease space for us and looking out, about a year from now onwards, we will seeing a series of launches in all three areas, both in the United States and throughout the European Union, and other selective countries too. But today I think I would like to focus most on what we are going to try and get executed in 2014 and look at the selected key value drivers. They are listed on this slide and I’m going to go through them quickly one by one. Because these are the things that investors are asking us about when we ask them what’s on their minds.

So first of all Cangrelor, which is an intravenous, anti-platelet agent with a novel mode of action on the P2Y12 receptor is progressing through the regulatory process rather promptly. We are obviously taking steps to push it through and this is a near perfect franchise fit because this goes straight into the cath lab and our existing commercial infrastructure will take care of this both in the U.S. and Europe.

The NDA and the MAA were recently accepted. There is an FDA advisory committee meeting on February 12th and the FDA PDUFA date is April 30, 2014; there is a typo there, I’m sorry. Manufacturing commercial scale has been accomplished and we are working on the value and pricing reimbursement programs, as well as life cycle.

So this is here and now, and indeed it’s based upon very robust data. This is a set of data from the Phase III programs involving approximately 29,000 patients undergoing PCI. Starting from the bottom of the slide, you see about a 40% risk reduction in stent thrombosis in large myocardial infarctions, 27% reduction in death, and then the combinations of various endpoints showing around a 20% to 30% risk reduction. These are robust findings in the cath lab and we believe this will become a standard of care, IV anti-platelet solution, if and when it is approved by regulators.

We also have been very pleased to look at Cangrelor in combination with Angiomax, and it is very clear to us that the potential for combined used in particularly high-risk percutaneous coronary intervention is very profound. Angiomax, when given with Cangrelor performs better and Cangrelor when given with Angiomax performs better. Cangrelor improves the stent thrombosis in ischemic complication with Angiomax very significantly and Angiomax reduces the bleeding risk very substantially in patients on Cangrelor.

So we believe the combination, which, when you look at net benefit outcome as shown on the right provides the best results of any combination we’ve seen in the cath lab, including competitive drugs today. So we’re very excited about this one-two punch if you like and we expect Cangrelor and Angiomax to be the standard of care for intravenous coverage during high-risk PCI for many years to come.

Let me switch gear and talk about IONSYS which is an iontophoretic pain control patch or system. The name of the game here is to simplify a very effective but very complex type of treatment called intravenous patient-controlled analgesia. IV PCA is a complex process requiring pumps and personnel to be carefully coordinated in order to not make mistakes and get opioid analgesia on-board intravenously, usually morphine; whereas the IONSYS device that we are developing and which is shortly going to go before regulatory review again is a simple applied device about the size of half an iPhone and it’s appropriate to call it half the size of an iPhone because the design of this device is such that it delivers fentanyl in the bottom half of the two piece component tray you see, and in the top is an electronic circuit board that controls the speed and frequency with which the opioid analgesic is delivered, as you see on the right of the slide, percutaneously, with no needles. This replaces potentially the rather cumbersome and complicated IV PCA setup that many of you may be familiar with it if you have known friends or family undergoing major surgery.

About 1.5 million people in the U.S. alone have IV PCA with opioids, and about 7 million people have intravenous opioids without IV PCA because at least in part, the nature of setting it all up is complex. We believe that we can move into both of those markets robustly and substantially. This system works very well. If you look at it in direct randomized comparisons against intravenous patient controlled analgesia, there are significant improvements in patient perception of good and excellent pain control. There is ease of use of metrics, which clearly come out in favor of the device and we expect this to be quite rapidly adopted when we launch it.

There is one alternative which is in the works and shown on the right. By comparison photographically the device we’re going to sell is on the left. On the right is a multi-component system for delivering sublingual sufantanil through a tethered system which needs to be bolted to the bed.

Let me turn away from the surgical pain control area to a next major effort, which is an assault on life threatening hospital infections. You know it’s a bit like asking the question, why do you rob the bank, it’s because where the money is; in hospitals bleeding and infections and pain are the things that get in the way of quality care.

Oritavancin is our single dose Phase 3 completed product for Gram-positive infections, including MRSA. We have an expectation of an approval this year for acute bacterial skin and skin structure infections and as mentioned it’s a single intravenous dose, which we showed in Phase 3 could cure 96.6% of MRSA skin infections.

Through our recent hook up with Rempex Pharmaceuticals, who we acquired a couple of months ago, we now have also minocin IV which is marketed for acinetobacter infections, the only available minocin in the United States and we’re working on an improved formulation for that, which we anticipate launching in 2014.

Carbavance is a combined beta-lactamese inhibitor called RPX7009, together with a marketed carbapenem, which we believe will be very effective against multi drug resistant Gram-positive infections and is about to start Phase 3 testing.

We also through this acquisition have now acquired a portfolio of novel follow on BLIs, all of which can be combined against MDR pathogens on the Gram-negative side. So we really have moved into the infectious disease space in a big way and as many of you know, the CDC has designated even in the last couple of months, certain urgent and serious threats for the U.S. healthcare system.

