MDCO Beats, Ties with AstraZeneca - Analyst Blog

By Zacks Equity Research,

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The Medicines Company ( MDCO ) reported first quarter earnings of 21 cents per share, including the impact of stock-based compensation expense. First quarter earnings, while well above the Zacks Consensus Estimate of 11 cents, declined 65% from the year-ago earnings.

Although first quarter 2012 revenues were higher, higher operating expenses led to the year-over-year decline in earnings. Revenues, up 12.9% at $126.6 million, were above the Zacks Consensus Estimate of $124 million.

The Quarter in Detail

Angiomax US sales increased 10% to $115.5 million during the first quarter. Ex-US sales increased 49% to $10.6 million, mainly due to increasing sales in Europe, especially the UK, the Nordic region, Benelux, Italy and Russia. The company said that sales in all three regions -- the US, Europe and Asia-Pacific - exceeded its targets.

There was some inventory stocking at US hospitals in December 2011 ahead of a price increase in January 2012. The Medicines Company said that about 70% of the buy-in was used up during the first quarter of 2012. The remaining is expected to be utilized by hospitals throughout the rest of 2012.

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.

The Medicines Company launched two new products/formulations in the third quarter of 2011 -- a ready-to-use formulation of Argatroban as well as a new formulation of Cleviprex (clevidipine). Argatroban, however, ran into some production problems in the fourth quarter of 2011. The company is working on resuming supply in April.

R&D spend increased 37.8% to $32.8 million. SG&A expenses increased 13.9% to $43.2 million.

2012 Guidance Maintained

The Medicines Company expects revenues to grow 9% - 11% in 2012. While sales in the US will be driven by Angiomax share gains in high-risk patients, the company expects growth in Europe to pick up as well.

R&D spend is expected to be about 20% of net revenues. A major part (60%) of the R&D dollars will be spent in the first half of the year mainly due to the phase III development of Cangrelor and oritavancin.

SG&A spend is expected to be flat to slightly up compared to 2011.

Pipeline Update

The Medicines Company also provided an update on its pipeline candidates. An interim analysis of the ongoing PHOENIX trial with Cangrelor is scheduled to take place in the third quarter.

Meanwhile, oritavancin is in a phase III program, SOLO (SOLO-1 and SOLO-2), for the treatment of acute bacterial skin and skin structure infections (ABSSI). The Medicines Company has accelerated the SOLO-1 trial and expects to present results in the fourth quarter. If results are positive, the company intends to speed up the other study, SOLO-2, so that a new drug application (NDA) can be filed in mid-2013.

The company intends to file for approval of MDCO-157 using a Section 505(b)(2) NDA in 2015. Clinical studies are expected to commence in 2012. MDCO-157 is a Captisol-enabled intravenous (IV) formulation of clopidogrel (the active ingredient in Plavix).

Signs Deal with AstraZeneca

In addition to announcing first quarter results, The Medicines Company entered into a worldwide development and collaboration agreement with AstraZeneca ( AZN ) for acute ischemic heart disease compounds including Brilinta, Angiomax and Cangrelor.

The Medicines Company's sales force will start promoting AstraZeneca's anti-platelet treatment, Brilinta, from May 2012. Brilinta is already being promoted by AstraZeneca's sales force in the US.

The Medicines Company's strong presence in the hospital setting should help drive Brilinta sales. During the 4-year co-promotion period, The Medicines Company will receive $15 million per year for accomplishing pre-agreed commercialization activities. The company could receive up to an additional $5 million per year on the achievement of performance thresholds.

We are positive on the AstraZeneca deal, which should bring in additional revenues without The Medicines Company being required to increase its sales force.

ASTRAZENECA PLC ( AZN ): Free Stock Analysis Report
BIOGEN IDEC INC ( BIIB ): Free Stock Analysis Report
MEDICINES CO ( MDCO ): Free Stock Analysis Report
PFIZER INC ( PFE ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AZN , BIIB , MDCO , PFE

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