Medicure Inc (PK)【MCUJF】株式ニュース

Noble Financial Analyst report

I hadn't heard of the firm but it is an excellent report. Better than Merriman's

BUY MCU: Aggrastat’s rebirth + MC-1’s potential = likely upside before Mar-08 data
Analyst: Laurence S. Bleicher
303-257-3263
lbleicher@noblefinancialgroup.com
US$1.87
US$0.91
US$144.2M
US$122.0M
116.3M
105.4M
24.2%
294K
126K
MC-1 PHASE 2 DATA SUGGEST A RELATIVELY LOW-RISK PHASE 3 TRIAL
We believe the current Phase 3 CABG surgery trial of MC-1 will
succeed, as it is much better statistically powered than a Phase 2b trial
that yielded statistically and clinically significant results
MC-1 HAS SIGNIFICANT POTENTIAL BEYOND CABG ALONE & IN COMBINATION
Phase 2 trials have shown positive MC-1 data in PCI, positive ace-inhibitor/
MC-1 combination data in diabetic hypertension
AGGRASTAT A NEAR-TERM SLEEPER FOR MCU
Early efforts to recapture market share are meeting with success; if
nothing else Aggrastat keeps a future MC-1 salesforce productive
2007 US$3 PRICE TARGET ATTAINABLE BEFORE MARCH-08 BINARY EVENT
MCU is significantly undervalued despite MC-1’s stage of
development given its potential; applying a 30x multiple to our Nov-2012
estimate or a 25x multiple to our Nov-2013 estimate and
discounting by 40% for four or five
years, respectively, yields a 2007
price target of US$3, attainable
before pivotal MC-1 data in
March-08
Revenue (US$millions)
F2007E F2008E F2009E
Aug US$0.2 US$3.0 US$4.3
Nov US$1.3 US$3.4 US$4.6
Feb US$2.2 US$3.7 US$4.9
May US$2.7 US$4.0 US$5.1
FY US$6.4 US$14.1 US$18.9
Earnings (per share, US$)
(future q’s omit amortization, forex gains)
F2007E F2008E F2009E
Aug US$(0.03) US$(0.11) US$(0.06)
Nov US$(0.06) US$(0.11) US$(0.06)
Feb US$(0.07) US$(0.12) US$(0.07)
May US$(0.11) US$(0.06) US$(0.07)
FY US$(0.27) US$(0.40) US$(0.26)
P/E n/a n/a n/a
Five-Year EPS Growth n/a
EV/EBITDA (ttm) n/a
ROE (ttm) n/a
Debt/Cap (mrq) n/a
Div./Div. Yield n/a
Fiscal Year May-31
Refer to pages #16-17 for Disclosures
Throughout 2007 add’l MC-1 &
Aggrastat data publications
November-07 finish enrolling
pivotal MC-1 CABG trial
Interim DSMB look at pivotal
MC-1 CABG trial
March-08 pivotal MC-1 CABG
trial data
US$3
04/24/07
Biotechnology & Specialty Pharmaceuticals
M
2
Medicure, Inc. (MCU - US$1.24) 04/24/07
Medicure, Inc. (MCU) is a commercial-stage and research
and development-stage pharmaceuticals company. At
this time, MCU’s commercial portfolio consists of
Aggrastat, a GP IIb/IIIa inhibitor for use in Acute
Coronary Syndrome. MCU’s most advanced pipeline
product is MC-1, an unpartnered, highly novel agent, in
Phase 3 for use in Coronary Artery Bypass Graft surgery.
MCU’s pipeline includes several other unpartnered
cardiovascular compounds, both chronic and acute, from
pre-clinical to pre-Phase 3.
We believe that the current Phase 3 CABG surgery trial
of MC-1 will be successful, as that study is much better
statistically powered than a Phase 2b trial that yielded
statistically and clinically significant results. MCU has a
Special Protocol Assessment from the FDA for the
current Phase 3 CABG surgery trial of MC-1. Pivotal
data are expected in March of 2008; an interim Data
Safety Monitoring Board look will occur before that.
Also, we believe that MCU’s early success in its initial
efforts to increase the market share of its recently
acquired product, Aggrastat, will continue. Finally, we
are optimistic about the rest of MCU’s pipeline, to which
we assign no value at this time to be conservative.
Price Target
Our US$3 2007 price target is an average of two 2007
price targets. We apply a 30x multiple to our Nov-2012
estimate and discount by 40% for four years to attain a
2007 price target of US$3.20; we apply a 25x multiple to
our Nov-2013 estimate and discount by 40% for five
years to attain a 2007 price target of US$2.90. (If we
were to model flat Aggrastat market share going forward,
our new 2007 price target would still imply
approximately 100% upside. If the Phase 3 CABG
surgery trial of MC-1 were to be successful, we would
lower our discount rate to the low-20s, which would raise
the 2007 present value of what would then be our 2008
price target to between US$5 and US$6, not including
whatever value might have emerged in the meantime
from the pipeline.).
A survey of seven US and Canadian analysts reveals an
average rating closer to Buy than Hold. Over the last
month, this average rating has not changed. The mean
price target among these analysts is US$2.69, with a price
target range from US$2 to US$3.34.
2
Medicure, Inc. (MCU) is a commercial and R&D-stage pharmaceuticals company. At this time, MCU s commercial portfolio consists of Aggrastat, a GP IIb/IIIa
inhibitor for use in Acute Coronary Syndrome. MCU s most advanced pipeline product is MC-1, an unpartnered, highly novel agent, in Phase 3 for use in
Coronary Artery Bypass Graft surgery, and in pre-Phase 3 and earlier stages of clinical development for other acute cardiovascular indications. MCU s pipeline
includes several other unpartnered cardiovascular compounds, both chronic and acute, at various stages of development, from pre-clinical to pre-Phase 3.

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Medicure, Inc. (MCU - US$1.24) 04/24/07
Overview
Medicure, Inc. (MCU) is a commercial-stage and research
and development-stage pharmaceuticals company. At
this time, MCU’s commercial portfolio consists of
Aggrastat, a GP IIb/IIIa inhibitor for use in Acute
Coronary Syndrome (ACS), for which MCU obtained US
rights from MGI Pharmaceuticals (MOGN, Not Rated) in
August of 2006. MCU’s most advanced pipeline product
is MC-1, an unpartnered, highly novel agent, in Phase 3
for use in Coronary Artery Bypass Graft (CABG)
surgery, and in pre-Phase 3 and earlier stages of clinical
development for other acute cardiovascular indications.
MCU’s pipeline includes several other unpartnered
cardiovascular compounds, both chronic and acute, at
various stages of development, from pre-clinical to pre-Phase
3, of which some are combinations of MC-1 with
other agents while others are not based on MC-1.
Aggrastat for ACS
MCU currently commercializes Aggrastat in the US.
Aggrastat is the only small-molecule therapy among the
GP IIb/IIIa inhibitors, a class of antiplatelet agents for use
in ACS that also includes Integrilin from Schering-Plough
(SGP, Not Rated) and ReoPro from Eli Lilly
(LLY, not rated). Aggrastat enjoys a pricing advantage
vs. these harder-to-manufacture large molecule agents.
While the GP IIb/IIIa class saw its penetration of the ACS
market decline for several years, that penetration appears
to have stabilized in the low-20s over the last few
quarters; MCU’s acquisition of US Aggrastat rights
appears therefore to have been very well-timed.
Similarly, while Aggrastat’s share of the GP IIb/IIIa class
fell for several years, that share has increased markedly
over the last few quarters—MCU’s initial efforts to
promote the agent appear to have met with success thus
far, having likely been bolstered by the presentation of
data suggesting Aggrastat’s non-inferiority vs. ReoPro at
the 2006 American Heart Association meeting shortly
after MCU acquired US Aggrastat rights. MCU owes
Merck (MRK, Not Rated) at least a 5% royalty on US
Aggrastat sales.
MCU is initially developing its lead drug candidate, an
orally available, small-molecule, P2 purinergic (P2x)
receptor antagonist called MC-1, in three different acute
cardiovascular indications. MCU was founded to in-license
the worldwide rights to MC-1, which had been
discovered at the University of Manitoba. MC-1 is
unpartnered at this time, although MRK has acquired the
ex-North America right of first refusal for any
combination of Aggrastat and MC-1. MRK negotiated
this option in the course of MRK’s approval of MOGN’s
sale to MCU of US rights for Aggrastat; MRK had
retained the right to review and ultimately authorize any
Aggrastat transaction made by MOGN.
We believe that our sales assumptions for Aggrastat in
ACS and MC-1 in CABG surgery, to be detailed below,
are conservative. For Aggrastat, we assume that the GP
IIb/IIIa class will maintain its current, stable penetration
of the ACS market. We assume that Aggrastat will very
gradually increase its share of the GP IIb/IIIa class,
reaching only 17% volume-share in mid-2013, its seventh
full year of active detail by the MCU salesforce. We feel
this is conservative, as Aggrastat is the class leader in
Europe, and held 17% volume-share in the US as recently
as 2003. Additionally, our due diligence suggests that
Aggrastat arguably has not in several years, if ever, been
as high a priority for any US salesforce as it is now for
MCU’s; and, that Aggrastat appears to offer at least
equivalent efficacy to its competitors at a lower price.
MC-1 CABG surgery indication
MC-1’s most advanced indication is CABG surgery, for
which the agent is currently in a Phase 3 trial under a
Special Protocol Assessment (SPA): a non-binding
agreement with the FDA that the trial, if successfully
completed, will, in combination with other, previously
attained data, form an adequate basis for a New Drug
Application (NDA). MCU began enrolling this 3,000-
patient Phase 3 trial of MC-1 in November of 2006, and
targets enrollment completion in November of 2007, data
release in March of 2008 (an earlier, interim Data Safety
Monitoring Board (DSMB) examination of the data is
scheduled), and MC-1 NDA submission for CABG
surgery in June of 2008. The trial generally replicates the
protocol of a successfully completed, randomized,
placebo-controlled, double-blind, dose-ranging 900-patient
Phase 2b trial in CABG surgery. In that trial, the
regimen of MC-1 currently being pursued in Phase 3
(250mg pre/post-op, then once daily for 30 days)
demonstrated a statistically significant 37% reduction in a
composite of cardiovascular-related death, non-fatal
myocardial infarction (MI), and non-fatal stroke at post-operative
day 30 vs. placebo (p-value less than 0.03);
maintained a statistically significant reduction of similar
size in that composite vs. placebo throughout a follow-up
period out to post-op day 90; and displayed an equivalent
adverse event profile vs. placebo.