We’re working on at least three of these. Probably the toughest one is CRE, Carbapenem Resistant Enterobactericeae and MRSA I mentioned and then the acinetobacter with minocin and RPX602. So we really are working across the board in the most important, frankly most valuable indications in acute anti-infectious diseases.

Now specifically people have shown great interest in the profile of carbavance, which is just about to start Phase 3 and how it stacks up against two alternative Gram-negative drugs, which have also BLI combination, that’s the tall towers [ph] combination from Cubist, the Kazawi combination from Forest-AstraZeneca.

In general we believe that carbavance will be highly active against both pseudomonas and enterobactericeae and so we think it has a breadth which will be important in these life threatening situations. We’ve performed head to head studies against 235 multi drug resistant strains and have found if we look at the MIC90s, which are the important here, rather impressive effects compared to the alternatives.

Now before I go further, I would like to come back to the core of our business to make sure that I don’t miss it and that is the growth driver for the company for some years, which is Angiomax. This drug continues to grow. We’ve now treated more than six million people cumulatively and based upon outcomes data sets from universities and other researches, we can estimate about something approaching 50,000 lives saved and about $3.5 billion of direct cost savings to the hospitals, we work with even after paying for the drug.

So we think that’s going to continue to grow and we also believe it’s continue to penetrate the market around the world. We took our usual end of year price increase, which is effective January 1, 2014, we do see continued gains in market share around the world and in fact in some markets Angiomax is used in 75% of patients going through the cath lab. In actual fact in Scandinavia by the way of example, 100% of people having PCI for heart attacks get Angiomax. So we have 100% penetration in some parts of Europe now.

We are continuing to invest outside the coronary arteries into the peripheral endovascular intervention space and we have a large trial called Endomax just underway, and finally it’s worth remembering that our royalty payments to Biogen Idec, which have been substantial until now will end in December this year.

Now I would be remiss of me not to at least mention the intellectual property status of Angiomax before I finish the presentation. There are no major changes since we reviewed this in great detail in October, suffice to say that we remain very confident that our intellectual property is valid and enforceable and we’re going to continue to fight that just as we have for the last 10 years with no intention of changing our stance, but of course we are also equally comfortable to settle cases where it makes sense for both parties.

Now some people have also asked us, are you going to continue business development? You’ve acquired so many assets in the last few years; perhaps it’s time to stop. Now we don’t think so. We think a disciplined approach to the business development is something you should be doing all the time and we’ll continue to seek the same kinds of differentiated valuable, late or marketed products for the acute care hospital space to fit down the three channels that we’ve built. We will also this year though add another task for our business development team, and that is to find us some good partners in Asia-Pacific and in Latin America, where we don’t intend for the time being to build our own operations.

This slide is a very slightly modified version of something we showed at our Investor Day on October 9th. And really the purpose of it is to demonstrate not only the expected growth of the Company’s top line over the next five plus years but also is to show the effect of this broadened portfolio and diversifying the company from being predominantly acute cardiovascular company relying on one product Angiomax to one that will be not only diversified within cardiovascular since where we’ll bringing through cardiovascular products other than Angiomax but also diversified into infectious disease and surgery.

We announced yesterday to go back to Carbavance, the drug I was talking about earlier, that the FDA awarded us QIDP status for no fewer than six indications or six gram negative indications that are listed here including complicated UTI, intra-abdominal infections, HAP and VAP, and febrile neutropenia. This of course, as many of you know, provides partial review by the agency, eligibility for fast track status during the development program and five additional years of exclusivity upon approval. So rather significant for us and something which we’re very happy to have.

There have also been a rather large number of recent events in the company, which I’ll briefly review. Since October, this list of things has happened to us, various QIDP runs, MAAs accepted and the Rempex acquisition completed. We also announced our Boston Scientific co-promotion, Cangrelor MAA accepted in Europe now and the most recent use of the yesterday Carbavance.

Looking forward it’s an even longer list of cost for the whole year. And I would point out one or two of these including the FDA advisory committee for Cangrelor on February 12th, which seems like tomorrow, practically is tomorrow actually, PDUFA date for the same product on April 30th. And then a string of NDA and MAA submissions throughout the rest of the year as I showed on one of my early charts.

So in summary, we’re about 580 people. We’re very committed to this space. We’re in it to win it, and serving a concentrated, yet growing worldwide market. It includes 3,000 hospitals that we feel are the leading institutions around the world we can work with. We expect to launch at least six products into that same channel in the next two to three years, driving really high rates of growth and by leveraging our organization we believe seeing good bottom line growth as well, and of course continuing to add products that fit our strategy.

And with that, I’d like to thank you for your attention. And we’ll be in the breakout at the Yorkshire room, I believe. Thank you.

Question-And-Answer Session

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