UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
____________
FORM 8‑K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 22, 2014


THE MEDICINES COMPANY

(Exact Name of Registrant as Specified in Charter)


Delaware
 
000-31191
 
04-3324394
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
                       

8 Sylvan Way
Parsippany, New Jersey
 
07054
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant's telephone number, including area code: (973) 290-6000

 
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02. Results of Operations and Financial Condition.
On October 22, 2014, The Medicines Company (the “Company”) announced financial results for the three and nine months ended September 30, 2014. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.
(d)    Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1
Press release dated October 22, 2014 entitled “The Medicines Company Reports Third Quarter and First Nine Months 2014 Results”










SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
THE MEDICINES COMPANY
 
Date: October 22, 2014
By:
/s/ Stephen M. Rodin
 
Senior Vice President and General Counsel
 
 
 
 
 








Exhibit Index


Exhibit No.
Description
99.1
Press release dated October 22, 2014 entitled “The Medicines Company Reports Third Quarter and First Nine Months 2014 Results”


 
    





Press Release (Q3 2014)


Exhibit 99.1

The Medicines Company Reports Third Quarter and First Nine Months 2014 Results

Nine Month Net Revenues Rise 6% year over year

Company Reports Progress with Product Candidates

PARSIPPANY, NJ -- (MARKETWIRE) -- 10/22/2014 --The Medicines Company (NASDAQ: MDCO), a global biopharmaceutical company focused on saving lives, alleviating suffering, and contributing to the economics of healthcare by focusing on the world's leading acute/intensive care hospitals, today announced third quarter and first nine month results for 2014.

Financial highlights for the third quarter of 2014:

Worldwide net revenue was $172.4 million for the third quarter of 2014 compared to $174.3 million in the third quarter of 2013:

•
Worldwide Angiomax® (bivalirudin)/Angiox® (bivalirudin) revenue was down 2% to $151.0 million in 2014 compared to $153.6 million in 2013, sales in the United States increased to $143.6 million in 2014 from $138.5 million in 2013.

•
Recothrom® Thrombin topical (recombinant) sales were $16.8 million in the US in the third quarter of 2014, as compared to $17.0 million in the third quarter of 2013.

•
Other products including Argatroban RTU, Cleviprex® (clevidipine), Minocin® (minocycline) for injection and PreveLeak recorded sales in the third quarter of 2014 of $4.6 million, as compared to $3.7 million in the third quarter of 2013.


Page 1 of 12









Net loss for the third quarter of 2014 was $16.7 million, or $(0.26) per share, compared with net income of $7.8 million, or $0.12, for the third quarter of 2013.

Adjusted net income(1) for the third quarter of 2014 was $11.6 million, or $0.18 per share(1), compared to adjusted net income(1) of $29.3 million, or $0.47 per share(1), for the third quarter 2013.

Financial highlights for the nine months ended September 2014:

Worldwide net revenue increased by 6% to $533.4 million for the first nine months of 2014 from $502.9 million in the first nine months of 2013:

•
Worldwide Angiomax/Angiox revenue was up 5% to $469.8 million in 2014 from $447.6 million in 2013, driven by United States growth (up to $442.0 million in 2014 from $407.8 million in 2013).

•
Recothrom sales were $46.5 million in the United States in the first nine months of 2014. Sales during the first nine months of 2013 were $43.5 million, after the Company began selling Recothrom in the US in February 2013.

•
Other products including Argatroban RTU, Cleviprex, Minocin and PreveLeak recorded sales in the first nine months of 2014 of $17.1 million, as compared to $11.7 million in the first nine months of 2013.

Net loss for the nine months ended September 30, 2014 was $26.9 million, or $(0.42) per share, compared with net income of $14.3 million, or $0.24, for the first nine months of 2013.

Adjusted net income(1) for the first nine months of 2014 was $54.3 million, or $0.82 per share(1), compared to adjusted net income(1) of $76.5 million, or $1.29 per share(1), for the first nine months of 2013.

Page 2 of 12










Business, Research and Development Update
The company today announced the launch of ORBACTIVTM and MINOCIN IV and an increase in selling resources for CLEVIPREX® in the United States.

The company also reports progress for KANGREAL, IONSYS, RAPLIXA and ORBACTIV which together constitute seven new drug applications under active review with either the United States FDA or the European EMA.