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Medicure, Inc. (MCU - US$1.24) 04/24/07
Our due diligence has determined that the results attained
in the Phase 2b CABG surgery trial of MC-1 suggest that
MCU had probably substantially underestimated the
actual effect size of the agent in planning that trial, thus
overpowering it. The Phase 3 CABG trial nonetheless
assumes the same MC-1 effect size, and is probably
therefore better powered than its ostensible 85% power to
detect a 20% reduction in the composite endpoint.
Regardless, the Phase 3 trial is much better powered than
the successful Phase 2b trial, due to its size among other
reasons; as such, we believe that the current Phase 3
CABG surgery trial of MC-1 will be successful.
We believe that after completing this trial, MCU will
attain a commercial partner for MC-1 outside the US, but
will retain US rights to the drug and market it through its
existing US Aggrastat salesforce. With US$22M of net
cash, MCU has sufficient resources to conclude this trial.
Based upon MCU’s aforementioned target of a June of
2008 NDA filing of MC-1 for CABG surgery, we expect
MCU will launch MC-1 in the US in mid-2009, and
MCU’s partner will launch MC-1 ex-US one year later.
As MCU has received fast-track designation for MC-1 in
CABG surgery (as well as in other indications), the NDA
might receive expedited review; accordingly, we feel our
expectation of a mid-09 US launch of MC-1 is
conservative.
For MC-1, we assume that the agent will garner slightly
less than a one-half penetration/share of the US CABG
surgery market in mid-2014, after five full years on the
market; we model half that trajectory for the EU market,
beginning one year later as previously discussed. We
believe this assumption would be highly conservative if
MC-1 were to succeed in its current Phase 3 trial, as it
would then offer a unique mechanism by which to reduce
death and/or MI in CABG surgery patients. We further
assume that the price of a course of MC-1 therapy will be
set initially at only US$600 per course of therapy, about
25% above the price of a course of Aggrastat therapy
(despite the latter being 60-75% cheaper than the other
GP IIb/IIIa inhibitors), and will undergo minimal price
increases. We feel that this assumption too would be
highly conservative if MC-1 were to succeed in its current
Phase 3 trial.
MCU’s other unpartnered pipeline products
Besides MC-1 for CABG surgery, MCU also possesses
an unpartnered pipeline of other MC-1 indications and of
other agents, from pre-clinical to pre-Phase 3, addressing
both acute and chronic markets. MC-1 has received fast-track
designation for not only CABG surgery, but also for
ACS and for angioplasty, also known as Percutaneous
Coronary Intervention (PCI). MCU has successfully
completed a Phase 2a trial of MC-1 in PCI; however, as
this was only a biomarker-endpoint trial, and MCU
intends to pursue MC-1 in Phase 3 next in ACS
(admittedly a closely related indication to PCI), we assign
no value to MC-1 in ACS or PCI at this time for the sake
of conservatism. This is probably excessively
conservative, as the biomarker measured in this trial is
known to be correlated strongly with meaningful clinical
events. MCU is also investigating MC-1 in a Phase 1
trial in stroke, which at this time is omitted from
valuation due to the lack of Phase 2 data thus far.
Two combination products of MC-1 with other agents are
currently in clinical-stage testing. MC-4232 is a
combination of MC-1 and the ACE-inhibitor, lisinopril,
for which MCU is finalizing a Phase 3 program design in
diabetic hypertension. MC-4232 has successfully
completed a randomized, placebo and active-controlled,
double-blind, 120-patient, 16-week, dose-ranging Phase 2
trial in diabetic hypertension. Although the trial was only
designed to suggest an optimal dose of MC-4232 rather
than to evaluate its efficacy, the best-performing dose
demonstrated statistically significant improvements vs.
baseline in four of the numerous pre-specified endpoints,
as well as trends towards improvements vs. baseline and
vs. active control in several endpoints. For the sake of
conservatism, we assign no value to MC-4232 at this
time, despite its early signs of efficacy, as it has not yet
unambiguously demonstrated efficacy vs. active
control—although admittedly this is more likely due to
the dose-ranging design of the trials conducted thus far
than it is due to any shortcomings of the agent.
MC-4262 is a combination of MC-1 and an unidentified
angiotensin receptor blocker (ARB) currently in Phase 1
trials for metabolic-syndrome hypertension. MC-45308
is a molecule unrelated to MC-1 undergoing preclinical
evaluation for thrombosis. MC-5422 is the first of
several MC-1 variations MCU is studying and has not yet
entered preclinical testing. No value is assigned to any of
these compounds at this time due to the lack of Phase 2
data thus far.
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Medicure, Inc. (MCU - US$1.24) 04/24/07
Price target rationale
In addition to our sales assumptions, we believe, as will
be detailed below, we have been reasonably conservative
throughout our model. For example, we assume greater
share count dilution than has occurred historically, and a
greater tax rate in profitable years than MCU suggests.
We conservatively model fully-taxed diluted EPS of
US$0.41 and US$0.62 in the twelve-month periods
ending in November of 2012 and November of 2013,
respectively.
Our US$3 2007 price target is an average of two 2007
price targets. We apply a 30x multiple to our Nov-2012
estimate and discount by 40% for four years to attain a
2007 price target of US$3.20; we apply a 25x multiple to
our Nov-2013 estimate and discount by 40% for five
years to attain a 2007 price target of US$2.90. We
believe that each of the aforementioned multiples is
conservative, as they imply PEG ratios of less than 0.5 for
the 2013-based target and less than 0.2 for the 2012-based
target. We believe the 40% discount rate we have
selected is conservative given the strength of the data thus
far for MC-1 in CABG surgery, and the early signs of
success with Aggrastat re-launch efforts. The average of
these two 2007 price targets is slightly greater than our
official 2007 price target of US$3. (If we were to model
flat Aggrastat market share going forward, our new 2007
price target would still imply approximately 100%
upside. If the Phase 3 CABG surgery trial of MC-1 were
to be successful, we would lower our discount rate to the
low-20s, which would raise the 2007 present value of
what would then be our 2008 price target to between
US$5 and US$6, not including whatever value might
have emerged in the meantime from the pipeline.)
Company Background
Medicure, Inc. (MCU) is a commercial-stage and research
and development-stage pharmaceuticals company.
Medicure was founded on September 15, 1997, to acquire
the discoveries of Dr. Naranjan Dhalla of the University
of Manitoba, which would eventually form the basis for
the development of MC-1, currently MCU’s most
advanced pipeline candidate. Dr. Dhalla and Dr. Albert
Friesen, the current CEO of MCU, were among the
principal owners of Medicure at the time of its founding.
The MC-1 technology had originally been licensed by the
University of Manitoba to Genesys Pharma, Inc., a
consulting firm owned entirely at the time by Dr. Friesen,
on August 18, 1997. Genesys transferred the technology
at minimal cost to Medicure on September 26, 1997. On
August 30, 1999, Medicure completed a new license
agreement with the University of Manitoba in order to
modify slightly the terms of the original agreement
transferred from Genesys.
On November 22, 1999, Medicure was acquired by Lariat
Capital, led at the time by Dr. Friesen, in an arm’s length
transaction through a reverse takeover. As a result of the
merger, control of Lariat passed to the former
shareholders of Medicure. Lariat had been incorporated
on June 3, 1997, for the purpose of acquiring a project or
company through a reverse takeover. Lariat went public
on the Alberta Stock Exchange in March of 1999. On
December 22, 1999, Medicure and Lariat were
amalgamated as Medicure, Inc., resulting in Medicure,
Inc.’s assumption of Lariat’s listing on the Alberta Stock
Exchange. In December of 2002, Medicure, Inc. listed on
the Toronto Stock Exchange under the ticker, MPH.
Medicure, Inc. listed on the American Stock Exchange in
February of 2004 under the ticker, MCU.
At this time, MCU’s commercial portfolio consists of
Aggrastat, a GP IIb/IIIa inhibitor for use in ACS, for
which MCU obtained US rights from MOGN in August
of 2006. MCU’s most advanced pipeline product is MC-1,
an unpartnered, highly novel agent, in Phase 3 for use
in CABG surgery, and in pre-Phase 3 and earlier stages of
clinical development for other acute cardiovascular
indications. MCU’s pipeline includes several other
unpartnered cardiovascular compounds, both chronic and
acute, at various stages of development, from pre-clinical
to pre-Phase 3, of which some are combinations of MC-1
with other agents while others are not based on MC-1.
MCU enjoys a highly experienced executive team, led by
CEO Dr. Albert Friesen. Dr. Friesen earned a Ph.D. in
protein chemistry at the University of Manitoba. Dr.
Friesen was a founding executive of Rh Pharmaceuticals,
where he oversaw the development and approval of
WinRho, one of his two successful NDAs; Rh
Pharmaceuticals was eventually acquired by Cangene
(CNJ.to, Not Rated). Among other firms, Dr. Friesen has
also played a founding executive role at ABI
Biotechnology, eventually acquired by Apotex (private),
and Novopharm Biotech, now Viventia (private). MCU’s
Scientific Advisory Board includes Dr. A. Michael
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Medicure, Inc. (MCU - US$1.24) 04/24/07
Lincoff of the Cleveland Clinic, as well as several other
acknowledged thought leaders in cardiology.
Aggrastat
At this time, MCU’s commercial portfolio consists of
Aggrastat, generically known as tirofiban hydrochloride.
Aggrastat is an antagonist of the platelet glycoprotein
IIb/IIIa receptor, also known as a GP IIb/IIIa inhibitor.
MCU obtained US rights to Aggrastat from MOGN in
August of 2006 for a purchase price of US$19M plus the
value of assumed inventory, as well as the assumption of
the royalty owed the inventor of the molecule, MRK.
MCU owes MRK a moderate royalty on US sales of
Aggrastat: 5% on sales of up to US$25M annually, 10%
on sales from US$25-50M, 12% from US$50-75M, 14%
from US$75-100M, and 20% on sales greater than
US$100M annually. MCU currently commercializes
Aggrastat in the US, and has actively promoted the agent
with its own internal salesforce since November of 2006;
MCU did not immediately actively promote Aggrastat
after acquiring it in order to allow wholesaler inventory
levels of the agent to return to historical, approximately
one-month levels.
Like another of the GP IIb/IIIa inhibitors, Integrilin from
SGP, Aggrastat is indicated for use in ACS or PCI in
combination with the anticoagulant, heparin; the third GP
IIb/IIIa inhibitor, ReoPro from LLY, is indicated for use
in ACS in combination with heparin only when PCI is
planned within 24 hours. The antagonism of the platelet
glycoprotein IIb/IIIa receptor impedes clotting, making
these agents useful additions to heparin in these
indications. The GP IIb/IIIa class saw its penetration of
the ACS market decline for several years, up until
recently. This decline was primarily due to the
emergence during that period of additional anticoagulant
options for ACS besides heparin; as GP IIb/IIIa inhibitors
had not been studied in combination with these newer
anticoagulants, their use fell while the use of these
alternative anticoagulants rose.
GP IIb/IIIa penetration of the ACS market has stabilized
in the low-20s recently as the agents’ core use in PCI has
proven resilient despite the emergence of alternative
anticoagulants in ACS. MCU’s acquisition of US
Aggrastat rights appears therefore to have been very well-timed.
Our due diligence suggests that the current
penetration will remain stable in the future. The recent
hue and cry over the long-term equivalence of outcomes
data for bare-metal stents and for drug therapy as an
alternative to PCI is unlikely to spell the end of the
procedure anytime soon; physicians will probably cling to
the hope that drug-coated stents, commonly used in PCI
today, would have fared better than their bare-metal
predecessors vs. drugs alone. Relatedly, as yet further
new anticoagulants are approved for ACS, they are
unlikely to stem the tide of PCI.
Although Aggrastat’s share of the GP IIb/IIIa class fell
while the penetration by the class of the ACS market was
declining, Aggrastat’s share has increased markedly over
the last few quarters—MCU’s initial efforts to promote
the agent appear to have met with success thus far. Our
due diligence suggests that the main culprit behind
Aggrastat’s share decline was its lack of promotional
emphasis. Aggrastat was never the primary focus of
whichever salesforce was promoting it any given moment
in the US until MCU acquired the agent. Both MOGN
and its predecessor, Guilford Pharmaceuticals, promoted
Aggrastat within a broad portfolio of other, non-cardiovascular
hospital products; obviously MRK also
enjoyed other demands on its attention besides Aggrastat.
MCU’s initial Aggrastat promotional efforts have likely
been bolstered by the presentation at the 2006 American
Heart Association meeting of a large, retrospective
dataset that suggests single high-dose bolus Aggrastat’s
non-inferiority vs. ReoPro across a number of important
clinical endpoints. Trends observed in this dataset
suggest if anything the superiority of Aggrastat vs.
ReoPro in the endpoints of death (0.7% vs. 1.7%,
respectively, p-value of about 0.40) and
thrombocytopenia (1.3% vs. 2.8%, respectively, p-value
of about 0.26). This presentation occurred shortly after
MCU acquired US Aggrastat rights. Additionally,
Aggrastat is known to be the fastest-reversing of the GP
IIb/IIIa inhibitors, which means that any if its recipients
who later have to undergo CABG surgery will need their
surgery delayed the least to allow time for their platelet
functions to return to normal.
The growing awareness of Aggrastat’s clinical
equivalence at least vs. its competitors meshes well with
the agent’s cost advantage. While all three GP IIb/IIIa
inhibitors are injectible agents, Aggrastat is the only
small-molecule therapy among the GP IIb/IIIa inhibitors;
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Medicure, Inc. (MCU - US$1.24) 04/24/07
Integrilin is a large-molecule peptide chain and ReoPro is
an antibody. Accordingly, Aggrastat enjoys a pricing
advantage vs. these harder-to-manufacture large molecule
agents: MCU sells Aggrastat for US$400-500 per course
of therapy, whereas Integrilin and ReoPro retail between
US$1,200-2,000 per course of therapy.
We believe that our sales assumptions for Aggrastat are
conservative. We assume that the GP IIb/IIIa class will
maintain its current, stable penetration of the ACS
market. We assume that Aggrastat will very gradually
increase its share of the GP IIb/IIIa class, reaching only
17% volume-share in mid-2013, its seventh full year of
active detail by the MCU salesforce. We feel this is
conservative, as Aggrastat is the class leader in Europe,
and held 17% volume-share in the US as recently as 2003
(the year in which MRK divested the product to
Guilford). Additionally, as discussed above, our due
diligence suggests that Aggrastat arguably has not in
several years, if ever, been as high a priority for any US
salesforce as it is now for MCU’s; and, that Aggrastat
appears to offer at least equivalent efficacy to its
competitors at a lower price.
Aggrastat enjoys composition of matter patent protection
into 2013. Additional Orange Book-listed patents extend
into 2019, and a final patent on the use of a single high-dose
bolus of the drug reaches out to 2023. MCU is in
the process of negotiating with the FDA about adding
single high-dose bolus Aggrastat to the product’s label,
and hopes eventually to do a prospective trial of this
version of the agent.
MC-1
Background
MCU’s lead drug candidate, MC-1, is an orally available,
small-molecule, P2 purinergic (P2x) receptor antagonist.
MC-1 is a metabolite of Vitamin B6. To attain the
biolevels of MC-1 through Vitamin B6 administration
and subsequent metabolism that direct administration of
MC-1 attains, Vitamin B6 would have to be dosed at
levels orders of magnitude higher than those at which it is
known to cause dose-limiting neurotoxicity. MC-1 has
been given at doses three to four times higher than the
levels currently being explored in Phase 3 trials for up to
16 weeks in humans and up to nine months in dogs, with
none of the side effects of Vitamin B6 observed (nor with
any side effects observed different from and/or greater
than those seen in placebo controls). In fact, MC-1
appears to produce neuroprotective effects opposite to
those of Vitamin B6, suggesting another metabolite of the
latter besides MC-1 is responsible for its neurotoxicity.
P2x receptors are found on the surfaces of
cardiomyocytes in the heart, glial cells in the brain, and
endothelial cells and macrophages throughout the body.
In endothelial cells and macrophages, P2x receptors
appear to play a role in modulating inflammatory activity.
In cardiomyocytes and glial cells, P2x receptors appear to
be agonized endogenously by adenosine 5’-triphosphate
(ATP), one of the primary carrier molecules for
intracellular energy transfer in the body. When agonized
by ATP, P2x receptors open calcium channels (not all
calcium channels are P2x-mediated, but all P2x receptors,
at least in cardiomyocytes and glial cells, mediate calcium
channels).
Our due diligence suggests that in a healthy person, this
