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Revs Up at The Medicines Company

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The Medicines Company (MDCO - Free Report) reported third quarter earnings of 32 cents per share, well above the year-ago earnings of 12 cents per share. The Zacks Consensus Estimate for third quarter earnings was 22 cents per share.

Third quarter 2012 revenues came in at $136.8 million, up 13.3% and just above the Zacks Consensus Estimate of $136.0 million. Angiomax’ strong performance led to the increase in revenues.

The Quarter in Detail

Angiomax US sales increased 11.4% to $123.8 million during the third quarter. Ex-US sales increased 8.1% to $10.0 million.

Angiomax, acquired from Biogen Idec Inc. (BIIB - Free Report) , is the lead product at The Medicines Company. Acquired in 1996, Angiomax is used as an anticoagulant in patients undergoing coronary angioplasty.

The Medicines Company also earned revenues of $3.8 million from its co-promotion agreement with AstraZeneca (AZN - Free Report) for Brilinta in the US. The company has a worldwide development and collaboration agreement with AstraZeneca for acute ischemic heart disease compounds including Brilinta, Angiomax and Cangrelor.

Research and development (R&D) spend increased 30.1% to $34.5 million. The increase in R&D spend reflects accelerated spending for the Cangrelor PHOENIX study and the oritavancin SOLO -1 trial. The Medicines Company said that it has finished enrolling patients in both studies. Selling, general and administrative (SG&A) expenses, however, decreased 4.3% to $43.4 million.

2012 Guidance

The Medicines Company said that it now expects to achieve revenue growth towards the upper end of its guidance range of 11%–12%.

Given the completion of enrolment for the PHOENIX and SOLO -1 studies, the company expects global regulatory activities to speed up in the fourth quarter. As a result, the company expects additional R&D costs of about $3 - $4 million in 2012.

Pipeline Update

The Medicines Company also provided an update on its pipeline candidates. The company finished enrolling patients for the Cangrelor PHOENIX trial. Top-line results will be presented in the first quarter of 2013.

Meanwhile, oritavancin is in a phase III program, SOLO (SOLO-1 and SOLO-2), for the treatment of acute bacterial skin and skin structure infections (ABSSI). The Medicines Company has finished enrolling patients in the SOLO-1 trial and expects to present results in the first quarter of 2013.

The Medicines Company intends to file MDCO-157 for approval using a Section 505(b) (2) NDA in 2013. Clinical studies commenced in September. MDCO-157 is a Captisol-enabled intravenous (IV) formulation of clopidogrel (the active ingredient in Plavix).

We currently have a Neutral recommendation on The Medicines Company, which carries a Zacks #3 Rank (short-term ‘Hold’ rating). We expect Angiomax to continue performing well. The settlement agreements regarding Angiomax are also positive events. Moreover, we are pleased to see management actively pursuing in-licensing deals and acquisitions to drive growth. The AstraZeneca deal is a smart move by the company.

While we are pleased with The Medicines Company’s efforts to develop its pipeline, we were disappointed to hear about the discontinuation of the development of phase II candidate, MDCO-2010. Going forward, we expect investor focus to remain on the presentation of top-line results from the PHOENIX and SOLO -1 studies.

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