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The Medicines Co. Earnings Down Y/Y, Angiomax Sales Grow

MDCO CYTK

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The Medicines Co.’s (MDCO - Free Report) earnings of 7 cents per share in the fourth quarter of 2014 were below the year-ago earnings of 12 cents per share. Excluding the impact of stock-based compensation expense, fourth-quarter 2014 earnings stood at 20 cents per share, below the year-ago earnings of 23 cents per share. The Zacks Consensus Estimate for the fourth quarter of 2014 was at a loss of 84 cents per share.

Fourth-quarter 2014 revenues increased 3.2% year over year to $191 million on the back of higher Angiomax sales. Revenues were also above the Zacks Consensus Estimate of $189 million.

In 2014, The Medicines Co.’s earnings of 51 cents per share were below the year-ago earnings of $1.13 per share. Excluding the impact of stock-based compensation expense, 2014 earnings stood at $1.02 per share, below the year-ago earnings of $1.50 per share. The Zacks Consensus Estimate for 2014 was at a loss of $1.23 per share. In 2014, revenues increased 5.3% to $724.4 million above the Zacks Consensus Estimate of $722 million.

The Quarter in Detail

Total Angiomax sales were $165.9 million, up 3.1% year over year driven by higher sales in the U.S. During the quarter, U.S. sales of Angiomax increased 10.6% to $157.5 million.

Recothrom sales in the U.S. totaled $17.9 million, down 9.1% from the year-ago period. Sales of other products like Argatroban RTU, Cleviprex, Minocin injection, Orbactiv and PreveLeak surgical sealant amounted to $7.2 million up 24.3% from the year-ago period.

Both Minocin and Orbactiv were launched in the U.S. in Oct 2014.

R&D expenditure increased 11.6% to $43 million. Adjusted SG&A spend was up 36% to $90.1 million.

Our Take

While Angiomax remains the growth driver at The Medicines Co., we are concerned about the patent challenges on the product from companies like Hospira . An earlier-than-expected entry of generic versions of Angiomax would be a major setback for the company. Moreover, in Aug 2015, Angiox (trade name for Angiomax in Europe) is also set to lose exclusivity in the EU.

We are, however, encouraged by the positive recommendations from the Committee for Medicinal Products for Human Use (CHMP) on the approval of Orbactiv, Raplixa (sealant powder) and Kengrexal (cangrelor). The company is awaiting final decisions on the approval of these products in the EU in the second quarter of 2015.

2015 is expected to be an important year for the company with several pending results. The company’s pipeline needs to deliver to offset the losses after Angiox loses its exclusivity.

The Medicines Co. carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Affymetrix Inc. and Cytokinetics, Inc. (CYTK - Free Report) . Both stocks carry a Zacks Rank #1 (Strong Buy).





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