ATP-activated P2x-mediation of calcium channels helps
to induce the contraction of tissues composed of
cardiomyocytes, i.e., to pump blood. In an individual
suffering an ischemic event, however, cellular stress
triggers an overabundance of ATP, which in turn causes
excessive P2x-mediated calcium-channel opening. This
leads to a surplus of calcium-ion transport into
cardiomyocytes, which might exacerbate their damage
and therefore the ischemic event itself. MC-1
antagonizes the P2x receptor, preventing the excessive
binding of ATP to it when administered to individuals
suffering an ischemic event, and therefore preventing the
surplus of ischemia-reinforcing calcium-ion transport into
already-damaged cardiomyocytes. While theoretically
this could result in an over-prevention of P2x-mediated
calcium-channel opening, thereby starving
cardiomyocytes of calcium ions minimally needed for
tissue contraction, this dose-limiting toxicity appears to
occur only at doses of MC-1 about 100 times greater than
those at which therapeutic activity is observed in patients
undergoing cardiac stress.
As discussed above, MCU was founded to in-license the
worldwide rights to MC-1, which had been discovered at
the University of Manitoba. Under the terms of its
license, MCU owes the University up to a 3.9% royalty
on sales of MC-1, but faces no other requirements (no
milestones, etc.). MC-1 is unpartnered at this time,
although MRK has acquired the ex-North America right
8
Medicure, Inc. (MCU - US$1.24) 04/24/07
of first refusal for any combination of Aggrastat and MC-1.
MRK negotiated this option in the course of MRK’s
approval of MOGN’s sale to MCU of US rights for
Aggrastat; MRK had retained the right to review and
ultimately authorize any Aggrastat transaction made by
MOGN. MC-1 enjoys several issued method patents
regarding the targeting of the P2x receptor to treat
ischemia that extend into 2015/2016, as well as several
issued drug-specific use patents that last until 2017.
Several formulation patents, some of which pertain to
specific dose levels, are pending for MC-1; if issued on
schedule in 2008 they will protect the compound until
2025.
MC-1 CABG surgery indication
MC-1’s most advanced indication is CABG surgery, for
which the agent is currently in a Phase 3 trial under a
SPA with the FDA. The proposed cardioprotective
method of action of MC-1 relevant in CABG surgery is
the prevention, via P2x-receptor antagonism, of ischemia
reinforcement by calcium-ion transport, as described
previously. MCU began enrolling this 3,000-patient
Phase 3 trial of MC-1 in November of 2006, and targets
enrollment completion in November of 2007, data release
in March of 2008 (an earlier, interim DSMB examination
of the data is scheduled), and MC-1 NDA submission for
CABG surgery in June of 2008.
Data from a randomized, placebo-controlled, double-blind,
dose-ranging, 900-patient Phase 2b trial of MC-1 in
CABG surgery were reported in December of 2005. In
that trial, the regimen of MC-1 currently being pursued in
Phase 3 (250mg pre/post-op, then once daily for 30 days)
demonstrated a statistically significant 37% reduction in a
composite of cardiovascular-related death, non-fatal MI,
and non-fatal stroke at post-operative day 30 vs. placebo
(p-value less than 0.03); maintained a statistically
significant reduction of similar size in that composite vs.
placebo throughout a follow-up period out to post-op day
90; and displayed an equivalent adverse event profile vs.
placebo. These data were attained using a definition of
MI of peak CK-MB as determined by blood test of at
least 100ng/mL (CK-MB is an enzyme released by
cardiomyocytes that have burst in the course of dying; it
is considered an effective, proportionate marker of the
extent of cardiomyocyte death). MI itself was reduced
47% by 250mg daily of MC-1 with a p-value less than
0.01 with this definition.
MI is somewhat subjectively defined; different peak CK-MB
levels can be used to determine the MI threshold.
The 100ng/mL level, however, has been accepted by the
FDA as an appropriate MI threshold in the SPA for the
MC-1 Phase 3 CABG surgery trial. Furthermore, this
level had previously been condoned by the FDA in other
clinical programs examining cardioprotective agents,
such as the cariporide trials conducted by Aventis (now
Sanofi-Aventis, SNY, Not Rated) and the pexelizumab
studies conducted by Alexion (ALXN, Not Rated) and its
partner, Procter & Gamble (PG, Not Rated).
Nonetheless, the MC-1 Phase 2b CABG surgery trial’s
protocols initially defined MI as peak CK-MB of at least
50ng/mL. MCU chose this definition so that a higher
event rate would occur than with a more stringent, more
typical MI threshold, thereby allowing the capital-constrained
firm to avoid having to recruit thousands of
patients for a proof of concept trial. This strategy worked
too well, however; with such a loose definition of MI, so
many events occurred in every trial arm that MC-1 did
not separate sufficiently from placebo. Under the
50ng/mL definition, 250mg of MC-1 attained only mid-teens
reductions in composite events and in MIs
specifically vs. placebo, with p-values of about 0.3.
Physicians advising MCU on the Phase 2b MC-1 trial in
CABG surgery, who hailed from such respected
institutions as Duke University and Montreal Heart
Institute, recommended that the firm reanalyze the data
with a more stringent, more typical MI threshold. They
did not make this recommendation out of any desire to
game the results in MCU’s favor; rather, they observed
that the 26% placebo event rate seen in the study under
the 50ng/mL definition of MI greatly exceeded the
historical placebo event rates from other trials, which
were typically in the teens.
Furthermore, they noted that individuals suffering MIs
under the 50ng/mL definition in other studies had been
observed to experience cardiovascular mortality in only
the low-single digits within 90 days post-CABG surgery,
i.e., at a similar or lower rate than that of the real-world
post-CABG surgery population, which endures a mid-single
digit rate of one-year post-CABG surgery
cardiovascular mortalities, of which the vast majority
occur in the first 90 days post-op. Intuitively, patients
suffering MIs ought to experience greater death rates than
the overall population, which includes patients who do
not suffer MIs; when this does not occur, the MI
9
Medicure, Inc. (MCU - US$1.24) 04/24/07
threshold has likely been set incorrectly low. Data from
these other studies suggest a more appropriate threshold
for MI might be as low as 60-100ng/mL, as at that level, a
90 days post-CABG surgery cardiovascular mortality in
the mid-single digits has been observed. At 100ng/mL or
greater, 90 days post-CABG surgery cardiovascular
mortality in the low-double digits has been observed.
Following their recommendation, MCU reanalyzed the
very blood samples that had been used to attain the initial
results, again in a double-blind fashion, but now under
two alternate definitions of MI: peak CK-MB levels of at
least 70ng/mL and of at least 100ng/mL. Under the
70ng/mL definition, the 250mg dose of MC-1 reduced
composite events by 32% vs. placebo, with a p-value less
than 0.035; MIs specifically were reduced 38% vs.
placebo, with a p-value less than 0.02. As previously
discussed, under the 100ng/mL definition, the 250mg
dose of MC-1 reduced composite events by 37% vs.
placebo, with a p-value less than 0.03; MIs specifically
were reduced 47% vs. placebo, with a p-value less than
0.01.
We take great comfort in the FDA’s granting of a SPA for
the ongoing Phase 3 trial of MC-1 in CABG surgery in
light of the aforementioned MI threshold issues. The
Phase 3 trial very closely follows the protocol of the
Phase 2b trial, with a few key differences. Only the
250mg dose of MC-1 is being studied; an additional dose
was explored in the Phase 2b trial. Up to 3,000 patients
are being enrolled in the Phase 3 trial, rather than the 900
recruited into the Phase 2b study; this, combined with the
pursuit of only a single MC-1 dose, greatly increases the
Phase 3 trial’s power over that of the Phase 2 trial. MI is
prospectively defined as peak CK-MB of at least
100ng/mL in the Phase 3 trial, the definition at which the
greatest MC-1 effect was observed in Phase 2b study.
Finally, stroke has been eliminated as a component of the
composite endpoint in the Phase 3 trial; were stroke to
have been omitted from the Phase 2b study, the 250mg
dose of MC-1 would have reduced composite events vs.
placebo by 42%, with a p-value of about 0.01.
Our due diligence has determined that the results attained
in the Phase 2b CABG surgery trial of MC-1 suggest that
MCU had probably substantially underestimated the
actual effect size of the agent in planning that trial, thus
overpowering it. That MCU defined MI initially as
50ng/mL for fear of not having enough patients in the
trial to attain significant results with a more stringent MI
threshold, but subsequently achieved the aforementioned
results for MI definitions of 70ng/mL and 100ng/mL,
further suggests that MCU had underestimated MC-1’s
effect size. The Phase 3 CABG trial nonetheless assumes
the same MC-1 effect size as was input into the Phase 2b
trial design, and is probably therefore better powered than
its ostensible 85% power to detect a 20% reduction in the
composite endpoint. Regardless, the Phase 3 trial is
much better powered than the successful Phase 2b trial,
due to its size, its exploration of only a single dose of
MC-1, and its elimination of stroke from the composite
endpoint. Accordingly, we believe that the current Phase
3 CABG surgery trial of MC-1 will be successful.
Nonetheless, in light of the aforementioned MI threshold
issues in the Phase 2b trial, we are discounting our MCU
estimates by a healthy 40% annually to attain a price
target we feel is conservative.
We believe that after completing this trial, MCU will
attain a commercial partner for MC-1 outside the US, but
will retain US rights to the drug and market it through its
existing US Aggrastat salesforce. With US$22M of net
cash, MCU has sufficient resources to conclude this trial.
Based upon MCU’s aforementioned target of a June of
2008 NDA filing of MC-1 for CABG surgery, we expect
MCU will launch MC-1 in the US in mid-2009, and
MCU’s partner will launch MC-1 ex-US one year later.
As MCU has received fast-track designation for MC-1 in
CABG surgery (as well as in other indications), the NDA
might receive expedited review; accordingly, we feel our
expectation of a mid-09 US launch of MC-1 is
conservative.
We believe that our sales assumptions for MC-1 in
CABG surgery are also conservative. We assume that the
agent will garner slightly less than a one-half
penetration/share of the US CABG surgery market in
mid-2014, after five full years on the market; we model
half that trajectory for the EU market, beginning one year
later as previously discussed. We believe this assumption
would be highly conservative if MC-1 were to succeed in
its current Phase 3 trial, as it would then offer a unique
mechanism by which to reduce death and/or MI in CABG
surgery patients. We further assume that the price of a
course of MC-1 therapy will be set initially at only
US$600 per course of therapy, about 25% above the price
of a course of Aggrastat therapy (despite the latter being
60-75% cheaper than the other GP IIb/IIIa inhibitors), and
10
Medicure, Inc. (MCU - US$1.24) 04/24/07
will undergo minimal price increases. We feel that this
assumption too would be highly conservative if MC-1
were to succeed in its current Phase 3 trial.
Additional MC-1 indications
MC-1 has received fast-track designation for not only
CABG surgery, but also for ACS and for PCI. MCU has
successfully completed a Phase 2a trial of MC-1 in PCI,
in which periprocedural CK-MB levels were reduced by
MC-1 administration vs. placebo by about 30%, with a p-value
of about 0.035. However, as this was only a
biomarker-endpoint trial, and MCU intends to pursue
MC-1 in Phase 3 next in ACS (admittedly a closely
related indication to PCI), we assign no value to MC-1 in
ACS or PCI at this time for the sake of conservatism.
This is likely excessively conservative, as the biomarker
CK-MB is known to be closely correlated with
meaningful clinical endpoints, as discussed previously.
MCU intends to begin enrolling a Phase 3 trial of MC-1
in ACS within three to six months of successfully
completing the Phase 3 trial of MC-1 in CABG surgery,
and anticipates concluding the ACS trial within 12-18
months, i.e. between June of 2009 and March of 2010.
MCU is also investigating MC-1 in a Phase 1 trial in
stroke, which at this time is omitted from valuation due to
the lack of Phase 2 data thus far.
Pipeline
Besides the aforementioned MC-1 indications, MCU also
possesses an unpartnered pipeline of other agents, from
pre-clinical to pre-Phase 3, addressing both acute and
chronic markets. Some of these agents are combinations
of combinations of MC-1 with other agents while others
are not based on MC-1.
Two combination products of MC-1 with other agents are
currently in clinical-stage testing. MC-4232 is a
combination of MC-1 and the ACE-inhibitor, lisinopril,
for which MCU is finalizing a Phase 3 program design in
diabetic hypertension. MC-4232 has successfully
completed a randomized, placebo and active-controlled,
double-blind, 120-patient, 16-week, dose-ranging Phase 2
trial in diabetic hypertension. Although the trial was only
designed to suggest an optimal dose of MC-4232 rather
than to evaluate its efficacy, the best-performing dose
demonstrated statistically significant improvements vs.
baseline in four of the numerous pre-specified endpoints,
as well as trends towards improvements vs. baseline and
vs. active control in several endpoints. The best-performing
dose of MC-4232 reduced systolic blood
pressure vs. baseline (147.0mmHg) by 12mmHg (p-value
less than 0.0001) and vs. lisinopril alone by 4.5mmHg (p-value
of 0.13); reduced diastolic blood pressure vs.
baseline (82.6mmHg) by 7.5mmHg (p-value less than
0.0001) and vs. lisinopril alone by 3.4mmHg (p-value of
0.06); reduced fasting serum glucose from baseline
regardless of lisinopril use by 1.5mmol/L for patients
with baseline of 7.8mmol/L (p-value of 0.03) and by
3.4mmol/L for patients with baseline greater than
10mmol/L (p-value unspecified); reduced triglycerides in
patients with at least 1.7mmol/L baseline values by 27%
(p-value of 0.04); reduced LDL-cholesterol vs. placebo
by 10.6mg/dL (p-value of 0.095); and reduced HbA1c in
patients with at least 8.0% baseline values regardless of
lisinopril use by over 0.6%-points (p-value of about
0.27). For the sake of conservatism, we assign no value
to MC-4232 at this time, despite its early signs of
efficacy, as it has not yet unambiguously demonstrated
efficacy vs. active control—although admittedly this is
more likely due to the dose-ranging design of the trials
conducted thus far than it is due to any shortcomings of
the agent.
MC-4262 is a combination of MC-1 and an unidentified
angiotensin receptor blocker (ARB) currently in Phase 1
trials for metabolic-syndrome hypertension. MC-45308
is a molecule unrelated to MC-1 undergoing preclinical
evaluation for thrombosis. MC-5422 is the first of
several MC-1 variations MCU is studying and has not yet
entered preclinical testing. No value is assigned to any of
these compounds at this time due to the lack of Phase 2
data thus far.
Model
In addition to our sales assumptions, we believe we have
been reasonably conservative throughout our model. We
assume that MCU will enjoy no pipeline advances. This
is conservative with regard to MCU’s revenues, as well as
its multiple. Admittedly, this assumption reduces R&D
expenses, which some might suggest is not conservative;
however, we feel we have kept R&D expenses adequately
high. Furthermore, despite MCU possessing substantial
net operating loss carry-forwards at this time, which will
only increase between now and profitability, we assume
that MCU will begin paying taxes in full in its first
quarter of profitability, at a greater tax rate than MCU
11
Medicure, Inc. (MCU - US$1.24) 04/24/07
suggests it will ever have to endure. Finally, with regard
to share count, we assume that MCU’s historical rate of
share dilution will increase. We conservatively model
fully-taxed diluted EPS of US$0.41 and US$0.62 in the
twelve-month periods ending in November of 2012 and
November of 2013, respectively.
Risks
Risks to the attainment of our estimates and price targets
include, but are not limited to, the following: the failure
of MC-1 to succeed in its Phase 3 CABG surgery trial;
the failure of MC-1 to receive FDA approval in a timely
fashion; the failure of Aggrastat to penetrate the ACS
market; the failure of MC-1 to penetrate the CABG
surgery market; the potential for inaccuracy in our
estimates of expenses; the potential for fluctuation in the
exchange rate of the US dollar vs. the Canadian dollar,
etc. 11
Medicure, Inc. (MCU - US$1.24) 04/24/07
suggests it will ever have to endure. Finally, with regard
to share count, we assume that MCU’s historical rate of
share dilution will increase. We conservatively model
fully-taxed diluted EPS of US$0.41 and US$0.62 in the
twelve-month periods ending in November of 2012 and
November of 2013, respectively.
Risks
Risks to the attainment of our estimates and price targets
include, but are not limited to, the following: the failure
of MC-1 to succeed in its Phase 3 CABG surgery trial;
the failure of MC-1 to receive FDA approval in a timely
fashion; the failure of Aggrastat to penetrate the ACS
market; the failure of MC-1 to penetrate the CABG
surgery market; the potential for inaccuracy in our
estimates of expenses; the potential for fluctuation in the
exchange rate of the US dollar vs. the Canadian dollar,
etc.edicure, Inc. (MCU - US$

