The Medicines Company Reports Third Quarter 2008 Financial Results

22 Oct 2008

PARSIPPANY, N.J.--(BUSINESS WIRE)--

The Medicines Company (NASDAQ: MDCO) today announced its financial results for the third quarter and first nine months of 2008.

    Highlights for the third quarter of 2008:

    --  Net revenue increased by 42% to $88.1 million for the third
        quarter of 2008 from $62.2 million for the third quarter of
        2007.
        -- Angiomax(R) (bivalirudin) U.S. sales increased by 40% to
         $85.0 million for the third quarter of 2008 from $60.7
         million for the third quarter of 2007.

        -- Angiomax/Angiox international net revenue in the third
         quarter of 2008 increased $1.6 million to $3.1 million
         compared to $1.5 million in the third quarter of 2007.
    --  Cleviprex(TM) (clevidipine butyrate) was approved on August 1,
        2008 and launched in the U.S. on September 15, 2008. Initial
        gross wholesaler orders, which totaled $10.0 million, were
        recorded as deferred revenue. These amounts were not
        recognized as net revenue during the third quarter of 2008,
        but will be recognized as net revenue in the future subject to
        various adjustments.

    --  Curacyte Discovery GmbH ("Curacyte"), acquired on August 11,
        2008 for $23.7 million, has been integrated to form the basis
        for research capability, and its lead compound CU-2010 is
        moving toward clinical studies. Approximately $21.4 million of
        this acquisition investment was expensed as in process
        research and development.

    --  Net loss for the third quarter of 2008, primarily related to
        the Curacyte acquisition was $13.2 million, or $0.25 per
        share, compared to net loss of $23.6 million, or $0.46 per
        share, primarily due to the Nycomed transaction in the third
        quarter of 2007.

    --  The Company reported third quarter of 2008 non-GAAP net income
        of $8.5 million, or $0.16 per share, compared to non-GAAP net
        income of $6.3 million, or $0.12 per share, for the third
        quarter of 2007. Non-GAAP net income excludes the Curacyte
        acquisition, the Nycomed transaction, stock-based compensation
        expense and non-cash income taxes.

John Kelley, President and Chief Operating Officer, stated, "We are pleased to report another successful quarter of executing on our strategy. Angiomax is gaining market share across the spectrum of PCI patients, which is translating into solid top-line sales growth both in the U.S. and internationally. We continue to make progress in building our European organization, with an expected roll out of the field force in January."

The recent presentation of the landmark HORIZONS-AMI 1-year data on October 15, 2008 at TCT, adds to the existing wealth of data that demonstrates the attributes of Angiomax in all types of patients undergoing PCI from those with stable angina to those with STEMI. The principal investigator, Gregg Stone, MD, CRF Chairman, Professor of Medicine and the Director of Research and Education at the Center for Interventional Vascular Therapy at New York-Presbyterian Hospital/Columbia University Medical Center was quoted as saying, "These data again demonstrate that bivalirudin is a better treatment option than conventional therapy for STEMI patients undergoing primary PCI. This strategy could save thousands of lives each year if incorporated globally into routine practice."

    Financial highlights for the first nine months of 2008:

    --  Net revenue increased by 37% to $254.3 million for the first
        nine months of 2008 from $185.2 million for the same period in
        2007.
        -- Angiomax U.S. sales increased by 35% to $246.3 million for
         the first nine months of 2008 from $182.2 million for the
         first nine months of 2007.

        -- Angiomax/Angiox international net revenue in the first nine
         months of 2008 increased $5.0 million to $8.0 million
         compared to $3.0 million in the first nine months of 2007.
    --  Net loss for the first nine months of 2008, primarily related
        to the Curacyte acquisition was $4.3 million, or $0.08 per
        share, compared to net loss of $19.8 million, or $0.38 per
        share, which included the Nycomed transaction in the first
        nine months of 2007.

    --  The Company reported non-GAAP net income of $35.4 million, or
        $0.68 per share, for the first nine months of 2008, compared
        to non-GAAP net income of $19.6 million, or $0.38 per share,
        for the first nine months of 2007. Non-GAAP net income
        excludes the Curacyte acquisition, the Nycomed transaction,
        stock-based compensation expense and non-cash income taxes.

