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The Medicines Company Reports Second-Quarter 2018 Results

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The Medicines Company (NASDAQ:MDCO) today reported its financial results
for the second quarter ended June 30, 2018.

"During the second quarter of 2018, we continued to advance inclisiran's
development programs, including the accumulation of further promising
safety data from 3,660 patients in Phase III trials," said Clive
Meanwell, M.D., Ph.D., Chief Executive Officer of The Medicines Company.
"We were also able to present consistent phase II subset efficacy data
in various demographic and disease populations for LDL-C and other
atherogenic lipoproteins. We look forward to further progress in 2018
and Phase III data read-outs in 2019."

Second quarter 2018 highlights included the following:

  • In April, the Company presented new data and analyses from multiple
    studies in the ORION development program for inclisiran at the
    National Lipid Association 2018 Scientific Sessions. The data
    demonstrated that inclisiran likely has a "one-size-fits-all" dosing
    regimen, without the necessity of dose adjustments, across a wide
    range of dyslipidemia patient populations, including those
    hard-to-treat patients with homozygous familial hypercholesterolemia
    (HoFH) and other sub-groups, such as patients with renal impairment
    and diabetes. The data showed that inclisiran lowered low-density
    lipoproteins cholesterol (LDL-C) by more than 50% for a wide range of
    dyslipidemia patient populations and sub-groups, and by up to 44% in
    HoFH patients.
  • In May, the Company presented the results of a pre-specified analysis
    of secondary endpoints from the ORION-1 Phase II trial at the 86th
    European Atherosclerosis Society Congress. The results, which were
    published in Circulation, the journal of the American Heart
    Association, showed that, beyond its powerful effect on LDL-C,
    inclisiran also reduced atherogenic lipoproteins in a profound and
    sustained manner. Atherogenic lipoproteins – non-HDL-C, ApoB, VLDL-C
    and Lp(a) – have been associated with an increased risk of heart
    attacks and strokes, particularly in high-risk patients. The
    reductions, which were generally dose-dependent, were achieved most
    clearly with a 300 mg dose of inclisiran given on Day-1 and Day-90,
    and were sustained to the pre-specified time of assessment (180 days)
    and beyond (at least 210 days). This is the same starting dose of
    inclisiran being utilized in the Phase III trials (the Phase III dose
    of inclisiran is 300 mg given on Day-1 and Day-90, and then every six
    months thereafter).
  • In June, the Company presented new data from a pre-specified, subgroup
    analysis of dosing, efficacy and safety of inclisiran in patients with
    diabetes from the ORION-1 Phase II trial at the American Diabetes
    Association 78th Scientific Sessions®. The data
    demonstrated that a subcutaneous injection of 300 mg of inclisiran
    given at Day-1 and Day-90 lowered LDL-C at Day-180 by more than 50% in
    patients with atherosclerotic cardiovascular disease (ASCVD) and those
    considered ASCVD-risk equivalents, regardless of whether those
    patients had diabetes. Importantly, the data showed that patients with
    and without diabetes experienced similar adverse event profiles,
    including no effects on control of blood glucose levels over six
    months.
  • In June, the Independent Data Monitoring Committee (IDMC) for the
    ongoing inclisiran Phase III clinical trials conducted its third,
    planned review of safety and efficacy data from the trials and
    recommended that they continue without modification. At the time of
    the review, substantially all patients in trials had received two
    doses of inclisiran or placebo, and more than 1,550 patient-years of
    safety data for inclisiran had been accumulated – with an additional 5
    patient-years of safety data continuing to accumulate every day.
  • During the second quarter, the Company substantially completed the
    implementation of its previously-announced restructuring, as
    anticipated.

Commenting further, Dr. Meanwell said, "We continued to deliver against
our 2018 objectives during the second quarter, demonstrating strong
execution on all fronts. We remain sharply focused on tightening expense
management and advancing the inclisiran development program efficiently."

Second-Quarter 2018 Financial Summary from Continuing Operations

On a GAAP basis, loss from continuing operations in the second quarter
of 2018 was $54.5 million, or $0.74 per share, compared to a loss of
$370.1 million, or $5.15 per share, in the second quarter of 2017.
Included in loss from continuing operations for the second quarter of
2018 were restructuring charges of $6.1 million. On a non-GAAP basis,
adjusted loss(1) from continuing operations in the second
quarter of 2018 was $46.3 million, or $0.63(1) per share,
compared to a loss of $52.0 million, or $0.72(1) per share,
in the second quarter of 2017.