MERRIMAN CURHAN FORD MCU
.
600 California Street
9th Floor
San Francisco, CA 94108
(415) 248-5600 Main
(415) 248-5690 Fax
(800) 909-7897 Trading
www.mcfco.com
April 17, 2007
Medicure, Inc. (MCU) Buy
An Undervalued Late-Stage Cardiovascular Biotechnology Company;
Initiating Coverage at Buy
• Unmet need for a cardioprotectant. Ischemic reperfusion injury
(IRI) is associated with a high risk of death, MI, heart failure, arrhythmia,
renal insufficiency, and stroke. All of these can add up to
a 20% incidence of major vascular events following CABG surgery.
• MC-1, Medicure’s lead product, is currently in the midst of a pivotal
Phase III trial for the treatment of IRI. This trial is being conducted
under the auspices of an SPA agreement with the FDA, which
reduces the regulatory risk of the product. We believe that this
product has a high probability of being partnered within the next
three years. Final Phase III data may be presented at next year’s
ACC in March 2008.
• AGGRASTAT is an undervalued asset, in our view. We believe
Medicure’s re-growth of this brand can generate solid revenues and
provide a commercial platform for the eventual launch of MC-1.
• Initiating coverage at Buy. We are valuing the company on a
modified sum-of-the-parts basis. We are projecting that the company
will re-grow the AGGRASTAT brand to C$23M in three years.
For MC-1, we are assuming a 2009 launch, under a co-promote
model in the United States. Based on these assumptions, we believe
the stock can trade towards the US$2.00-2.20 level in 12 months.

