The Medicines Company (MDCO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:
The Medicines Co.’s third quarter earnings of $0.05 per share were well below the year-ago earnings of $0.38 per share. Third-quarter 2014 revenues decreased 1.1% year over year to $172.4 million, missing the Zacks Consensus Estimate of $191 million. The company cut its 2014 revenue guidance to reflect the weak Angiox situation in the EU. Although Angiomax should continue growing, we remain concerned about the earlier-than-expected entry of generic competition. Meanwhile, we are encouraged to see that management is actively pursuing in-licensing deals and acquisitions to drive long-term growth. Orbactiv’s recent approval is also a positive. We remain Neutral on the stock.

Overview:

Parsippany, NJ-based The Medicines Company is a global biopharmaceutical company focused on advancing the treatment of critical care patients through the delivery of innovative, cost-effective medicines to the worldwide hospital marketplace. The company’s lead product, Angiomax (bivalirudin), which was acquired from Biogen Idec, Inc. in 1996, is used as an anticoagulant in patients undergoing coronary angioplasty. In late 2008, The Medicines Co. received approval for Cleviprex (clevidipine), an intravenous drug (calcium channel blocker) intended for the short-term control of blood pressure in patients undergoing cardiac surgery. A new formulation of Cleviprex was launched in Oct 2011.

In Aug 2014, Orbactiv (oritavancin), a novel, semi-synthetic lipoglycopeptide antibiotic gained FDA approval for the treatment of acute bacterial skin and skin structure infections (ABSSSIs) caused by susceptible designated gram-positive bacteria including methicillin-resistant staphylococcus aureus (MRSA). Orbactiv became a part of the company’s pipeline through its acquisition of Targanta Therapeutics in Feb 2009. The product launch is slated for the fourth quarter.

Late-stage pipeline candidates include Cangrelor, an intravenous antiplatelet, Ionsys, Raplixa and RPX-602. Ionsys (fentanyl iontophoretic transdermal system) is a compact, disposable, needleless patient-controlled analgesia (PCA) system for the short-term management of acute postoperative pain in the hospital setting. Ionsys became a part of the company’s portfolio following its acquisition of Incline Pharmaceuticals.

Raplixa, a dry powder topical formulation of fibrinogen and thrombin, is under FDA review for stopping bleeding during surgery. RPX-602, which became a part of The Medicines Co.’s portfolio following its Dec 2013 acquisition of Rempex Pharmaceuticals, Inc., is an improved formulation of Minocin IV for the treatment of infections caused by acinetobacter species. A regulatory application for RPX-602 will be submitted for FDA approval shortly with potential approval expected in the first half of 2015.

Apart from RPX-602, the Rempex acquisition added anti-infective assets like Carbavance and Minocin IV to The Medicines Co.’s portfolio. The company also acquired a preclinical developmental program of novel candidates. Carbavance, currently in phase III development with results due in 2016, has QIDP designation.

Minocin IV is being marketed by The Medicines Co. in the U.S. for resistant infections due to acinetobacter (multi-drug resistant gram-negative bacteria that is a growing problem across the world). Acinetobacter is mainly prevalent in intensive care units.

The company also has a licensing and collaboration agreement with Alnylam Pharmaceuticals for the development, manufacturing and commercialization of therapeutic products targeting the human PCSK-9 gene based on certain of Alnylam’s RNAi technology. A phase I study is slated to commence later this year/early next year (initial results due in mid-15).

In May 2014, The Medicines Co. acquired privately-held Tenaxis Medical, Inc. for an upfront payment of $58 million and future milestone payments that may amount to $112 million. Tenaxis’ sole product is approved in the U.S. as a vascular sealant. It is also approved in the EU as a surgical sealant meant for cardiovascular, general, urological, and thoracic surgery.

The Medicines Co. has an early-stage candidate in its pipeline – MDCO-216. The company acquired exclusive worldwide licensing rights to MDCO-216 from Pfizer Inc. MDCO-216 is a naturally occurring variant of a protein that could be used to reverse the development of arterial plaque development and reduce the risk of heart problems in patients with acute coronary syndrome (ACS).

The Medicines Co. licensed marketing rights in the U.S. and Canada to a ready-to-use formulation of Argatroban which has been developed by Eagle Pharmaceuticals, Inc., a specialty pharmaceutical company with expertise in drug development. Argatroban, currently approved in a concentrated formulation, is an anticoagulant for prophylaxis or treatment of thrombosis in patients with or at risk for heparin induced thrombocytopenia (HIT) and for patients with or at risk for HIT undergoing percutaneous coronary intervention (PCI). The ready-to-use formulation gained FDA approval in late Jun 2011.

The Medicines Co. has a worldwide development and collaboration agreement with AstraZeneca for acute ischemic heart disease compounds including Brilinta, Angiomax and Cangrelor. The company is also collaborating with Bristol-Myers Squibb for marketing Recothrom, an FDA approved recombinant thrombin used as a topical hemostat to control non-arterial bleeding during surgical procedures.

The Medicines Co. sells its products through its own sales force and distributors. The company also has a portfolio of 10 generic drugs (referred to as acute care generic products), for which it has non-exclusive marketing rights in the U.S.

In 2013, revenues totaled $687.9 million, consisting of Angiomax/Angiox sales of $608.6 million.

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