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The Medicines Co. Up on Narrower-than-Expected Loss in Q3

The Medicines Company MDCO reported a loss of 82 cents per share in the third quarter of 2015. The company had reported earnings of 18 cents per share in the year-ago period. Including the impact of share-based compensation expense, The Medicines Co. reported a loss of 94 cents per share in the third quarter of 2015, narrower than the Zacks Consensus Estimate of a loss of 97 cents. The Medicines Co.’s shares were up 10.4% following the release of third-quarter results.

Third-quarter 2015 revenues plunged 57.8% year over year to $72.7 million, marginally below the Zacks Consensus Estimate of $73 million. Total net revenues for the third quarter of 2015 also include royalty revenues of $24.5 million, derived from the gross profit of authorized generic sales of Angiomax by Novartis AG’s NVS generic arm, Sandoz, Inc.

The Quarter in Detail

Angiomax U.S. sales slumped 69.8% to $43.3 million, reflecting the loss of exclusivity. Worldwide sales of Angiomax too were down almost 69% to $47 million during the reported quarter.

Recothrom sales totaled $15.4 million, down 8.3% from the year-ago period.

Sales of other products like Cleviprex, Argatroban, Minocin injection, Orbactiv, Kengreal and PreveLeak surged almost 124% from the year-ago period to $10.3 million.

While research & development (R&D) expenses decreased 9.6% to $30.1 million, adjusted selling, general and administrative spend increased 17.5% to $81.8 million.

On the third quarter call, The Medicines Co. announced a restructuring program which will include exploring options for optimizing the company's capital structure and liquidity position. In addition, the company announced the divestiture of its three approved hemostatic agents, most likely in more than one transaction and the divestiture of certain non-core products and businesses in order to generate non-dilutive cash and eliminate associated cash burn and capital requirements in the next 3–4 months.

Currently, the company is focusing on the launch of its recently approved products including Kengreal (antiplatelet agent), Ionsys (acute postoperative pain), Orbactiv (infection) and a new formulation of Minocin IV (infection). The company has also cut down its commercial resources by reducing expenses related to Angiomax in different fields (R&D and promotional activities) and has redeployed the Angiomax sales force to support the launch of Kengreal and support Cleviprex.

Meanwhile, The Medicines Co. reiterated the revenue and R&D guidance for 2015.

Our Take

The Medicines Co.’s third-quarter results were mixed with the company posting a narrower-than-expected loss and revenues falling year over year. We are encouraged by the company’s focus on the launch of its newly approved products. These drugs should help lessen the impact of the loss of Angiomax revenues. We expect investor focus to remain on the sales ramp-up of new products and the company’s progress with its restructuring plans.

The Medicines Co. is a Zacks Rank #3 (Hold) stock. A couple of better-ranked stocks in the health care sector are Actelion Ltd. ALIOF and Baxalta Incorporated BXLT. Both carry a Zacks Rank #1 (Strong Buy).

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