target is too low

Jose J Haresco, Ph.D.
Senior Vice President
(415) 248-5629
jharesco@mcfco.com
Medicure engages in the R&D and
commercialization of therapeutics
for cardiovascular needs. It develops
products for the treatment
of acute cardiovascular events,
such as acute coronary syndrome,
coronary artery bypass,
and graft surgery, as well as
heart attacks to chronic conditions,
including hypertension and
metabolic syndrome.
Market Cap (M): $139.4
Shares Out. (M): 111.0
Float (M): 106.2
10-Day Avg. Volume: 167,600
Institutional Ownership: 24.2%
Enterprise Value (M): $107.2
MCF Estimates
Market Data
Stock Performance
Company Description
Valuation (FY07E)
Key Metrics
Price: $1.20
Rating: Buy
52-Week Range: $0.91-1.91
Book Value/Share: 0.256
Debt/Capital: 21.7%
Debt (M): C$13.4
Cash (M): C$47
EV/Sales: NM
EV/EBITDA: NM
PEG Ratio: NM
Summary
Medicure is, in our view, an undervalued late-stage biotechnology
company in the cardiovascular sector. We believe that Medicure can
re-grow the AGGRASTAT brand to a conservative C$23M in three
years. The company’s lead product, MC-1, is currently in pivotal
Phase III for the treatment of ischemic reperfusion injury following
CABG surgery; the trial is being conducted under the auspices of the
SPA agreement with the FDA, which reduces regulatory risk, in our
view.
Investment Conclusion

April 17, 2007 2
Cardiology
Medicure, Inc. Buy
Company Description
Medicure is, in our view, an undervalued biotechnology company in the cardiovascular sector. The company
recently acquired AGGRASTAT, an injectible anti-platelet therapy for the treatment of acute coronary syndrome
(ACS). AGGRASTAT offers superior efficacy in diabetics at a much lower cost relative to its competitors,
ReoPro and Integrilin, but has for several years not been aggressively marketed. We believe that Medicure
can re-grow the product to a conservative C$23 million in three years. The AGGRASTAT franchise also
provides a platform upon which to launch future cardiovascular products. The company’s lead development
candidate, MC-1, is currently in pivotal Phase III for the treatment of ischemic reperfusion injury following
CABG surgery; the trial is being conducted under the auspices of SPA agreement with the FDA, which reduces
the regulatory risk, in our view. The company is headquartered in Manitoba, Canada. As of the publication
of this report, the company had approximately C$47 million in cash and equivalents.
Investment Highlights
Unmet need for a cardioprotectant. Ischemic reperfusion injury (IRI) is thought to be responsible for the
myocardial damage that can occur following a coronary artery bypass graft (CABG). IRI is associated with a
high risk of death, MI, heart failure, arrhythmia, renal insufficiency, and stroke after CABG surgery. All of
these can add up to a 20% incidence of major vascular events following CABG surgery.
Unique technology. We believe MC-1 blocks the signaling cascade that ultimately causes ischemic reperfusion
injury. It is has shown very promising results in multiple Phase II trials, and is currently in the midst of
a pivotal Phase III trial. This trial is being conducted under the auspices of an SPA agreement with the FDA,
which reduces the regulatory risk of the product, in our view. The upside to this product may be its eventual
use in percutaneous coronary intervention (PCI). We believe that this product has a high probability of being
partnered within the next three years.
AGGRASTAT is an undervalued asset, in our view. Medicure acquired AGGRASTAT in late 2006 from MGI
Pharma. Despite offering better efficacy in diabetics at a lower cost, AGGRASTAT sales have floundered due
to lack of a coherent commercialization effort. We believe Medicure’s re-growth of this brand can generate
solid revenues and provide a commercial platform for the eventual launch of MC-1.
Significant potential market opportunities. AGGRASTAT operates in the US$500 million U.S. platelet
inhibitor market. We believe that the market for MC-1 in the CABG setting is worth US$185 million in the
United States alone. The use of MC-1 in coronary artery stenting procedures provides another US$750 million
in market opportunities.
Initiating coverage at Buy. We are valuing the company on a modified sum-of-the-parts basis. We are
projecting that the company will re-grow the AGGRASTAT brand to C$23 million in three years. For MC-1, we
are using a risk-adjusted probability model of success. We are conservatively assuming a CY2009 launch using
a co-promotion model in which Medicure earns 40% of the revenue generated by the partnership/joint
venture in the United States. We are assuming 30% penetration of the market in the first year, which we
believe is reasonable given that there is no product in the market for use as a cardioprotectant. We are also
only assuming a probability of 60% success to the trial, despite the fact that it is a pivotal study being conducted
under an SPA. We believe the stock can trade toward US$2.00-2.20 in 12 months, and we are therefore

Pipeline Detail: AGGRASTAT
Medicure acquired AGGRASTAT (tirofiban hydrochloride) from MGI Pharma in August 2006. AGGRASTAT is a
glycoprotein (GP) IIb/IIIa inhibitor. AGGRASTAT inhibits platelet aggregation in a dose- and concentrationdependent
manner by preventing the binding of fibrinogen to the GP IIb/IIIa receptor, reducing the risk of
clot formation.
AGGRASTAT approved by the FDA for the treatment of acute coronary syndrome (ACS) including unstable
angina and non-Q-wave myocardial infarction. Acute coronary syndrome (ACS) is a broad set of symptoms
attributed to acute myocardial ischemia — chest pain due to a lack of blood flow to the heart resulting from
coronary artery disease (CAD). ACS covers a range of clinical conditions ranging from unstable angina to
non-Q-wave myocardial infarction and Q-wave myocardial infarction.
Originally developed by Merck, AGGRASTAT was launched in the United States in 1998, and is currently
available in 82 countries worldwide. Merck continues to market AGGRASTAT outside the United States, including
Europe where 2006 sales for AGGRASTAT were approximately US$95 million. Merck sold the U.S.
rights to AGGRASTAT to Guilford Pharmaceuticals Inc. in 2003, which was subsequently acquired by MGI in
2005. Total U.S. sales for the GP IIb/IIIa inhibitor class in 2006 were in excess of US$500 million, which included
US$8 million in AGGRASTAT sales.
Superior efficacy in diabetics. There are currently three GPIIb/IIIa compounds on the market. These include
Millennium Pharmaceuticals/Schering’s Integrilin (US$363 million in sales in 2006), Eli Lilly’s ReoPro
Product Clinical Indication Preclinical Phase I Phase II Phase III NDA Market
Aggrastat Acute Coronary Syndrome
MC-1 CABG Surgery
Acute Coronary Syndrome
Stroke
MC-4232 Diabetic Hypertension
MC-4262 Hypertension Complicated
w/ Metabolic Syndrome
MC-45308 Thrombosis
MC-5422 Ischemia Discovery
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
SPA Granted for MC-1
MC-1 Phase III Enrollment Completed
MC-1 Phase III Completed
MC-1 NDA Submitted
MC-1 Approval and Launch

(US$156.5 million in sales in 2006), and AGGRASTAT. Of these, Integrilin has the broadest indication; it is
approved for use both during and before PCI procedures, which largely accounts for its dominant market
share. All three drugs are intravenously delivered and have therefore been overshadowed by orally available
compounds like Bristol Myers Squibb’s Plavix (US$3.4 billion in sales in 2006).
AGGRASTAT is the most cost-effective of the three. It has superior efficacy in diabetic patients, is convenient
to use (Integrilin requires refrigeration), and part of the recommended treatment regime for Non ST-Elvated
ACS in the 2005 American Heart Association guidelines.
AGGRASTAT is More Effective in Diabetic Patients (Composite Endpoint)
Impact of AGGRASTAT on Mortality in Diabetic Patients
As effective and safe as ReoPro in PCI. The 2004 study by Danzi compared a high-dose bolus of AGGRASTAT
to Reopro in patients undergoing coronary stenting. The study compared two cohorts of patients
who underwent coronary stent placement between January 2000 and December 2002. In the first cohort,
ReoPro which was given to 280/802 (34.9%) of 802 stented patients; in the second cohort, AGGRASTAT was
administered to 274/716 (38.3%) stented patients.
The primary endpoints were the proportion of patients with major bleeding and the rate of site access complications.
The study also evaluated the 30-day incidence of major adverse cardiac events (MACE). After the
procedure, the patients were given Plavix for four weeks and aspirin on an ongoing basis. Major bleeding episodes
were observed in four patients receiving ReoPro and in none receiving AGGRASTAT (1.4% vs. 0%; P =
0.12); the rates of site access complications were similar (3.6% vs. 3.3%; P = 0.96). The 30-day incidence
of MACE was 7.1% in the ReoPro group and 5.8% in the AGGRASTAT group (P = 0.65). Thus, in patients
30-Day Death or MI in Diabetic Patients
TRIAL Compound IIb/IIIa Inhibitor Placebo p value
PRISM AGGRASTAT 8.1% 4.3% 0.04
PRISM-PLUS AGGRASTAT 15.5% 4.7% 0.00
PURSUIT Integrilin 18.8% 18.1% 0.70
GUSTO IV ReoPro 11.4% 10.3% 0.50
PARAGON A Lamafiban 16.2% 11.7% 0.21
PARAGON B Lamafiban 13.7% 13.0% 0.74
Source: Circulation 2001; 104; 2767-2771
30-Day Death in Diabetic Patients
TRIAL Compound IIb/IIIa Inhibitor Placebo p value
PRISM AGGRASTAT 4.2% 1.8% 0.07
PRISM-PLUS AGGRASTAT 6.7% 3.6% 0.17
PURSUIT Integrilin 6.1% 5.1% 0.33
GUSTO IV ReoPro 7.8% 5.0% 0.51
PARAGON A Lamafiban 6.2% 4.6% 0.93
PARAGON B Lamafiban 4.8% 4.9% 0.01
Source: Circulation 2001; 104; 2767-2771

