The Medicines Co.'s (MDCO) Q2 Earnings Decline Y/Y


The Medicines Co.’s (MDCO) second-quarter earnings of 31 cents per share were well below the year-ago earnings of 50 cents per share. Including the impact of stock-based compensation expense, second-quarter 2014 earnings stood at 18 cents per share, below the year-earlier earnings of 44 cents. The Zacks Consensus Estimate for the second quarter of 2014 was a loss of 7 cents per share.

The company’s second quarter 2014 revenues rose 6.3% year over year to $183.8 million, missing the Zacks Consensus Estimate of $185 million.

Including one-time items, the company reported a loss of 8 cents per share compared to the year-ago earnings of 30 cents per share.



The Quarter in Detail

Angiomax U.S. sales increased 10.4% to $152.2 million. Ex-U.S. sales of Angiomax were $10.9 million during the quarter.

Recothrom sales in the U.S. totaled $16.3 million, down 8.9% from the year-ago period. Net U.S. sales of The Medicines Co.’s Ready-to-Use Argatroban, Cleviprex, Minocin IV, the Tenaxis surgical sealant and the generic portfolio came in at $4.4 million in the second quarter of 2014.

While adjusted R&D spend grew 21.4% to $32.8 million, SG&A spend increased 67.6% to $88.7 million.

Our Take

Although Angiomax continues to perform well, we remain concerned about patent challenges from Hospira (HSP) and Mylan (MYL). The Medicines Co. suffered a setback in late March when the U.S. District Court of Delaware issued a trial opinion that Hospira’s generic version of Angiomax does not infringe one of the patents. Angiomax is the company’s lead product, with U.S. sales accounting for almost 80% of total revenues in 2013. Needless to say, the earlier-than-expected entry of generics would be a major setback for the company.

We expect investor focus to remain on the Hospira and Mylan patent challenges. Meanwhile, The Medicines Co. has an important regulatory event coming up with the FDA expected to respond on the approval status of its antibiotic candidate, Orbactiv (oritavancin) by Aug 6.

The Medicines Co. is a Zacks Rank #1 (Strong Buy) stock. An equally well-ranked stock in the biotech sector is Biogen Idec (BIIB). Hospira also carries a Zacks Rank #1.

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