The company also reports the status of its research and development programs. Clinical phase III development for Carbavance, an investigational antibacterial agent for resistant gram negative infections is underway and two potential registration trials are expected to begin enrollment shortly. The company also reports progress in its partnership with Alnylam developing a PCSK9 RNA interference compound for lowering cholesterol which will shortly begin clinical trials using subcutaneous dosing. In addition, the company reports that new data will be presented for ApoA1-Milano at the upcoming American Heart Association meeting in Chicago on November 15-19th which showed persuasive evidence of profound reverse cholesterol transport, and a lipid profile similar to that seen in humans who carry an ApoA1-Milano. This genotype and phenotype is associated with longevity and substantially reduced risk of atherosclerotic coronary disease. The company also reports new clinical data with the investigational anesthestic agent ABP700 which is under development with its partner, Annovation Biopharma, Inc. The agent has shown human anesthetic effects as predicted from animal pharmacology, an apparent absence of undesired adrenal effects, preserved minute ventilation and absence of apnea even at doses causing deep anesthesia, and complete recovery within 60 seconds even after a 30-minute period of anesthesia. The Company has the exclusive option to acquire Annovation Biopharma, and subject to review of ongoing research data, plans to exercise the option during the first half of 2015.

Glenn Sblendorio, President and Chief Financial Officer, stated, “In the first nine months of 2014, we showed year over year growth in revenues and built an Infectious Disease Care organization in the United States for the launch of ORBACTIVTM and MINOCIN IV.”

Page 3 of 12










“We are making considerable and rapid progress with launches, with our ongoing NDA programs in US and Europe, and with our investigational compounds in research and development which are demonstrating impressive proof of concept in various ways as planned. These are exciting times at The Medicines Company as we build a leading acute and intensive care hospital portfolio of highly innovative new products. We expect a steady stream of news flow over the coming 3-12 months” said Clive Meanwell, Chairman and Chief Executive Officer.

(1) Adjusted net income and adjusted earnings per share are non-GAAP financial performance measures with no standardized definitions under US GAAP. For further information and a detailed reconciliation, refer to the Non-GAAP Financial Performance Measures and Reconciliations of GAAP to Adjusted Net income sections of this release for explanations of the amounts excluded and included to arrive at adjusted net income and adjusted earnings per share amounts.

Conference Call Information
There will be a conference call with management today at 8:30 a.m. Eastern Time to discuss third quarter 2014 financial results, operational developments, and full year financial guidance. The conference call will be available via phone and webcast. The webcast can be accessed at www.themedicinescompany.com.
Domestic Dial In: +1 (877) 359-9508
International Dial In: +1 (224) 357-2393
Passcode for both dial in numbers: 18355946
Replay is available from 11:30 a.m. Eastern Time following the conference call through October 29, 2014. To hear a replay of the call dial +1 (855) 859-2056 (domestic) and +1 (404) 537-3406 (international). Passcode for both dial in numbers is 18355946.

Page 4 of 12










NON-GAAP FINANCIAL PERFORMANCE MEASURES
In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted net income and adjusted earnings per share measures that we believe 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 net income excludes upfront collaboration payments, amortization of acquired intangible assets and other charges, deal related charges, restructuring charges, stock-based compensation expense, changes in contingent consideration, arbitration award, development milestone payment, non-cash interest, one time impairment charge, loss on equity and net income tax adjustments. See the attached Reconciliations of GAAP to Adjusted Net Income and Adjusted Earnings Per Share for explanations of the amounts excluded and included to arrive at adjusted net income and adjusted earnings per share amounts for the three and nine months ended September 30, 2014 and September 30, 2013.
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. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways.

About The Medicines Company
The Medicines Company's purpose is to save lives, alleviate suffering, and contribute to the economics of healthcare by focusing on 3,000 leading acute/intensive care hospitals worldwide. Its vision is to be a leading provider of solutions in three areas: acute cardiovascular care, surgery and perioperative care, and serious infectious disease care. The company operates in the Americas, Europe and the Middle East, and Asia Pacific regions with global centers today in Parsippany, NJ, USA and Zurich, Switzerland.

Page 5 of 12










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" and "expects" and similar expressions, including the Company's preliminary revenue results, are intended to identify forward-looking statements. These forward-looking statements involve important 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, the Company's ability to develop its global operations and penetrate foreign markets, 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 the Company’s ongoing and planned commercial launches will be successful; whether physicians, patients and other key decision makers will accept clinical trial results, 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 4, 2014, which are incorporated herein by reference. The Company specifically disclaims any obligation to update these forward-looking statements.

Page 6 of 12











Contact:
The Medicines Company
Investor relations, +1 973-290-6400
investor.relations@themedco.com
or
Media:
Robert Laverty
Vice President Communications, +1 973-290-6162
robert.laverty@themedco.com








Page 7 of 12









The Medicines Company
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
 
Three months ended September 30,
 
 
2014
 
2013
 
 
 
 
 
Net revenue
 
$
172,401

 
$
174,282

Operating expenses:
 
 
 
 
    Cost of revenue
 
69,076

 
65,794

    Research and development
 
33,314

 
23,187

    Selling, general and administrative
 
82,662

 
62,528

Total operating expenses
 
185,052

 
151,509


 
 
 
 
(Loss) income from operations
 
(12,651
)
 
22,773

    Co-promotion income and profit share
 
2,864

 
4,423

    Loss in equity investment
 
(1,184
)
 
—

    Interest expense
 
(3,958
)
 