undergoing coronary stenting, the high bolus dose of AGGRASTAT is as safe as ReoPro. Nevertheless, AGGRASTAT
is only approved for the treatment of ACS, and is not approved for use in PCI.
Market opportunity. The market for GP IIa/IIIb inhibitors should remain stable at the US$500 million level
until the end of the decade given its use in the PCI market, in our view. AGGRASTAT has previously suffered
from Merck and MGI’s lack of interest in driving AGGRASTAT product sales. Sales of AGGRASTAT under
Merck and then MGI fell from US$33.6 million in 2003 to US$12.3 million in 2005. By the time Medicure acquired
the product, virtually no sales and marketing dollars were being spent on the product. We believe that
Medicure’s investment of a proprietary 24 person sales force and marketing dollars can reinvigorate the
product. The product offers superior efficacy in diabetics at a 72% discount to ReoPro and a 43% discount to
Integrilin. The company is largely banking on off-label use to grow its franchise; for this reason we have kept
our estimates fairly conservative going forward. We believe that Medicure can re-grow the product to the
CAN$23 million level over the next 24 months.
MC-1
Background: vascular disease. Vascular disease (atherosclerosis) is a progressive and chronic condition
caused by the buildup of fatty cells in the inner lining of the vascular arteries, which turns into a localized,
patched, thickening, called a plaque or lesion. Expansion of the plaque into the interior of the artery (the lumen)
results in a narrowing of the artery (known as stenosis). The narrowing reduces blood flow to tissues
(such as the heart), which leads to tissue death (necrosis). Vascular disease can occur in arteries of any organ
of the body, and often leads to impaired organ function or death. Heart attacks, congestive heart failure,
kidney failure, or diabetes-related vascular diseases can all be caused by vascular disease.
Atherosclerosis in the coronary arteries is referred to as Coronary Artery Disease (CAD) or Coronary Heart
Disease (CHD). Coronary artery bypass graft surgery, or CABG, was the first treatment for CAD and involves
circumventing a blocked artery using a healthy vein or artery. Coronary artery bypass graft surgery is a surgery
in which one or more blocked coronary arteries are bypassed by a blood vessel graft to restore normal
blood flow to the heart. These grafts usually come from the patient's own arteries and veins located in the
chest, leg, or arm. The graft goes around the clogged artery to create new pathways for oxygen-rich blood to
flow to the heart. The goals of the bypass surgery are: 1) to relieve symptoms of coronary artery disease
(including angina), 2) Enable the patient to resume a normal lifestyle, and 3) lower the risk of a heart attack
or other heart problems.
This highly-invasive procedure is considered the standard care for CAD, but is associated with long hospital
stays and recovery times. In particular, it is associated with a high risk of death, MI, heart failure, arrhythmia,
renal insufficiency, and stroke. All these can add up to a 20% incidence of major vascular events following
CABG surgery.

Coronary Artery Bypass Graft Surgery
In coronary artery bypass graft surgery, a surgeon makes a vertical incision in the skin
and muscle in the middle of the chest and then cuts through the breastbone (sternum).
The surgeon spreads the rib cage to expose the heart and then cuts through the lining
that protects the heart (pericardium). To reroute blood flow around the diseased blood vessel,
surgeons typically use a portion of the saphenous vein in the leg or an internal mammary artery.
Source: health.yahoo.com
MC-1 Mechanism of Action
In order to perform CABG surgery, blood flow to the descending arteries is cut off for a short period of time.
A major source of vascular damage following CABG surgery is caused by the act of unblocking the blood flow
(reperfusion). During the earliest phases of reperfusion, cardiomyocytes (cells responsible for the heart’s
muscular contractions) undergo extreme contraction — sustained shortening and stiffening of the myocardium.
If this lasts for an extended period of time, cell death through apoptosis or necrosis can ensue. This
eventually aggravates the vascular problem and leads to immune-mediated vascular damage. This is known
as ischemic reperfusion injury, or IRI.
The core cause of ischemic reperfusion injury is thought to be the rapid release of extracellular ATP. At the
ischemic phase, ATP within the cell is depleted and cardiomyocytes accumulate Na+ via various pathways in
the membrane including the Na+ channel, the Na+/H+ exchanger, and the Na+/HCO3 symporter. Na+ cannot
exit the cell since the Na+/K-ATPase is rendered non-functional due to the lack of ATP. Na+ influx leads to
Ca2+ buildup since the Na+/Ca2+ exchanger (NCE) operates in reverse mode in a depolarized, Na+-overloaded
cell. Extracellular ATP from platelets and nerve endings further exacerbate the problem by binding to the P2
purnergic receptors, which also cause an influx of Ca2+ . Consequently, ischemic cells develop cytosolic Ca 2+
overload.
During reperfusion, the cell is re-supplied with ATP and it starts hoarding excess intracellular Ca2+. The overload
of intracellular Ca2+ has been implicated in several mechanisms that lead to irreversible cellular injury:
initiation of signaling cascades that lead to the activation of phospholipase A2 (PLA2), PLAC, endonucleases,
proteases, and several genes that control the cellular life cycle. These processes eventually lead to cell
death, which in turn causes further injury through activation of local, cytokine-mediated, immune responses.

Elevated Calcium Levels Contribute to Ischemic Reperfusion Injury
High intracellular concentrations of [Ca2+], have been implicated in several mechanisms
that lead to irreversible cell death, which in turn leads to local immune responses that aggravate vascular damage.
MC-1 can prevent this cascade by blocking Ca+ influx into the cell.
Source: FASEB Journal (1995) 9, 219-228; Cardiovascular Research (2004) 61, 365-371
MC-1 is a cardioprotectant. It prevents the cascade ischemic reperfusion cascade by stopping at one of its
core sources: it prevents extracellular ATP from binding to the P2 purinergic receptors and further increasing
the cytosolic [Ca2+ ] level. Blocking this cascade can prevent cell death, which in turn prevents further downstream
immune responses from aggravating the damage.
Multiple clinical studies demonstrate MC-1’s potential. MC-1 has been evaluated in several clinical
studies. Most recently, the MEND-CABG (Phase II/III) trial showed that MC-1 may mitigate adverse events
after CABG surgery.
MC-1 Trials
MEND-I. MEND-I was a double-blind, placebo-controlled study to evaluate MC-1’s ability to reduce cardiomyocyte
death as measured by changes in the MB fraction of the enzyme creatine kinase (CK-MB), which is
secreted from damaged cardiac muscles. CK-MB levels have been previously correlated with the risk of myocardial
infarctions.
Sixty patients were randomized in a 2:1 manner, receiving either MC-1 (10 mg/kg) or placebo prior to Percutaneous
Coronary Intervention (PCI) The primary endpoint was infarct size based on CK-MB measurements
24 hours after PCI. Secondary endpoints were the occurrence of major cardiac events (MACE) within 30 days
and occurrence of MI within 24 hours of PCI.
MC-1 showed a 43.5% reduction in infarct size (32.9 ng / ml, p=0.038). However, there no deaths in either
the placebo or experimental groups, so the occurrence of non-fatal MI was the same.
MEND-CABG I. MEND-CABG enrolled 901 patients in a placebo-controlled Phase II/III trial. Patients were
enrolled into three treatment arms: 250 mg MC-1, 750 mg MC-1, or placebo in a 1:1:1 manner. Patients received
treatment once a day for 30 days. The study enrolled high-risk patients that two of the following criteria: ACS within 28 hours, MI within seven days, TIMI 0-2 flow, angiographic evidence of thrombus, LVEF
<=30%, or saphenous vein graft lesion.
The primary composite endpoint included cardiovascular death, non-fatal MI defined by CK-MB levels >= 50
ng/ml and non-fatal cerebral infarction at post-operative day (POD) 30. The study was not powered to detect
significance, but merely show a trend towards significance. It was powered at 78% to detect a 37% reduction
in the primary endpoint. The trial failed to meet its primary endpoint under the definition of non-fatal MI
having CK-MB levels > 50 ng/ml, showing only a 14% reduction in MI under this definition. However, at a
definition of MI having CK-MB levels > 100 ng/ml, an alternative definition of MI, MC-1 showed remarkably
good results. MC-1 was well tolerated.
Exploratory Analysis of 100 ng/ml Definition of MI
Source: Medicure
MEND-CABG II (Pivotal Phase III). The company is in the midst of a pivotal Phase III trial that will enroll
3,000 high-risk CABG patients. In December 2006, Medicure announced that it had completed an SPA agreement
with the FDA. The study will be conducted in 120 sites across the United States and Europe, and uses a
composite endpoint and a definition of CK-MG >= 100 ng /ml as the definition of MI. The FDA had previously
allowed Alexion to use this definition in its ischemic reperfusion injury trials. Patients will be treated for 30
days and followed for an additional 90 days. Enrollment began in early 2007. As of April 12, 2007, over 90%
of sites were active; enrollment is on track to be completed in late 2007. Final Phase III data should be available
at next year’s Late Breaking ACC at the end of March 2008. We estimate that the company will file a
rolling NDA in 2007/2008 and launch the product in late 2008 or early 2009 at the latest.
Regulatory Pathway
We are optimistic about the outcome of this trial, particularly given that the SPA agreement lowers regulatory
risk, the trial’s similarity to MEND CABG-1, and the FDA’s agreement that an additional Phase III trial
will not be required. Furthermore, this product has been granted priority six-month review. The FDA has said
will allow MEND-CABG-1 data to be included in the submission.
The company has been in continuous contact with the EMEA regarding a European submission, and expects
to file for European approval shortly after an approval in the United States. What remains to be seen, however,
is whether the EMEA will require the company to perform an additional Phase III trial.
Timepoint Placebo
POD30 49 31 (37.2% difference, p=0.028) 34 (31.1% difference, p=0.071)
POD90 50 32 (36.5% difference, p=0.030) 35 (30.5% difference, p=0.071)
Incidence of MI Only
Timepoint Placebo
POD30 43 23 (47.2% difference, p=0.008) 23 (47.2% difference, p=0.008)
POD90 44 23 (48.3% difference, p=0.006) 23 (48.3% difference, p=0.006)
250 mg / day 750 mg / day
Composite Endpoint of Cardiovascular Death, MI, Stroke
250 mg / day 750 mg / day