First Half 2018 Financial Summary from Continuing Operations

On a GAAP basis, loss from continuing operations in the first half of
2018 was $139.3 million, or $1.89 per share, compared to a loss of
$441.1 million, or $6.17 per share, in the first half of 2017. Included
in loss from continuing operations for the first half of 2018 was a
non-cash, mark-to-market change in fair value of approximately $31.1
million associated with the Company's common stock ownership in Melinta,
guaranteed repayments and restructuring charges of $11.4 million. On a
non-GAAP basis, adjusted loss(1) from continuing operations
in the first half of 2018 was $102.6 million, or $1.40(1) per
share, compared to a loss of $105.3 million, or $1.47(1) per
share, in the first half of 2017.

First Half 2018 Financial Summary from Discontinued Operations

In the first quarter of 2018, the Company completed the sale of its
infectious disease business, consisting of the products Vabomere™,
Orbactiv® and Minocin® IV, as well as line extensions of those products,
for $270 million in upfront consideration and guaranteed payments,
tiered royalty payments of between 5% to 25% on worldwide net sales of
Vabomere, Orbactiv and Minocin IV, and the assumption by Melinta of all
royalty, milestone and other payment obligations relating to those
products.

(1) Adjusted net loss and adjusted loss per share from
continuing operations are non-GAAP financial performance measures with
no standardized definitions under U.S. GAAP. For further information and
a detailed reconciliation, refer to the "Non-GAAP Financial Performance
Measures" and "Reconciliations of GAAP to Adjusted Loss From Continuing
Operations and Adjusted Loss per Share" sections of this press release.

Net income from discontinued operations in the first half of 2018 was
$114.2 million, compared to a net loss of $58.9 million in 2017. Net
income from discontinued operations in the first half of 2018 included a
pre-tax gain of approximately $169.0 million from the sale of the
Company's infectious disease business to Melinta.

At June 30, 2018, the Company had $162.5 million in cash and cash
equivalents, compared to $151.4 million at the end of 2017.

Second-Quarter 2018 Conference Call and Webcast Information

The Company will host a conference call and webcast today, August 1,
2018, at 8:30 a.m., Eastern Daylight Time, to discuss its second-quarter
2018 financial results and provide clinical and operational updates. The
dial-in information to access the call is as follows:

U.S./Canada:       (877) 359-9508
International: (224) 357-2393
Conference ID: 5847059

A taped replay of the conference call will be available from 11:30 a.m.,
Eastern Daylight Time, today until 11:30 p.m., Eastern Daylight Time, on
August 8, 2018. The replay may be accessed as follows:

U.S./Canada:       (855) 859-2056
International: (404) 537-3406
Conference ID: 5847059

The webcast can be accessed in the "Investors" section of The
Medicines Company website
. A replay of the webcast will also be
available.

About Inclisiran

Inclisiran is an investigational GalNAc-conjugated RNA interference
therapeutic, which inhibits the synthesis of PCSK9 protein in liver
cells, thereby reducing liver cell LDL receptor turnover, and lowering
plasma LDL-C.

The Medicines Company and Alnylam Pharmaceuticals, Inc. are
collaborating in the advancement of inclisiran pursuant to their 2013
agreement. Under the terms of the agreement, Alnylam completed certain
pre-clinical studies and the Phase I clinical study, with The Medicines
Company leading and funding the development of inclisiran from Phase II
forward, as well as potential commercialization.

About The Medicines Company

The Medicines Company is a biopharmaceutical company driven by an
overriding purpose – to save lives, alleviate suffering and contribute
to the economics of healthcare. The Company's goal is to create
transformational solutions to address the most pressing healthcare needs
facing patients, physicians and providers in cardiovascular care. The
Company is headquartered in Parsippany, New Jersey.

Forward-Looking Statements

Statements contained in this press release 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," "plans," "expects" and "potential' and
similar expressions, 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 ability of the Company to effectively develop
inclisiran; whether inclisiran will advance in the clinical trials
process on a timely basis or at all, or succeed in achieving its
specified endpoints; whether the Company will make regulatory
submissions for inclisiran on a timely basis; whether its regulatory
submissions will receive approvals from regulatory agencies on a timely
basis or at all; the extent of the commercial success of inclisiran, if
approved; 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 (SEC), including, without limitation, the risk factors
detailed in the Company's Quarterly Report on Form 10-Q filed with the
SEC on May 9, 2018, which are incorporated herein by reference. The
Company specifically disclaims any obligation to update these
forward-looking statements.

