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Medicines Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2012 04:49PM

Medicines Company (MDCO) filed Quarterly Report for the period ended 2012-03-31. Medicines Co has a market cap of $1.19 billion; its shares were traded at around $21.66 with a P/E ratio of 30.8 and P/S ratio of 2.5.



Highlight of Business Operations:

On April 25, 2012, we entered into a global collaboration agreement with AstraZeneca pursuant to which we and AstraZeneca have agreed to collaborate globally to develop and commercialize certain acute ischemic heart disease compounds. Under the terms of the collaboration agreement, a joint development and research committee and a joint commercialization committee have been established to prepare and deliver a global development plan and a country-by-country collaboration and commercialization plan, respectively, related to BRILINTA and Angiomax and cangrelor. Implementation of these plans is subject to agreement between both parties. The first joint activity agreed upon by the parties under the global collaboration is a four-year co-promotion arrangement for BRILINTA in the United States. Pursuant to the agreement, our sales force will begin supporting promotion activities for BRILINTA in May 2012. Under the terms of the agreement, AstraZeneca will pay us $2.5 million for conducting BRILINTA co-promotion activities during the period from the effective date of the agreement through June 30, 2012, $7.5 million in base consideration for conducting BRILINTA co-promotion activities during the period from July 1, 2012 to December 31, 2012, plus up to $2.5 million in additional consideration for the same period, contingent upon the number of new prescriptions written during that period, $15.0 million in base consideration per year from 2013 through 2015 for conducting BRILINTA co-promotion activities, plus up to an additional $5.0 million per year from 2013 to 2015 if certain performance targets with respect to new prescriptions are achieved and $7.5 million in base consideration for conducting BRILINTA co-promotion activities during the period from January 1, 2016 until June 30, 2016, plus up to an additional $2.5 million in additional consideration for the same period if certain performance targets with respect to new prescriptions are achieved. We and AstraZeneca have not agreed as to any development and commercialization activities to be performed with respect to Angiomax and cangrelor or as to any terms under which such activities would be performed.

Net revenue increased by $14.5 million, or 12.9%, to $126.6 million in the three months ended March 31, 2012 compared to $112.1 million in the three months ended March 31, 2011, reflecting increases of $11.0 million or 10.5% in the United States, and $3.5 million or 48.8% in international markets. The net revenue increase was comprised of net volume increases of $4.7 million and price increases of $9.9 million, which were offset by the unfavorable impact from foreign exchange of $0.1 million.

Angiomax. Net revenue from sales of Angiomax increased by $14.0 million or 12.5% to $126.1 million in the three months ended March 31, 2012 compared to $112.1 million in the three months ended March 31, 2011, primarily due to a price increase in the United States and increased unit sales globally. Net revenue in the United States in both the three months ended March 31, 2012 and 2011 reflect chargebacks related to the 340B Drug Pricing Program under the Public Health Services Act and rebates related to the PPACA. Under the 340B Drug Pricing Program, we offer qualifying entities a discount off the commercial price of Angiomax for patients undergoing PCI on an outpatient basis. Chargebacks related to 340B Drug Pricing Program increased by $0.5 million to $9.4 million in the three months ended March 31, 2012 compared to $8.9 million in the three months ended March 31, 2011, primarily due to increased usage by eligible hospital customers. Rebates related to the PPACA were $0.2 million in both the three months ended March 31, 2012 and March 31, 2011. Net revenue from sales of Angiomax outside the United States increased in the three months ended March 31, 2012 compared to the three months ended March 31, 2011 due to greater demand by existing hospital customers and the addition of new hospital customers in Russia, the United Kingdom, Italy, Denmark, Spain, France, Germany, the Netherlands, Australia and Israel.

Cost of revenue in the three months ended March 31, 2012 was $38.7 million, or 31% of net revenue, compared to $35.6 million, or 32% of net revenue, in the three months ended March 31, 2011.

Net cash used in operating activities was $15.0 million in the three months ended March 31, 2012, compared to net cash provided by operating activities of $19.0 million in the three months ended March 31, 2011. The cash used in operating activities in the three months ended March 31, 2012 included net income of $7.6 million and non-cash items of $4.6 million consisting primarily of stock-based compensation expense and depreciation and amortization, which were offset by a $27.3 million decrease resulting from changes in working capital items. The changes in working capital items reflect a decrease in accounts payable and accrued expenses of $29.2 million primarily due to payments related to inventory of active pharmaceutical ingredient bivalirudin and payment of certain corporate expenses, a decrease in accounts receivable of $7.1 million, which was due in part to the timing of receipts and related sales volume, and an increase in inventory of $4.8 million due to purchases under our supply agreement with Teva API, Inc., or Teva API, which was formerly known as Plantex USA Inc., of certain minimum quantities of the active pharmaceutical ingredient bivalirudin for our commercial supply.

Read the The complete Report



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