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The Medicines Company (MDCO - Free Report) recently announced that its two-year global collaboration agreement for Recothrom with Bristol-Myers Squibb (BMY - Free Report) has come into force. The two companies will jointly work for the commercialization of Recothrom products. The Medicines Co. will gain the right to market and sell the products.

The Medicines Co. expects the Recothrom deal to be accretive to 2013 earnings. At the time of announcing the deal, The Medicines Co. had said that it intends to seek approval in additional countries and expects US revenues to grow to $100 - $115 million in 2013.

Bristol-Myers will be responsible for manufacturing and supplying the product to The Medicines Co. The Medicines Co. has the option to acquire the Recothrom assets.

Recothrom is an FDA approved recombinant thrombin used as a topical hemostat to control non-arterial bleeding during surgical procedures. Recothrom was previously marketed in the US by Bristol-Myers and in Canada by Bayer’s (BAYRY - Free Report) HealthCare unit. It has patent exclusivity till early 2020 in the US.

We remind investors that the agreement was inked in Dec 2012. As per the terms of the agreement, The Medicines Co. made an upfront payment of $105 million to Bristol-Myers together with an option fee of $10 million. The company will also pay tiered royalties on product sales during the two-year collaboration period.

We are positive on the deal and believe that Recothrom’s inclusion has strengthened The Medicines Co.’s portfolio. The Medicines Co. carries a Zacks Rank #3 (Hold). However, other pharma stocks like Cempra Inc. look better-positioned. Cempra carries a Zacks Rank #2 (Buy).

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