We recently reiterated a Neutral recommendation on The Medicines Company (MDCO), which carries a Zacks #3 Rank (short-term Hold rating). The Medicines Company reported a first-quarter profit of 60 cents per share, well above the Zacks Consensus Estimate of 39 cents and the year-ago profit of 19 cents.
Performance was boosted by higher revenues. Revenues, up 9.8% at $112.1 million, surpassed the Zacks Consensus Estimate of $110 million.
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 the first quarter of 2011 were up 9.7% year over year in the US.
The Medicines 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.
Moreover, the US Government decided against appealing the Court’s decision. These developments removed a significant overhang from the stock.
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 its lead product Angiomax. Several generic players like Teva (TEVA), Hospira (HSP), Mylan (MYL), Dr. Reddy’s (RDY) 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.
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