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The Medicines Company (MDCO)
Q4 2008 Earnings Conference Call
February 18, 2009 8:30 am ET
Dr. Clive A. Meanwell - Chairman, Chief Executive Officer
John P. Kelley - President and Chief Operating Officer
Glenn P. Sblendorio - Executive Vice President and Chief Financial Officer
Robyn Brown - Vice President, Investor Relations
Mona Ashiya - J.P. Morgan
Joseph Schwartz - Leerink Swann
Matt Duffy - BDR Research
Liana Moussatos - Pacific Growth Equities
Steve Harr - Morgan Stanley
Lucy Lu - Citigroup
Maged Shenouda - UBS
Previous Statements by MDCO
» The Medicines Company Q3 2008 Earnings Call Transcript
» The Medicines Company Q2 2008 Earnings Conference Call Transcript
» The Medicines Company Q1 2008 Earnings Conference Call Transcript
Thank you Mary, and welcome everyone to The Medicines Company fourth quarter and full year 2008 earnings call. This morning I am joined by Dr. Clive Meanwell, our Chairman and Chief Executive Officer, who will discuss our strategy and moderate a Q&A session at the end of the call; John Kelley, our President and Chief Operating Officer, who will provide an overview of 2008 operating results; and Glenn Sblendorio, our Executive Vice President and Chief Financial Officer, who will review our financial results, update the status of the Targanta acquisition, and provide guidance for 2009.
I would like to remind you that this conference call will contain statements about The Medicines Company that are not purely historical, and all other statements that are not purely historical may be deemed to be forward-looking statements, which involve a number of risks and uncertainties. Without limiting the foregoing, the words ‘believe,’ ‘anticipate,’ and ‘expect’ and similar expressions including our 2009 guidance are intended to identify forward-looking statements.
Important factors that can cause actual results to differ materially from those indicated by such forward-looking statements are identified in the company’s SEC filings including the Form 10-Q filed with the SEC on November 10, 2008. Copies of our SEC filings can be obtained from the SEC or by visiting the Investor Relations section of our website.
I would also note that during the call, we may refer to non-GAAP measures which exclude the impact of the Curacyte Discovery acquisition, stock-based compensation expense, the non-cash provision for income taxes, and the impact of the Nycomed transaction. Please refer to the non-GAAP reconciliation tables in our press release and the 2008 conference call summary fax sheet on our website.
Now, I will turn the call over to Dr. Clive Meanwell.
Dr. Clive A. Meanwell
Good morning to everybody. Our plan has been to build a leading critical care hospital medicines business not only in the United States, but now worldwide. In 2008, we made substantial progress. We aim to deliver economically dominant products. This is now a basic requirement to lead market share in the 2650 hospital institutions that provide more than 80% of worldwide critical care services. Our plan is working; with just $298 million of net shareholder equity, we have built a portfolio of development compounds and commercial hospital products. We have also built an organization that today serves 1200 hospitals in the US, we’ve geared up for 550 more in Europe, and over the next 5 years we expect to reach most of the remaining 900.
With these assets and capabilities, we delivered 58% compound annual growth rate in net revenue since 2001, more than $100 million in positive operating cash flow since 2006, and 33% KEGA in operating profits for the last three years by which I mean the money we made from operations excluding certain non-cash items and deal costs. We believe going forward we can deliver sustainable growth and I would like to give a medium-term perspective on The Medicines Company for you.
Our current business plan, which is the basis for our medium-term projections and outlook, includes the following assumptions and estimates. Angiomax net revenue in the United States grows quarterly until the entry of generic competitors in September 2010. We assume the list of generic competitors will not be long, but nevertheless, for planning purposes, we also assume an aggressive 50% generic erosion curve based on published information and our analysis of historical data for similar products.
Angiox and Angiomax net revenues outside the United States grow until the currently projected EUX sensitivity period ends in 2015. Now that we are working in Europe, we are in a better position to estimate that XUS revenue for Angiox can grow to $200 million per year.
Based on these estimates, Angiomax plus Angiox worldwide sales are expected to grow until the fourth quarter of 2010 in this scenario, max out around $500 million that year, then remain in the range $325 million down to $280 million dollar per year from 2011 through 2015 while US sales erode due to generics and XUS sales continue to grow under exclusivity provisions that are already in place. In this scenario, we will continue to support the brand competitively worldwide.
Other sources of revenue should also be considered in the medium term. Even after a slow start, which we also saw in the early months for Angiomax, as we have stated previously, we expect Cleviprex to grow annual net sales to $200 million by the fifth full year after launch. Assuming success with clinical trials and regulatory approvals, which are of course subject to risk, other sources of revenue may be anticipated by 2011 from cangrelor and our planned acquisition of Targanta provides us with another phase III compound that has the potential to reach the market the following year in the United States.