Zacks Small-Cap Research (Zacks SCR) sees MediciNova, which develops treatments for amyotrophic lateral sclerosis (ALS) and pulmonary fibrosis, as significantly undervalued. In a recent Zacks SCR note, the stock’s fair value is estimated at $10 per share — five times its current price. MediciNova is set to receive compensation from pharmaceutical giant Novartis, which was found to have infringed on MediciNova patents with its drug Zolgensma, one of the most expensive in the world.
Details
Zacks SCR has set a valuation for MediciNova of $10 per share, five times higher than its closing price of $2 per share on November 27. MediciNova’s market capitalization was then $98.6 million. For the year to date, the stock has gained 34%.
MediciNova is poised to receive a capital infusion in the form of damages from a lawsuit against Novartis. The company says Novartis infringed on certain patents through the unauthorized manufacture, use, and sale of recombinant adeno-associated virus vectors (rAAVs) for Zolgensma, its gene therapy drug for spinal muscular atrophy (SMA). rAAVs are used to deliver genetic material into patients’ bodies.
Although MediciNova has not disclosed the damages it will receive, it noted that a single Zolgensma injection costs $2.1 million, which makes it one of the most expensive drugs in the world. The funds will be used to support MediciNova clinical development programs. The company currently has 11 programs in clinical development, including the compound ibudilast for ALS in phase III trials and tipelukast for pulmonary fibrosis.
On November 12, the day after the damages were announced, MediciNova stock surged nearly 50% to $2.28 per share.
The dispute
In 2019, the U.S. FDA approved Zolgensma for children under two years old with SMA. The drug has since been approved by regulators in the EU and elsewhere.
Zolgensma has no direct competitors and was one of Novartis’s top-selling products in 2023, generating over $1.3 billion in revenue, according to MediciNova. Novartis projects eventual annual sales of $1.5-2.0 billion.
In 2022, a Sanofi subsidiary, Genzyme Corporation, filed a complaint in a Delaware federal court, alleging that Novartis infringed on its patent by using rAAV in Zolgensma. Genzyme had acquired this patent, along with several others, back in 2005 through an assignment agreement with MediciNova. The dispute between Sanofi and Novartis has since been settled, MediciNova reports, and it is entitled to receive a certain portion of monetary damages under the agreement with Genzyme.