NON-GAAP FINANCIAL PERFORMANCE MEASURES

In addition to financial information prepared in accordance with U.S.
GAAP, this press release also contains adjusted loss from continuing
operations and adjusted loss per share from continuing operations
attributable to The Medicines Company. The Company believes these
measures provide investors and management with supplemental information
relating to operating performance and trends that facilitate comparisons
between periods and with respect to projected information.

Adjusted loss from continuing operations excludes share-based
compensation expense, amortization of acquired intangible assets, asset
impairment charges, inventory adjustments, restructuring charges,
charges associated with product discontinuance, changes in contingent
purchase price, legal settlements, changes in short-term investments and
non-cash interest expense. The Company believes these non-GAAP financial
measures help indicate underlying trends in the Company's business and
are important in comparing current results with prior period results and
understanding projected operating performance. Non-GAAP financial
measures provide the Company and its investors with an indication of the
Company's baseline performance before items that are considered by the
Company not to be reflective of the Company's ongoing results. See the
attached Reconciliations of GAAP to Adjusted Loss from Continuing
Operations and Adjusted Loss per Share for explanations of the amounts
excluded and included to arrive at adjusted net loss and adjusted loss
per share amounts for the three- and six months ended June 30, 2018 and
2017.

These adjusted measures are non-GAAP and should be considered in
addition to, but not as a substitute for, the information prepared in
accordance with U.S. GAAP. The Company strongly encourages investors to
review its consolidated financial statements and publicly-filed reports
in their entirety and cautions investors that the non-GAAP measures used
by the Company may differ from similar measures used by other companies,
even when similar terms are used to identify such measures.

 

THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF
OPERATIONS

UNAUDITED
(In thousands, except
per share amounts)

 
   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

2018   2017 2018   2017
Net revenues $ 1,667 $ 10,861 $ 9,438 $ 28,326
Operating expenses:
Cost of revenues 2,931 12,490 5,668 22,468
Asset impairment charges 329,097 329,097
Research and development 30,294 23,249 70,660 49,693
Selling, general and administrative 21,013   28,359   49,964   68,816  
Total operating expenses 54,238   393,195   126,292   470,074  
Loss from operations (52,571 ) (382,334 ) (116,854 ) (441,748 )
Co-promotion and license income 254 757 482 1,514
Loss on short-term investment (3,474 ) (33,463 )
Interest expense (12,108 ) (12,521 ) (24,185 ) (24,943 )
Other income 1,053   1,033   3,422   1,144  
Loss from continuing operations before income taxes (66,846 ) (393,065 ) (170,598 ) (464,033 )
Benefit (provision) for income taxes 12,393   23,000   31,309   22,972  
Loss from continuing operations (54,453 ) (370,065 ) (139,289 ) (441,061 )
Income (loss) from discontinued operations, net of tax 256   (27,203 ) 114,241   (58,877 )
Net Loss $ (54,197 ) $ (397,268 ) $ (25,048 ) $ (499,938 )
 
Basic (loss) earnings per common share:
Loss from continuing operations $ (0.74 ) $ (5.15 ) $ (1.89 ) $ (6.17 )
Earnings (loss) from discontinued operations   (0.38 ) 1.55   (0.82 )
Basic loss per share $ (0.74 ) $ (5.53 ) $ (0.34 ) $ (6.99 )
 
Diluted (loss) earnings per common share:
Loss from continuing operations $ (0.74 ) $ (5.15 ) $ (1.89 ) $ (6.17 )
Earnings (loss) from discontinued operations   (0.38 ) 1.55   (0.82 )
Diluted loss per share $ (0.74 ) $ (5.53 ) $ (0.34 ) $ (6.99 )
 
Weighted average number of common shares outstanding:
Basic 73,349 71,918 73,574 71,498
Diluted 73,349 71,918 73,574 71,498
 
 

THE MEDICINES COMPANY
BALANCE SHEET ITEMS
UNAUDITED
(In
thousands)

 
      June 30, 2018   December 31, 2017
Cash and cash equivalents $ 162,530 $ 151,359
Short-term investment $ 21,042 $
Total assets $ 795,837 $ 872,983
Convertible senior notes (due 2022 and 2023) $ 662,729 $ 649,198
The Medicines Company stockholders' equity $ 21,229 $ 24,914
 