The following table provides reconciliations between GAAP and non-GAAP net (loss) income for the third quarter (Q3) and first nine months (9M) of 2008 and 2007. Non-GAAP net income excludes the Curacyte acquisition, Nycomed transaction, stock-based compensation expense and the non-cash provision (benefit) for income taxes:

                                      Reported
                                      GAAP Net
                                       (Loss)   Curacyte     Nycomed
            (in millions)              Income  Acquisition Transaction
----------------------------------------------------------------------
Q3 2008                                ($13.2)       $13.2           -
----------------------------------------------------------------------
Q3 2007                                ($23.6)           -       $28.1
----------------------------------------------------------------------
9M 2008                                 ($4.3)       $13.2           -
----------------------------------------------------------------------
9M 2007                                ($19.8)           -       $28.1
----------------------------------------------------------------------

                               FAS 123R     Non-Cash
                             Stock-Based    Provision
                             Compensation (Benefit) for    Non-GAAP
       (in millions)           Expense    Income Taxes  Net Income (1)
----------------------------------------------------------------------
Q3 2008                              $6.0         $2.5            $8.5
----------------------------------------------------------------------
Q3 2007                              $4.1        ($2.2)           $6.3
----------------------------------------------------------------------
9M 2008                             $17.4         $9.1           $35.4
----------------------------------------------------------------------
9M 2007                             $11.3            -           $19.6
----------------------------------------------------------------------

Note: Amounts may not sum due to rounding.

(1)Excluding the Curacyte acquisition costs, non-recurring Nycomed transaction charges, stock-based compensation expense and the non-cash provision (benefit) for income taxes.

Reconciliations between GAAP and non-GAAP fully diluted (loss) earnings per share (EPS) for the third quarter (Q3) and first nine months (9M) of 2008 and 2007 are provided in the following table:

                                      Reported  Curacyte     Nycomed
             (per share)              GAAP EPS Acquisition Transaction
----------------------------------------------------------------------
Q3 2008                                ($0.25)       $0.25           -
----------------------------------------------------------------------
Q3 2007                                ($0.46)           -       $0.54
----------------------------------------------------------------------
9M 2008                                ($0.08)       $0.25           -
----------------------------------------------------------------------
9M 2007                                ($0.38)           -       $0.54
----------------------------------------------------------------------

                                     FAS 123R     Non-Cash
                                   Stock-Based    Provision
                                   Compensation (Benefit) for Non-GAAP
           (per share)               Expense    Income Taxes   EPS(1)
----------------------------------------------------------------------
Q3 2008                                   $0.11        $0.05     $0.16
----------------------------------------------------------------------
Q3 2007                                   $0.08       ($0.04)    $0.12
----------------------------------------------------------------------
9M 2008                                   $0.34        $0.18     $0.68
----------------------------------------------------------------------
9M 2007                                   $0.22            -     $0.38
----------------------------------------------------------------------

Note: Amounts may not sum due to rounding.

(1)Excluding the Curacyte acquisition costs, non-recurring Nycomed transaction charges, stock-based compensation expense and the non-cash provision (benefit) for income taxes.

The Company believes that presenting the non-GAAP information contained in the financial tables and in this press release assists investors and others in gaining a better understanding of the Company's core operating results and future prospects, expected growth rates or forecasted guidance, particularly as related to the Curacyte acquisition costs, non-recurring Nycomed transaction charges, stock-based compensation expense and non-cash income taxes. Management uses this non-GAAP information, in addition to the GAAP information, as the basis for measuring the Company's core operating performance and comparing such performance to that of prior periods and to the performance of its competitors. Such measures are also used by management in its financial and operating decision-making. Non-GAAP information is not meant to be considered superior to or a substitute for the Company's results of operations prepared in accordance with GAAP. A reconciliation of GAAP results with non-GAAP results may also be found in the attached financial tables.

