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The Medicines Company (MDCO - Analyst Report) recently exercised its option to purchase all the outstanding capital stock of Dutch company, ProFibrix B.V.

The company exercised its option following the announcement of positive phase III data on Fibrocaps, ProFibrix' lead biologic. Fibrocaps, a dry powder topical formulation of fibrinogen and thrombin, is being developed to halt bleeding during surgery.

In the pivotal FINISH-3 study, Fibrocaps met all primary and secondary hemostasis efficacy endpoints in four separate surgical indications - spinal surgery, hepatic resection, soft tissue dissection and vascular surgery.

The Medicines Co. believes these results will support regulatory filings in the U.S. (first quarter of 2014) and the EU (fourth quarter of 2013). Fibrocaps, if approved, may have an advantage over existing products, as it can be used at room temperature and does not require thawing before use. The Medicines Co. believes that Fibrocaps peak sales could exceed $300 million provided it gains approval in major markets.

With The Medicines Co. deciding to exercise its option, all outstanding equity of ProFibrix was acquired for an upfront payment of $90 million. Additional payments of up to $140 million may be made on the achievement of U.S. and EU regulatory approvals and sales milestones.

Our Take

This acquisition makes strategic sense – the successful launch of Fibrocaps will allow The Medicines Co. to strengthen its position in the hemostasis market. Moreover, the company will be able to leverage its activities in surgery centers in the U.S. and speed up its entry in Europe.

We note that The Medicines Co. has an agreement with Bristol-Myers Squibb (BMY) for marketing Recothrom, an FDA approved recombinant thrombin used as a topical hemostat to control non-arterial bleeding during surgical procedures.

The Medicines Co. currently carries a Zacks Rank #4 (Sell). At present, companies like Biogen Idec (BIIB) and Anika Therapeutics look well-positioned with both being Zacks Rank #1 (Strong Buy) stocks.

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