The Medicines Company
) recently signed two agreements in a bid to boost its top line.
While one agreement relates to the in-licensing of a product, the
other is an acquisition deal. Both deals will see the company
making upfront payments totaling $300 million.
Under the first agreement, The Medicines Co. is collaborating
) for marketing Recothrom, an FDA approved recombinant thrombin
used as a topical hemostat to control non-arterial bleeding
during surgical procedures.
The Medicines Co. will make an upfront payment of $105 million
plus an option fee of $10 million along with tiered royalties on
product sales during the two-year collaboration period.
Bristol-Myers will be responsible for manufacturing and supplying
the product to The Medicines Co. The Medicines Co. has the option
to acquire the Recothrom assets.
While Bristol-Myers expects the deal to be minimally earnings
accretive in 2013 and 2014, The Medicines Co. expects the deal to
be earnings accretive from 2013. Recothrom, which generated
revenues of $65 million in 2011 and is expected to post sales of
$70 million in the US alone in 2012, is available in the US and
Canada. The Medicines Co. intends to seek approval in additional
countries and expects US revenues to grow to $100 - $115 million
Moving to the second agreement, The Medicines Co. announced
its intention to acquire Incline Therapeutics, Inc., a
hospital-focused specialty pharmaceutical company. With this
acquisition, Ionsys (fentanyl iontophoretic transdermal system)
will become a part of The Medicines Co.'s portfolio.
Ionsys is a compact, disposable, needleless patient-controlled
analgesia (PCA) system which is being developed for the
short-term management of acute postoperative pain in the hospital
We note that Ionsys was approved by the European and US
regulatory agencies and subsequently launched in Europe. However,
the system was recalled voluntarily in Europe due to device
stability issues and was never launched in the US. The Medicines
Co. is looking to re-submit the regulatory applications in the
near term and maybe launch the product in the US in early 2014
and the EU in 2015. The Medicines Co. is forecasting peak sales
of $800 million for Ionsys.
Both companies' boards have approved the deal under which The
Medicines Co. will shell out $185 million upfront to be followed
by additional payments of up to $205 million on the achievement
of regulatory and commercial targets. With The Medicines
Co. planning to invest in manufacturing and technical development
as well as regulatory requirements for Ionsys, the Incline
Therapeutics acquisition is expected to be modestly dilutive in
We are positive on both deals - Recothrom and Ionsys are
strategic fits for The Medicines Co.'s portfolio and should
strengthen the company's perioperative surgical franchise. While
Recothrom should drive near-term top-line growth, Ionsys, once
commercialized, should support long-term growth. We currently
have a Neutral recommendation on The Medicines Co., which carries
a Zacks #4 Rank (Sell). However, other companies like
) carry a Zacks #1 Rank (Strong Buy).
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