There are approximately 370,000 CABG procedures performed in the United States every year, and there is
currently no product approved for use as a cardioprotectant during cardiovascular surgeries. The number of
CABG procedures, according to our channel checks with cardiovascular surgeons, has been increasing in recent
months given the controversies regarding drug eluting stents. We believe that the use of MC-1 in the
U.S. CABG setting, at a conservative price of US$750 per I believe the company will charge 1000 to 1500 not 750 dollars. Even if you use 750 times 370 thousand you get a market near 300 million not 185 milliontreatment, is worth US$185 million in the United
States alone.
An upside to this is MC-1’s potential use in Percutaneous Coronary Intervention (PCI). MC-1’s ability to prevent
local cellular damage during balloon catherization or stent deployment could be of significant clinical
value in the face of the recent debates surrounding long-term complications associated with drug eluting
stents. There were approximately 1 million PCI procedures performed in 2006 in the United States alone — a
potential additional market value of US$750 million for MC-1. It is unlikely that Medicure can pursue this indication
on its own. Rather, we believe that this indication is something a larger partner would have to fund.
We believe that solid results in Phase III for the PCI indication can lead to a strong commercialization partnership.
Procter & Gamble had previously signed a co-development partnership with Alexion Pharmaceuticals
prior to the initiation of Alexion’s Phase IIb trial for pexelizumab. The partnership was valued at US$95 million,
which included a US$10 million upfront payment, royalties, and milestones.
Competitive Landscape
There are two primary competitors in the injectible anti-platelet market: Millenium/Schering’s Integrilin and
Eli Lilly’s ReoPro. Integrilin was originally developed by Millenium Pharmaceuticals, but is co-marketed with
Schering Plough in the United States and licensed to GlaxoSmithKline overseas. Integrilin is approved for use
in both ACS and PCI — hence its dominant share; patients can be treated with Integrilin once they are admitted
to a hospital and can be kept on it until the PCI procedure. ReoPro is approved for use as an adjunct
therapy in addition to heparin and aspirin in percutaneous coronary intervention for the prevention of cardiac
ischemic complications, or in patients with unstable angina who are non-responsive to conventional medical
therapy if a PCI is planned within 24 hours. Integrillin is approved for the treatment of patients with acute
coronary syndrome (unstable angina/non-ST-segment elevation myocardial infarction), including patients
who are to be managed medically and those undergoing percutaneous coronary intervention (PCI), and for
the treatment of patients undergoing PCI, including those undergoing intracoronary stenting. In contrast,
Aggrastat is approved for use on in ACS and not PCI. We believe this narrow label, as well as the lack of
marketing effort, has contributed to the product’s lackluster performance prior to its acquisition by Medicure.
Despite the need for a cardioprotectant, there is little competition for MC-1. The two most notable products,
Aventis’ caroporide and Alexion’s pexelizumab, both failed in recent years to show any efficacy as a cardio-protectant. Frankly, we believe this is the primary reason for Medicure’s stock being undervalued relative to
its late-stage peers. We are not discouraged by these companies’ failures to develop a drug for use in preventing
ischemic reperfusion injury. We believe that both compounds failed because the mechanisms of action
were too specific to engender a broad reduction in the immunomodulatory response to ischemic reperfusion
injury. MC- 1 attempts to prevent injury at the beginning of the signaling cascade which leads to the
immune response, rather than trying to modulate the immune response itself.
There are a number of compounds in development, but most are being pursued by academic research institutions.
We highlight the competitive products being pursued by private and public companies in the table
below.
Competitive Landscape for Cardioprotectants
Source: MCF & Co.
MC-4232
MC-4232 combines MC-1 with lisonopril, an ACE inhibitor, and is targeted at the extremely competitive high
blood pressure market. Phase II (MATCHED) clinical trials demonstrated blood pressure and metabolic control.
The MATCHED trial enrolled 120 patients in a randomized, placebo-controlled, double-blind, crossover study.
100, 300, and 1000 mg of MC-4232 were combined with 20 mg of lisonopril (normal dosing range is 20-40
mg). The primary endpoint was mean daytime ambulatory systolic flow (MDASBP); the study was not powered
to detect significance. The 300 mg/20 mg combination of MC-1/lisonopril reduced MDASBP by 12 mmHg
compared to baseline (p=0.0001) and to 7.5 mmHg for lisonopril alone (p=0.13). The results were encouraging
enough for the company to decide to push the product into later stages of development.
We expect this therapeutic category to grow to US$32 billion by 2010, driven largely by demographic shifts
which highlight the increasing prevalence of metabolic diseases. Treatment options in this market include
angiotensin receptor blockers, diuretics and beta blockers. This is a highly competitive market with a multitude
of generic options; a product will have to show a significant benefit in terms of efficacy, safety, or convenience
to be successful. Hence, we remain cautiously optimistic about the prospect of this product. The
company will, in our view, have to push the product into later stages of clinical development before it can be
effectively partnered.
Compound Company Description Development Phase
Avandia(rosiglitazone) GSK Assessment of IRI following 8 weeks of rosiglitazone
treatment in patients with metabolic disease; Expected
completion in 2007
Phase II
Lipotor (atorvastatin) Merck Assessment of IRI following 3 day treatment with
atorvastating 80 mg daily; Expected completion in 2007
Phase IV
Angiomax (bivalirudin) Medicines Company Evaluate use of Angiomax in patients with ACS prior to PCI Phase III
Reprieve Radiant Medical Endovascular therapeutic cooling technology; 225 patient
trial in patients with PCI
Phase II/III
TP-10 Avant Immunotherapeutics Complement inhibitor Phase II completed
FX06 Fibrex Medical Fibrin derived peptide; 220 patient trial in PCI patients
KAI9803 Kai Pharma Delta-PKC inhibitor; Phase I

