The Medicines Company (MDCO)

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The Medicines Company (MDCO)

Q2 2008 Earnings Call Transcript

July 23, 2008 8:30 am ET


Robyn Brown – VP, IR

Clive Meanwell – Chairman and CEO

Glenn Sblendorio – EVP and CFO

John Kelley – President and COO


Maged Shenouda – UBS

Joseph Schwartz – Leerink Swann

Liana Moussatos – Pacific Growth Equities

Steve Harr – Morgan Stanley

Jason Kantor – RBC Capital Markets

Biren Amin – Stanford Group

Lucy Lu – Citigroup

Matt Duffy – BDR Research



We are about to begin. Hello, and welcome to the Medicines Company’s second quarter 2008 earnings call. My name is Dana, and I will be the operator for today’s conference. As a reminder, today’s call is being recorded and we will have a question-and-answer session immediately following the prepared remarks. I will now turn the call over to Ms. Robyn Brown, Vice President of Investor Relations.

Robyn Brown

Thank you, Dana, and welcome, everyone, to the Medicines Company’s second quarter 2008 earnings conference call. I am Robin Brown, Vice President of Investor Relations. This morning, I am joined by Glenn Sblendorio, our Executive Vice President and Chief Financial Officer, who will review our financial results and update our guidance for 2008; John Kelly, our President and Chief Operating Officer, who will provide an operating review; and, Clive Meanwell, our Chairman and Chief Executive Officer, who will make some opening remarks, and then moderate a Q&A session at the end of the call.

I would like to remind you that this conference call would contain forward-looking statements, which involve a number of risks and uncertainties. Important that could cause actual results to differ materially from those indicated by such forward-looking statements are identified in the Company’s SEC filings, including the 10-Q filed with the SEC on May 12th, 2008, which is incorporated here and by reference. I would also note that during the call, we may refer to non-GAAP measures, which includes stock-based compensation expense and the non-cash provision for income taxes. Please refer to the non-GAAP reconciliation tables in our press release and the 2Q ’08 conference call summary fact sheet on our Web site.

Now, I’ll turn the call over to Clive Meanwell.

Clive Meanwell

Thank you very much, Robin. Before we get on to the business results, we thought we would give you an update on the situation in Washington DC where, understandably, investors and analysts continue to show interest in legislation currently before the United States Senate concerning discretionary powers to the patent trademark, of which to consider Hatch-Waxman (inaudible) that are made outside the current 60-day deadline.

Our advocacy of this change in law is based on in-depth, scholarly, and pragmatic analysis of patent healthcare policies in the United States. Lawmakers have made these discussions seriously in both the House and the Senate in about three to four years, and good progress has been made.

The House Bill HR6344 was passed unanimously in late June. This is by part is in legislation that in various forms have been approved twice by the full House of Representatives, and once by the Senate Judiciary Committee. The subject matter was reviewed by Congressional Committee in September 2006. The Congressional (inaudible) on the potential impact on the US Treasury. The Congressional Record of Regular Order was, therefore, very strong. In essence, it would give the PTO authority to excuse and slightly late filings of applications of patents and restoration under the Hatch-Waxman Act.

The principal argument is well known by those in Washington DC who have taken the time to consider the legislation on its merits. Regarding (inaudible) policy, the existing deadline imposed is immensely disproportional to penalty for a minor filing error. Imagine if you lost the mortgage on your house for paying that’s one day late. The loss of up to five years of (inaudible) earned the patent protection of filings for even one day late seems similarly disproportioned. Furthermore, add the step with the discretion allowed by almost all other patent law provisions.

Regarding public health policy, the deadline provision can have terrible public health consequences as illustrated by Angiomax. Based on investments made by this firm as others for many years under the law, we are entitled to four and a half years of patent restoration. Reconsideration of the application was denied because it was filed a day late.

Angiomax has shown real promise when you use it beyond what FDA has approved so far, open heart surgery, the prevention of treatment of stroke, and the treatment for coronary artery disease, to name a few, but securing approval will take costly and time consuming trials, of course. If the patent expires, assuming pediatric extension, which we do anticipate in late 2010, rather 2015, new research simply can’t get done, not by us, the patent holder, or anyone else because investments could never be recouped, and certainly it wouldn’t be done by the generic industry.

This would be a huge loss to patients, particularly since Angiomax is a promising substitute for the standard blood thinner, Heparin, which -- as this year’s scam in China has shown with over 100 dead bodies in the highly problematic drug. Even when it’s made properly, it’s essentially is with significant risk of severe allergy.

The public health problem illustrated by Angiomax will be repeated with other drugs as well since its common to patent holders of these new uses of their drug if they were able to recoup the large investment needed for the research. Almost all of the today’s important new specialized drugs follow this step-wide path. In short, translating from cyclical patent terms has a large public healthcare cost.

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