Revised 2008 Guidance:

Based upon the results of the first nine months of 2008 and the Curacyte acquisition, the Company provided revised 2008 guidance as follows:

                                        July 23, 2008 October 22, 2008
                                          Guidance    Revised Guidance
                                        ------------- ----------------
 (in millions, except percentages and
           per share amounts)
Net Sales
  US Angiomax                             $320-$330      $325-$335
  International Angiox                     $10-$15        $10-$15
  US Cleviprex                             $5-$10          $5-$10
  Total                                   $335-$355      $340-$360

Cost of Revenue                              25%            25%

R&D (GAAP)                                 $79-$83     $104-$109 (2)
----------------------------------------------------------------------
        (w/o 123R)                         $75-$79       $100-$105
----------------------------------------------------------------------

SG&A (GAAP)                               $153-$159    $158-$164 (3)
----------------------------------------------------------------------
        (w/o 123R)                        $135-$140      $140-$145
----------------------------------------------------------------------

Stock Based Comp -123R (1)                 $22-$24        $22-$24

Investment Income                           $6-$8          $6-$8

Effective Tax Rate                         50%-55%          (4)

Net Income (Loss) - GAAP                   $12-$16       ($6)-($2)
----------------------------------------------------------------------
                  - Non GAAP               $41-$49        $36-$44
----------------------------------------------------------------------

EPS - GAAP                               $0.22-$0.30  ($0.10)-($0.03)
----------------------------------------------------------------------
EPS - Non GAAP                           $0.77-$0.92    $0.68-$0.83
----------------------------------------------------------------------
(1) Note that GAAP reporting of R&D and SG&A include stock based
     compensation expense
(2) $21.4 million of in process research and development related to
     the Curacyte purchase, plus $4 million to $5 million of expenses
     associated with various company product development efforts
(3) $5 million related to accelerated European expansion costs,
     including the formation of a sales force
(4) Effective tax rate not provided as tax benefits associated with
     losses of international operations may not be recognized

There will be a conference call with management today at 8:30 a.m. Eastern Time to discuss third quarter and first nine months of 2008 financial results and operational developments. The conference call will be available via phone and webcast. The webcast can be accessed at The Medicines Company website at www.themedicinescompany.com.

The dial in information is listed below:

Domestic Dial In:      877-719-9795
International Dial In: 719-325-4749

Replay is available from 11:30 a.m. Eastern Time following the conference call through November 5, 2008. To hear a replay of the call, dial 888-203-1112 (domestic) and 719-457-0820 (international). Passcode for both dial in numbers is 1432418.

MDCO-F

About The Medicines Company: The Medicines Company (NASDAQ: MDCO - News) is focused on advancing the treatment of critical care patients through the delivery of innovative, cost-effective medicines to the worldwide hospital marketplace. The Company markets Angiomax(R) (bivalirudin) in the United States and other countries for use in patients undergoing coronary angioplasty, and Cleviprex(TM) (clevidipine butyrate) injectable emulsion in the United States for the reduction of blood pressure when oral therapy is not feasible or not desirable. The Company also has an investigational antiplatelet agent, cangrelor, in late-stage development and a serine protease inhibitor, CU-2010, in early-stage development. The Company's website is www.themedicinescompany.com.

This document is intended to assist listeners of The Medicines Company's quarterly results conference call available via webcast at www.themedicinescompany.com. In this document and the call, statements about The Medicines Company that are not purely historical, and all other statements that are not purely historical, may be deemed to be forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, the words "believes," "anticipates" and "expects" and similar expressions, including our 2008 guidance, are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. Important factors that may cause or contribute to such differences include the extent of the commercial success of Angiomax, whether the Company's products will advance in the clinical trials process on a timely basis or at all, whether the Company will make regulatory submissions for product candidates on a timely basis, whether its regulatory submissions will receive approvals from regulatory agencies on a timely basis or at all, whether physicians, patients and other key decision makers will accept clinical trial results, risks associated with the establishment of international operations, and such other factors as are set forth in the risk factors detailed from time to time in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission including, without limitation, the risk factors detailed in the Company's Quarterly Report on Form 10-Q filed on August 11, 2008, which are incorporated herein by reference. The Company specifically disclaims any obligation to update these forward-looking statements.

