Biotech Values

[DewDiligence]

MDCO has evidently thrown in the towel on getting
a U.S. patent extension for Angiomax. Thus the
U.S. patent is set to expire in 2010 (instead of 2015,
as it would have had MDCO not screwed up its
application to the USPTO for a 5-year extension).
So what does MDCO do to appease investors?
They buy out their Angiomax distributor in
Europe, where the patent runs until 2015. The only
problem: Angiomax isn’t selling worth a damn in
Europe due to its premium price. The move isn’t
working so far: MDCO is down about 7% today.

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070702:MTFH51420_2...

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Medicines Co Buys Back Rights of Drug, Cuts Sales View

Mon Jul 2, 2007 12:19 PM ET
By Varsha Tickoo

BANGALORE, July 2 (Reuters) - Medicines Co. <MDCO> said it bought back all European rights for its anti-clotting drug from Denmark's Nycomed, and cut its sales outlook for the drug citing a decline in angioplasty volumes in the United States.

"We've not necessarily seen the same acceptance of the product in Europe that we've seen in the United States and we think we can take a more global approach," Medicines President and Chief Operating Officer John Kelley said.

Kelley said the Danish company's recent acquisition of German chemical giant Altana's <ALTG.DE> pharmaceutical business had changed Nycomed's strategic focus and was taking it in a different direction.

"We had started to have discussions with (Nycomed) because ... we were interested in starting to look at putting our own infrastructure in place in Europe," Kelley said by phone.

"In a sense it will be the launch of the company in Europe, and a re-launch of Angiox," a Medicines official said in a conference call with analysts.

Angiox is the drug's brand name in Europe. In the United States, it is called Angiomax.

The announcement comes as the company prepares for the drug's patent expiration in the Unites States set for 2010, while the European patent runs through 2015.

The company had sought patent extension for the drug beyond 2010, but the U.S. Patent and Trademark Office turned that request down in April.

"We're still evaluating what the appropriate actions might be," Kelley said on the strategy for a possible appeal.

The drug, chemically called bivalirudin, is the company's only product on the market. There are two other key drugs in the company's pipeline, which focuses on acute-care products.

OUTLOOK CUT

Medicines cut its 2007 sales view to between $255 million and $267 million, compared with its earlier view of $276 million to $286 million. Analysts were expecting the company to have revenue of $280.6 million for 2007, according to Reuters Estimates.

Nycomed will not order the drug during the second half of 2007, Medicines said, resulting in a cut in full-year estimate on international revenue. It now sees $5 million to $7 million in international revenue, down from $10 million earlier.

By 2011, Medicines expects full-year international sales of Angiox to be $90 million to $110 million, and sees the growth being sustained further "regardless of what happens with the U.S. patent for Angiomax."

Medicines also expects a 15 cents to 20 cents a share impact on after-tax net income before amortization of transaction costs in 2008, largely due to expenses related to commercializing Angiox in Europe.

REIMBURSEMENT PAYMENT

Medicines would pay Nycomed $20 million now and another $20 million in 2008. Medicines would also pay $5 million if European health regulators approve an expanded label for Angiox to include findings of a trial.

Medicines would get added revenue from the sales of Angiox from July 1, but would also begin to incur operating expenses from that time including reimbursement to Nycomed for its services aiding the transition through the remainder of 2007. It expects to pay about $10 to $12 million to Nycomed.

Sales operations would transition to the company by the end of 2007, and product distribution during 2008, Parsippany, New Jersey-based Medicines said in a statement.
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