 

THE MEDICINES COMPANY
RECONCILIATIONS OF GAAP TO
ADJUSTED LOSS FROM CONTINUING OPERATIONS AND ADJUSTED LOSS PER
SHARE

UNAUDITED
(In thousands, except per
share amounts)

 
   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

2018   2017 2018   2017
Loss from continuing operations $ (54,453 ) $ (370,065 ) $ (139,289 ) $ (441,061 )
Before tax adjustments:
Cost of product revenues:
Share-based compensation expense (1) 75 236 69 407
Amortization of acquired intangible assets (2) 4,486
Inventory adjustments (3) 9 (2,554 ) (407 ) (2,965 )
Restructuring charges (4) 318 761 (66 )
Market withdrawal of Ionsys (5) 8,458 8,458
Asset impairment charges
Market withdrawal of Ionsys (5) 264,097 264,097
Discontinuance of MDCO 700 (6) 65,000 65,000
Research and development:
Share-based compensation expense (1) 1,195 934 2,179 1,526
Restructuring charges (4) 3,322 504 3,648 396
Market withdrawal of Ionsys (5) 1,032 1,032
Selling, general and administrative:
Share-based compensation expense (1) 3,377 7,786 6,826 13,217
Restructuring charges (4) 2,458 (53 ) 6,995 (104 )
Changes in contingent purchase price (7) 6 (258 ) 692
Legal settlements (8) 3,550
Market withdrawal of Ionsys (5) 3,434 3,434
Discontinuance of MDCO 700 (6) (14,701 ) (14,701 )
Other:
Non-cash interest expense (9) 6,786 6,849 13,531 13,822
Change in short-term investments (10) 3,074 31,101
Net loss tax adjustments (11) (12,426 ) (22,988 ) (31,342 ) (22,989 )
Loss from continuing operations - Adjusted $ (46,259 ) $ (52,031 ) $ (102,636 ) $ (105,319 )
 
Loss per share - Adjusted
Basic $ (0.63 ) $ (0.72 ) $ (1.40 ) $ (1.47 )
Diluted $ (0.63 ) $ (0.72 ) $ (1.40 ) $ (1.47 )
Weighted average number of common shares outstanding:
Basic 73,349 71,918 73,574 71,498
Diluted 73,349 71,918 73,574 71,498
 
 
Explanation of Adjustments:
 
(1)   Excludes share-based compensation of $4,647 and $8,956 for the three
months ended June 30, 2018 and 2017 and $9,074 and $15,150 for the
six months ended June 30, 2018 and 2017 because these expenses are
substantially dependent on changes in the market price of the
Company's common stock.
 
(2) Excludes amortization of intangible assets resulting from the
Incline Therapeutics transaction.
 
(3) Excludes all non-cash inventory adjustments.
 
(4) Excludes restructuring charges related to workforce reorganization
initiated in the first quarter 2018 and the sale of the non-core
cardiovascular products.
 
(5) Excludes charges associated with the voluntary discontinuation and
withdrawal of Ionsys from the market in the United States and
cessation of related commercial activities in 2017.
 
(6) Excludes costs associated with the decision to discontinue the
MDCO-700 program.
 
(7) Excludes changes in fair value of the contingent price related to
the acquisitions of Rempex that were not included in the sale to
Melinta.
 
(8) Excludes net loss from one-time legal settlements in 2018.
 
(9) Excludes non-cash interest expense which is in excess of the actual
interest expense paid on the Convertible Senior Notes.
 
(10) Excludes changes in fair value with our investment in Melinta and
guaranteed payments associated with the sale of our infectious
disease business.
 
(11) Excludes the estimated tax effect related to the sale of Melinta in
2018 and the decision to discontinue the MDCO-700 program in 2017.
 

In addition to the financial information prepared in accordance with
U.S. GAAP, this press release also contains adjusted financial measures
that the Company believes provide investors and management with
supplemental information relating to operating performance and trends
that facilitate comparisons between periods and with respect to
projected information.
These adjusted measures should be
considered in addition to, but not as a substitute for, the information
prepared in accordance with U.S. GAAP.
The Company strongly
encourages investors to review its consolidated financial statements and
publicly filed reports in their entirety and cautions investors that the
non-GAAP measures used by the Company may differ from similar measures
used by other companies, even when similar terms are used to identify
such measures.

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