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May 3, 2010
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The Medicines Co. (MDCO) reported a first-quarter profit of 19 cents per share, including the impact of stock-based compensation expense. First quarter profit was well above the Zacks Consensus Estimate of 13 cents and the year-ago loss of 3 cents.
Performance was boosted by lower operating expenses. The company completed its cost reduction program by cutting 74 jobs and expects to achieve annual savings in the range of $14.5 million - $16.5 million.
Revenues increased 2.9% to $102 million. While Angiomax sales in the US remained flat at $95.7 million, sales in ex-US markets increased to $5.6 million. On a sequential basis, ex-US sales increased marginally.
US sales were impacted by the company’s participation in the 340B drug pricing program, under which Angiomax was provided at a significant discount to qualifying customers, including disproportionate share hospitals (DSH).
Angiomax, acquired from Biogen Idec, Inc. (BIIB), is the lead product at The Medicines Company. Acquired in 1996, Angiomax is used as an anticoagulant in patients undergoing coronary angioplasty.
More than the product’s performance, we are concerned about the potential loss of exclusivity later this year. The Medicines Co is vigorously trying to get its Angiomax patent extended and has filed another lawsuit against the U.S. Patent and Trademark Office (PTO), the US Food and Drug Administration (FDA) and the US Department of Health and Human Services.
A hearing is scheduled to take place on May 6. With Angiomax accounting for almost 95% of total sales in 2009, the entry of generic competition would be devastating for the company. Generic player Teva Pharmaceutical Laboratories Inc. (TEVA) is looking to sell generic versions of Angiomax. Another company, APP Pharmaceuticals, has also challenged the patent.
The Medicines Company also provided an update on its pipeline candidates. The company said that it is looking to move Cangrelor into a phase III study called Champion Phoenix later this year.
The company is hoping to gain approval for the ready-to-use formulation of Argatroban later this year. The Medicines Company has also submitted a protocol with the FDA for a phase III study of oritavancin for the treatment of acute bacterial skin and skin structure infections (ABSSI).
As far as Cleviprex is concerned, the company is yet to resume normal supply of the product. The company had initiated a voluntary product recall in Decembed 2009 due to the presence of visible particulate matter was observed in some vials. The Medicines Company has completed the recall of the remaining lots of Cleviprex and is working on the supply situation. Cleviprex (clevidipine) is the only other marketed drug at The Medicines Company that received US Food and Drug Administration (FDA) approval in 2008.
We currently have a Neutral recommendation on the Medicines Company. We expect investor focus to remain on the Angiomax patent situation.
Read the full analyst report on "MDCO"
Read the full analyst report on "BIIB"
Read the full analyst report on "TEVA"
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