The Medicines Company (MDCO): How Much Vabomere Worth?

This morning, The Medicines Company (NASDAQ:MDCO) reported that the FDA approved its urinary tract infection treatment Vabomere, a move the drug maker hopes will bolster its revenues. However, investors question whether Vabomere can really deliver.

Cowen analyst Chris Shibutani projects Vabomere revenues of $50 million in 2018E (versus consensus of $30 million), $180 million in 2021E (versus consensus of $174 million) and peak sales of $350 million by 2027E.

“Based on our current DCF driven valuation modeling, Vabomere itself contributes roughly 15% or $8/share of our current price target,” Shibutani says. (To watch Shibutani’s track record, click here)

Pricing and commercial strategy will be announced when the drug launches in Q4. But meanwhile, MDCO will present 9 posters at IDweek on October 4-8 that mainly cover TANGO-2. Recall that the TANGO-2 trial for Vabomere was stopped early based on an interim analysis which showed a superior benefit-risk compared to best available therapy (BAT) in serious infections due to CRE and is the 2nd positive Ph3 trial for Vabomere. TANGO-2 thus represents the potential for Vabomere label expansion.

Overall, out of the 9 analysts polled in the past 12 months, 8 rate The Medicines stock a Buy, while 1 rates the stock a Hold. With a return potential of 62%, the stock’s consensus target price stands at $59.13.


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