                        The Medicines Company
                Consolidated Statements of Operations
                             (unaudited)

(in thousands, except per share data) Three months ended September 30,
                                      --------------------------------
                                           2008             2007
                                      --------------------------------

Net revenue                           $       88,126  $        62,191
Operating expenses:
   Cost of revenue                            22,089           16,157
   Research and development                   44,075           18,741
   Selling, general and
    administrative                            42,865           55,499
                                      --------------- ----------------
        Total operating expenses             109,029           90,397
                                      --------------- ----------------
Loss from operations                         (20,903)         (28,206)
Other income                                   1,070            2,664
                                      --------------- ----------------
Loss before income taxes                     (19,833)         (25,542)
Benefit from income taxes                      6,616            1,899
                                      --------------- ----------------

Net loss                              $      (13,217) $       (23,643)
                                      =============== ================

Basic loss per common share           $        (0.25) $         (0.46)
                                      =============== ================
Shares used in computing basic loss
 per common share                             51,941           51,672
                                      =============== ================

Diluted loss per common share         $        (0.25) $         (0.46)
                                      =============== ================
Shares used in computing diluted loss
 per common share                             51,941           51,672
                                      =============== ================
                        The Medicines Company
                Consolidated Statements of Operations
                             (unaudited)

(in thousands, except per share data)  Nine Months Ended September 30,
                                       -------------------------------
                                            2008            2007
                                       -------------------------------
Net revenue                            $      254,285  $      185,237
Operating expenses:
   Cost of revenue                             63,121          49,031
   Research and development                    82,518          53,948
   Selling, general and administrative        117,004         109,457
                                       --------------- ---------------
        Total operating expenses              262,643         212,436
                                       --------------- ---------------
Loss from operations                           (8,358)        (27,199)

Other income                                    5,256           7,965
                                       --------------- ---------------
Loss before income taxes                       (3,102)        (19,234)
Provision for income taxes                     (1,205)           (545)
                                       --------------- ---------------

Net loss                               $       (4,307) $      (19,779)

Basic loss per common share            $        (0.08) $        (0.38)
                                       =============== ===============
Shares used in computing basic loss
 per common share                              51,842          51,596
                                       =============== ===============

Diluted loss per common share          $        (0.08) $        (0.38)
                                       =============== ===============
Shares used in computing diluted loss
 per common share                              51,842          51,596
                                       =============== ===============
                        The Medicines Company
                Condensed Consolidated Balance Sheets
                             (unaudited)

                                            September 30, December 31,
(in thousands)                                  2008          2007
                                            ------------- ------------

                  ASSETS
Cash, cash equivalents and available for
 sales securities                           $     205,695 $    222,113
Accrued interest receivable                         1,338        1,598
Accounts receivable, net                           42,906       25,584
Inventory                                          25,498       35,468
Prepaid expenses and other current assets          13,352        7,425
                                            ------------- ------------
    Total current assets                          288,789      292,188
                                            ------------- ------------

Fixed assets, net                                   6,448        3,245
Intangible assets, net                             16,495       14,929
Restricted cash                                     5,000        5,000
Deferred tax assets                                45,264       46,018
Other assets                                        5,239          136
                                            ------------- ------------
    Total assets                            $     367,235 $    361,516
                                            ============= ============

   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                         $      71,387 $     83,620
Stockholders' equity                              295,848      277,896
                                            ------------- ------------
    Total liabilities and stockholders'
     equity                                 $     367,235 $    361,516
                                            ============= ============
The Medicines Company
Reconciliation of GAAP to non-GAAP Measures
(Amounts in thousands, except per share data)
(Unaudited)

                               Three Months Ended September 30,
                         ---------------------------------------------
                                             2008
                         ---------------------------------------------
                                                       Non-
                           GAAP                         Cash  Non-GAAP
                         Reported  Curacyte    SFAS   Taxes   Adjusted
                            (1)       (2)    123R (3)   (4)      (5)
----------------------------------------------------------------------
Net revenue              $ 88,126  $      -  $     -  $     - $ 88,126