Discovery-Stage Compounds
MC5422 anti-ischemia program. This program revolves around modifying MC-1 and creating mimetics to
further address ischemic and reperfusion injury.
MC-45308 antithrombotics program. Preliminary results have shown significant potential for the lead
drug candidate in this program, MC-45308, in preventing blood clots. The compound has demonstrated both
anti-platelet and anti-coagulant effects, which could make MC-45308 a major player in the management
strategy of cardiovascular diseases such as Myocardial Infarction (MI), stroke, Pulmonary Emboli (PE) and
Peripheral Arterial Disease (PAD). A drug of this type currently is non-existent within the antithrombotic marketplace.
Management
According to the company:
Albert D. Friesen, Ph.D., president and CEO, holds a Ph.D. in Protein Chemistry from the University of
Manitoba. As the first full-time employee and president of the Winnipeg Rh Institute, he oversaw the development
and initial pharmaceutical approval of WinRho. Dr. Friesen has also been instrumental in founding
several health industry companies including Novopharm Biotech Inc. (now Viventia Biotech Inc.), Genesys
Pharma Inc., and KAM Scientific Inc.
Jan-Ake Westin, M.Sc., VP, clinical development, has worked as a managing director at two of Canada’s
leading CROs — i3 Research and Innovus. In this capacity he has overseen the management of numerous
large cardiovascular clinical trials. Mr. Westin spent more than 20 years with Astra Pharma Inc., holding such
positions as international clinical research manager and senior clinical research scientist. Following this, Mr.
Westin proceeded to senior leadership positions with Pharmacia & Upjohn Inc. and Pfizer/Pharmacia Corp.,
where he served as director of clinical operations and director of clinical outsourcing, respectively. Mr. Westin
received his M.Sc. (Social Pharmacy) from the University of Uppsala in Sweden.
Derek G. Reimer, CA, CFO, came to Medicure from Deloitte & Touche LLP where he served as a senior
manager in the Assurance and Advisory Services group. In this role, Mr. Reimer dealt mainly with major corporate
clients, including several TSX 100 companies, providing advice regarding complex accounting, regulatory,
and compliance issues. His previous experience includes several years providing international accounting
services to clients exclusively in the financial services industry. Mr. Reimer is a chartered accountant who
also holds a Bachelor of Commerce (Hons.) degree in accounting from the University of Manitoba. Mr. Reimer
is responsible for managing financial systems, programs, and processes to ensure the successful accomplishment
of Medicure's business objectives.
Valuation and Rating
We are valuing the company on a modified sum-of-the parts basis.
We are projecting that the company can re-grow the AGGRASTAT brand to C23 million in three years. We are
opting to stay on the conservative side of the estimates because the company is inherently relying on offlabel
use to drive AGGRASTAT’s growth. We value this franchise at a multiple of 3x sales. We assume a gross
margin of 90% for this product.
For MC-1, we are using a risk-adjusted probability model of success. We are conservatively assuming a
CY2009 launch using a co-promotion model in which Medicure earns 40% of the revenue generated by the
partnership/joint venture in the United States. We are assuming 30% market penetration in the first year,
which we believe is reasonable given that there is no product in the market for use as a cardioprotectant. We
are pricing MC-1 at US$750 per treatment, which seems comparable to other therapeutics used in a cardioMERRIMAN
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Cardiology
Medicure, Inc. Buy
vascular surgery setting. We are also assuming a probability of 60% success to the trial, despite the fact that
it is a pivotal study being conducted under an SPA.
We believe that good Phase III results for MC-1 in IRI should lead to a partnership that targets the use of
MC-1 in PCI. Hence, we include in our valuation model the impact of milestone payments (US$15 million upfront,
US$35 million in development milestones, another US$40 million for commercialization milestones) as
well as a royalty-based revenue stream. In order to remain conservative, we model a 20% probability of success
since we view this aspect of the model rather dependent on MC-1’s performance in the IRI indication.
At the time of this report’s publication, the company had cash and equivalents of approximately C$47 million.
We believe this is enough to fund the company’s activities until the end of the pivotal U.S. Phase III trial. The
company may have to access the capital markets at least one time prior to commercializing the product.
Based on these assumptions, we believe the stock can trade toward the US$2.00-2.20 level in 12 months.
We are therefore we are initiating coverage with a Buy rating.
Medicure Valuation Model (in US$)
Source: MCF & Co.
Key Risks
Medicure may be unsuccessful in marketing AGGRASTAT. The company acquired AGGRASTAT on the
assumption that a lack of sales and marketing efforts are the primary reason that product sales faltered
since 2003. The lack of an effective and continuous marketing campaign for the product in the last few years
prior to the acquisition may have made the brand “stale” in the minds of interventional cardiologists. Despite
the product’s superior performance in diabetics, it may be difficult to overcome the product’s recent track
record.
MC-1 may fail its pivotal phase III trial. At least half of the company’s valuation rests on MC-1. While
the data from MEND-CABG 1 are encouraging, it was only through a retrospective analysis of the data that
led to the decision to redefine MI as CK-MB >=100. We are comforted that the company has reached an
agreement with the FDA regarding this issue, and that the agency had previously allowed Alexion to use the
same definition of MI in the company’s clinical trials for pexeluzimab.
Sales Roy. MCU Launch Year PV Sales Prob. Weighted Per Sh.
Product Indication Partner Ph. ($M) % Rev. ($M) Year Used Pds Rate ($M) Mult. (%) Value ($) Value ($)
AGGRASTAT ACS None Marketed 13 100% 13 2006 2008 0 10% 13 2 100% 26 0.23
MC-1 Cardioprotection None Phase III 185 40% 74 2009 2012 4 10% 51 4 60% 121 1.08
PCI-Upfront None 15 100% 15 2009 2009 1 10% 14 1 20% 3 0.02
PCI-Development None 35 100% 35 2010 2010 2 10% 29 1 20% 6 0.05
PC-Commcerial None 40 100% 40 2012 2012 4 10% 27 1 20% 5 0.05
PCI-Sales None 750 18% 135 2011 2016 8 10% 63 5 20% 63 0.56
MC-4232 Hypertension None Phase II
@ Yearend
Cash 22.3 19 0.17
112.0 $243 $2.17
Discount
Current 12-Mnt Burn
Not considered in valuation
40.8
Current shares outstanding (M) 12-18 Month Valuation
MERRIMAN
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Cardiology
Medicure, Inc. Buy
Other Public Companies Mentioned in This Report
Avant Immunotherapeutics (AVNC, $2.33, Not Rated)
Alexion Pharmaceuticals Inc. (ALXN $44.46, Not Rated)
Bristol-Myers Squibb (BMY $27.99, Not Rated)
Eli Lilly & Co. (LLY $56.76, Not Rated)
GlaxoSmithKline plc (GSK $57.97, Not Rated)
Merck & Co., Inc. (MRK $49.86, Not Rated)
MGI Pharma Inc. (MOGN $23.69, Not Rated)
Millenium Pharmaceuticals Inc. (MLNM $11.44, Not Rated)
The Medicines Company (MDCO, $26.11, Not Rated)
Sanofi Aventis SA (SNY $45.56, Not Rated)
MERRIMAN
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Cardiology
Medicure, Inc. Buy
Jose J Haresco, Ph.D.
Senior Vice President
(415) 248-5629
jharesco@mcfco.com
Source: MCF & Co.; company filings
Medicure, Inc.
Quarterly Income Statement
(In CAN$)
2008 2009 2010
8/31/2005 11/30/2005 2/28/2006 5/31/2006 FY 8/31/2006 11/30/2006 2/28/2007 5/31/2007 FY 5/31/2008 5/31/2009 5/31/2010
Revenue
AGGRASTAT $ - $ - $ - $ - $ - $ 2 80 $ 1 ,419.0 $ 2 ,552 $ 3 ,500 $ 7 ,751 $ 1 3,000 $ 1 8,000 $ 2 3,000
MC-1 $ 1 7,000 $ 4 0,000
MC-1 Milestones
Cost of Goods - - - - - 2 8 5 4.3 1 77 3 50 6 09 1 ,300 1 ,800 2 ,300
Gross Profit - - - - - 2 52 1 ,364.7 2 ,375 3 ,150 7 ,142 1 1,700 3 3,200 6 0,700
Operating Expenses
R&D 3 ,297 3 ,010 1 ,881 2 ,031 1 0,219 2 ,783 3 ,816.0 6 ,518 7 ,000 2 0,117 2 5,000 1 2,500 1 3,000
Amortization 5 82.9 7 74 7 80 2 ,909 1 ,800 1 ,800 1 ,800
Investments Tax
SG&A 5 37 6 36 8 61 8 24 2 ,858 1 ,160 2 ,658.0 3 ,425 3 ,700 1 0,943 1 5,000 2 5,000 2 7,000
Total Operating Expenses 3 ,834 3 ,646 2 ,742 2 ,855 1 3,077 3 ,943 7 ,056.9 1 0,717 1 1,480 3 3,196 4 1,800 3 9,300 4 1,800
Operating Income (3,834) (3,646) (2,742) (2,855) (13,077) (3,691) (5,692.2) (8,342) (8,330) (26,055) (30,100) (6,100) 1 8,900
EBITDA (3,834) (3,646) (2,742) (2,855) (13,077) (3,691) (5,692.2) (8,342) (8,330) (26,055) (30,100) (6,100) 1 8,900
Interest & Other Expense (790.0) (462) (600) (1,852) 1 ,600 1 ,400
Interest Income 2 5 3 5 6 1 1 79 3 00 2 90 3 90.0 4 67 4 40 1 ,587 1 ,400 2 ,000 2 ,100
Pretax Income (3,809) (3,611) (2,681) (2,676) (12,777) (3,401) (6,092.2) (8,365) (8,490) (26,349) (27,100) (2,700) 2 1,000
Taxes - - - - - - - - - - - -
Net Income $ (3,809) $ (3,611) $ (2,681) $ (2,676) $ (12,777) $ (3,401) $ (6,092) $ (8,365) $ (8,490) $ (26,349) $ (27,100) $ (2,700) $ 21,000
EPS $ (0.05) $ (0.05) $ (0.03) $ (0.03) $ (0.16) $ (0.04) $ (0.06) $ (0.08) $ (0.08) $ (0.24) $ (0.24) $ (0.02) 0.17
Weighted Average 8 0,000 8 0,000 8 0,000 8 0,000 8 0,000 9 2,200 9 6,200 1 11,000 1 12,000 1 12,000 1 13,000 1 25,000 1 26,000
Margins
Cost of Goods Sold NA NA NA NA NA NA NA NA NA NA 10.0% 10.0% 10.0%
Gross Margin NA NA NA NA NA NA NA NA NA NA 90.0% 184.4% 263.9%
SG&A NA NA NA NA NA NA NA NA NA NA 192.3% 69.4% 56.5%
Research & Development NA NA NA NA NA NA NA NA NA NA 115.4% 138.9% 37.1%
Operating Expenses NA NA NA NA NA NA NA NA NA NA 321.5% 218.3% 181.7%
Operating Income NA NA NA NA NA NA NA NA NA NA -231.5% -33.9% 82.2%
Net Income, net of taxes NA NA NA NA NA NA NA NA NA NA -208.5% -15.0% 91.3%
2006 FY2007
MERRIMAN
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April 17, 2007 15
Cardiology
Medicure, Inc. Buy
Jose J Haresco, Ph.D.
Senior Vice President
(415) 248-5629
jharesco@mcfco.com
Medicure, Inc.
Balance Sheet
(In CAN$)
Source: MCF & Co.; company filings
2/28/2007 5/31/2006
Assets
Current assets
Cash and cash equivalents C$ 43,423 C$ 3 4,920
Accounts recievable 3,287 4 58
Inventories 706
Research advance 200 2 00
Prepaid expense 1,282 2 63
48,898 3 5,842
Property and equipment 133 5 1
Intangible assets 23,922 2 ,922
Defered debt issue expenses
72,953 3 8,814
Liabilities and Shareholders Equity
Current liabilities
Accounts payable and accrued liabilities C$ 6,882 C$ 1 ,644
Current portion of long-term debt 5,054
11,936 1 ,644
Long-term debt 13,476
Shareholder's equity
Capital stock 109,035 8 1,227
Contributed surplus 2,754 2 ,071
Deficit (63,831) (46,128)
47,957 3 7,170
C$ 73,368 C$ 3 8,814
MERRIMAN
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Cardiology
Medicure, Inc. Buy
This research has been prepared by Merriman Curhan Ford & Co, a wholly owned subsidiary of MCF Corp. Some companies
Merriman Curhan Ford & Co. follows are emerging growth companies whose securities typically involve a higher degree of risk and
more volatility than the securities of more established companies.
The securities discussed in Merriman Curhan Ford & Co. research reports may be unsuitable for some investors depending on their
specific investment objectives, financial status, risk profile, or particular needs. Investors should consider this report as only a single
factor in making their investment decisions and should not rely solely on this report in evaluating whether or not to buy or sell the securities
of the subject company.
Regulation Analyst Certification (“Reg. AC”)
All of the views expressed in this research report accurately reflect the research analyst’s personal views about any and all of the
subject securities or issuers. No part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or views expressed by the research analyst in the subject company of this research report. Research analysts
are not compensated for revenue generated by the firm’s investment banking activities.
Specific Disclosures
- MCF & Co. has not received compensation for investment banking services within the last 12 months, and does not expect to receive or
intend to seek compensation for investment banking services in the next three months, from Millennium Pharmaceuticals Inc. or Medicure
Inc.
- Within the last 12 months MCF & Co. has not managed or co-managed a public offering for Millennium Pharmaceuticals Inc., or Medicure
Inc.
- MCF & Co. makes a market in MLNM and as such buys and sells from customers on a principal basis. MCF & Co. does not make a market
in MCU.
- Neither Jose Haresco nor a member of his household owns shares of MCU.
- Neither MCF & Co. nor its officers, principals, employees, or owners own options, rights, or warrants to purchase MLNM or MCU.
- No MCF & Co. employee serves on the board of directors of Millennium Pharmaceuticals Inc. or Medicure Inc.
- Neither Jose Haresco nor a member of his household serves on the board of directors of Medicure Inc.
- Neither MCF & Co. nor its affiliates beneficially owns 1% or more of an equity security of Millennium Pharmaceuticals Inc. or Medicure Inc.
Key to Investment Rankings (expected total share price return inclusive of dividend reinvestment, if applicable)
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The information contained herein is based on information obtained from sources believed to be reliable but is neither all-inclusive nor
guaranteed by Merriman Curhan Ford & Co. No independent verification has been made as to the accuracy or completeness of the
information. Opinions, if any, reflect our judgment at the time the report is first published and are subject to change without notice.
Merriman Curhan Ford & Co. does not undertake to advise you of changes in its opinion or information.
Member NASD / SIPC. Copyright © 2007. All rights reserved. Additional information supporting the statements in this report is available
upon request.
Rating Percent of
Universe
No. of
Stocks Description
Percent of companies under research
coverage from which MCF & Co. received
compensation for investment banking
services provided in the previous 12 months
or expects to receive or intends to seek in
the next three months
Buy 73% 131 MCF & Co. expects the stock price to appreciate 10% or
more over the next 12 months. Initiate or increase position. 15%
Neutral 25% 46 MCF & Co believes the stock price is fairly valued at current
levels. Maintain position or take no action. 2%
Sell 2% 4 MCF & Co. expects the stock price to depreciate over the
next 12 months. Sell or decrease position. 0%

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