We recently moved back to a Neutral recommendation on The Medicines Company (MDCO). The company received a major boost in 2010 regarding its Angiomax patent extension case. The US Patent and Trademark Office (PTO) extended the principal patent on Angiomax by a year to August 2011 and has been instructed to treat the patent extension application as having been filed on a timely basis.
While these developments removed a significant overhang from the stock, we believe the positive news regarding Angiomax are reflected in the stock price.
The Medicines Company recently reported 2010 earnings of $1.15 per share, in-line with the Zacks Consensus Estimate and well above the year-ago loss of $0.46. Performance was boosted by higher revenues and lower operating expenses. Full year revenues increased 8.3% to $437.6 million, well above expectations.
The Medicines Company’s lead product, Angiomax (bivalirudin), is a specific and reversible direct thrombin inhibitor that was launched in early 2001. Despite the challenging economic scenario which has led to hospitals and patients cutting down on costly procedures, Angiomax sales in 2010 were up 7.7% year over year in the US.
We are also pleased to see that management is actively pursuing in-licensing deals and acquisitions to drive growth. Deals include the acquisition of Germany-based Curacyte Discovery GmbH, the acquisition of Targanta Therapeutics and the acquisition of worldwide rights to MDCO-216 from Pfizer (PFE).
Our biggest concern with The Medicines Company is the generic risk being faced by Angiomax. Several generic players like Teva (TEVA), Hospira (HSP), Mylan (MYL) and APP Pharma are all seeking approval for their generic versions of the product. Angiomax is The Medicines Company’s lead product, accounting for 99.8% of total revenues in 2010.
HOSPIRA INC (HSP): Free Stock Analysis Report
MEDICINES CO (MDCO): Free Stock Analysis Report
MYLAN INC (MYL): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
TEVA PHARM ADR (TEVA): Free Stock Analysis Report
Zacks Investment Research