Operating expenses:
  Cost of revenue          22,089         -     (221)       -   21,868
  Research and
   development             44,075   (21,373)    (995)       -   21,707
  Selling, general and
   administrative          42,865         -   (4,735)       -   38,130
                         --------- --------- -------- ------- --------
    Total operating
     expenses             109,029   (21,373)  (5,951)       -   81,705

(Loss) income from
 operations               (20,903)   21,373    5,951        -    6,421

  Other income              1,070         -        -        -    1,070
                         --------- --------- -------- ------- --------
(Loss) income before
 income taxes             (19,833)   21,373    5,951        -    7,491
  Benefit (provision)
   for income taxes         6,616    (8,154)       -    2,499      961
                         --------- --------- -------- ------- --------
Net (loss) income         (13,217)   13,219    5,951    2,499    8,452

Basic (loss) earnings
 per common share        $  (0.25) $   0.25  $  0.11  $  0.05 $   0.16
                         ========= ========= ======== ======= ========

Shares used in computing
 basic (loss) earnings
 per common share          51,941    51,941   51,941   51,941   51,941
                         ========= ========= ======== ======= ========

Diluted (loss) earnings
 per common share        $  (0.25) $   0.25  $  0.11  $  0.05 $   0.16
                         ========= ========= ======== ======= ========

Shares used in computing
 diluted (loss) earnings
 per common share          51,941    51,941   51,941   51,941   51,941
                         ========= ========= ======== ======= ========
(1) GAAP Results
(2) Curacyte acquisition costs
(3) Non-cash stock compensation expense
(4) Non-cash tax provision
(5) Non-GAAP Results
The Medicines Company
Reconciliation of GAAP to non-GAAP Measures
(Amounts in thousands, except per share data)
(Unaudited)

                               Nine Months Ended September 30,
                       -----------------------------------------------
                                            2008
                       -----------------------------------------------
                                                      Non-
                         GAAP                          Cash  Non-GAAP
                       Reported  Curacyte    SFAS    Taxes   Adjusted
                          (1)       (2)    123R (3)    (4)      (5)
----------------------------------------------------------------------
Net revenue            $254,285  $      -  $      -  $     - $254,285

Operating expenses:
  Cost of revenue        63,121         -      (577)       -   62,544
  Research and
   development           82,518   (21,373)   (2,867)       -   58,278
  Selling, general and
   administrative       117,004         -   (13,931)       -  103,073
                       --------- --------- --------- ------- ---------
    Total operating
     expenses           262,643   (21,373)  (17,375)       -  223,895

(Loss) income from
 operations              (8,358)   21,373    17,375        -   30,390

  Other income            5,256         -         -        -    5,256
                       --------- --------- --------- ------- ---------
(Loss) income before
 income taxes            (3,102)   21,373    17,375        -   35,646
  (Provision) benefit
   for income taxes      (1,205)   (8,154)        -    9,101     (258)
                       --------- --------- --------- ------- ---------
Net (loss) income        (4,307)   13,219    17,375    9,101   35,388

Basic (loss) earnings
 per common share      $  (0.08) $   0.25  $   0.34  $  0.18 $   0.68
                       ========= ========= ========= ======= =========

Shares used in
 computing basic
 (loss) earnings per
 common share            51,842    51,842    51,842   51,842   51,842
                       ========= ========= ========= ======= =========

Diluted (loss)
 earnings per common
 share                 $  (0.08) $   0.25  $   0.34  $  0.18 $   0.68
                       ========= ========= ========= ======= =========

Shares used in
 computing diluted
 (loss) earnings per
 common share            51,842    51,842    51,842   51,842   51,842
                       ========= ========= ========= ======= =========
(1) GAAP Results
(2) Curacyte acquisition costs
(3) Non-cash stock compensation expense
(4) Non-cash tax provision
(5) Non-GAAP Results

Source: The Medicines Company