(3,765
)
    Investment impairment
 
(7,500
)
 
—

    Other (expense) income
 
(53
)
 
383

(Loss) income before income taxes
 
(22,482
)
 
23,814

    Benefit (provision) for income taxes
 
5,693

 
(16,068
)

 
 
 
 
Net (loss) income
 
(16,789
)
 
7,746

Net loss attributable to non-controlling interest
 
53

 
47

Net (loss) income attributable to The Medicines Company
 
$
(16,736
)
 
$
7,793


 
 
 
 
(Loss) earnings per common share attributable to The Medicines Company:
 
 
 
 
Basic
 
$
(0.26
)
 
$
0.13

Diluted
 
$
(0.26
)
 
$
0.12

Weighted average number of common shares outstanding:
 
 
 
 
Basic
 
64,534

 
59,231

Diluted
 
64,534

 
63,173

 
 
 
 
 


Page 8 of 12









The Medicines Company
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
 
Nine months ended September 30,
 
 
2014
 
2013
 
 
 
 
 
Net revenue
 
$
533,410

 
$
502,861

Operating expenses:
 
 
 
 
   Cost of revenue
 
221,630

 
186,446

   Research and development
 
105,638

 
108,408

   Selling, general and administrative
 
235,928

 
178,954

 Total operating expenses
 
563,196

 
473,808


 
 
 
 
(Loss) income from operations
 
(29,786
)
 
29,053

  Co-promotion income and profit share
 
16,210

 
12,241

  Loss in equity investment
 
(1,184
)
 
—

  Interest expense
 
(11,710
)
 
(11,143
)
  Investment impairment
 
(7,500
)
 
—

  Other (expense) income
 
(24
)
 
1,186

(Loss) income before income taxes
 
(33,994
)
 
31,337

  Benefit (provision) for income taxes
 
7,026

 
(17,163
)

 
 
 
 
Net (loss) income
 
(26,968
)
 
14,174

Net loss attributable to non-controlling interest
 
79

 
140

Net (loss) income attributable to The Medicines Company
 
$
(26,889
)
 
$
14,314


 
 
 
 
(Loss) earnings per common share attributable to The Medicines Company:
 
 
 
 
Basic
 
$
(0.42
)
 
$
0.25

Diluted
 
$
(0.42
)
 
$
0.24

Weighted average number of common shares outstanding:
 
 
 
 
Basic
 
64,363

 
56,296

Diluted
 
64,363

 
60,510

 
 
 
 
 

Page 9 of 12













Balance Sheet Items
(in thousands)
 
September 30,
 
December 31,
 
 
2014
 
2013
 
 
(unaudited)
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
356,239

 
$
376,727

Total assets
 
$
1,829,384

 
$
1,741,282

Convertible senior notes (due 2017)
 
$
243,976

 
$
236,088

The Medicines Company total stockholders' equity
 
$
910,572

 
$
892,161



Page 10 of 12









The Medicines Company
Reconciliation of GAAP to Adjusted Net Income and Adjusted Earnings Per Share
(unaudited)
 
 
 
 
 
 
 
 
 
(in thousands, except per share data)
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to The Medicines Company - GAAP
 
$
(16,736
)
 
$
7,793

 
$
(26,889
)
 
$
14,314

Before tax adjustments:
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
     Share based compensation expense
(1) 
149

 
43

 
351

 
147

     Amortization of acquired intangible assets
(6) 
6,236

 
5,076

 
32,852

 
13,894

     Restructuring charges
(2) 
—

 
—

 
—

 
581

Research and development:
 
 
 
 
 
 
 
 
     Stock based compensation expense
(1) 
1,629

 
924

 
4,442

 
2,630

     Restructuring charges
(2) 
—

 
—

 
—

 
1,252

     Upfront collaboration payments
(3) 
—

 
—

 
—

 
25,000

One time license payment
 
—

 
—

 
8,429

 
—

Selling, general and administrative:
 
 
 
 
 
 
 
 
    Stock based compensation expense
(1) 
6,636

 
4,492

 
19,943

 
12,850

    Amortization of acquired intangible assets
(6) 
1,414

 
1,136

 
4,243

 
3,408

    Change in contingent value rights
(7) 
9,114

 
5,480

 
28,731

 
(168
)
    Restructuring charges
(2) 
—

 
—

 
—

 
4,525

    Milestone Payment
(10) 
2,500

 
—

 
2,500

 
—

    Expenses incurred for certain transactions
(4) 
—

 
2,907

 
566

 
7,076

    Arbitration award
(5) 
—

 
—

 
—

 
5,000

Other:
 
 
 
 
 
 
 
 
     Non-cash interest expense
(8) 
3,012

 
2,820

 
8,874

 
8,307

     Investment impairment
(11) 
7,500

 
—

 
7,500

 
—

     Loss in equity investment
(12) 
1,184

 
—

 
1,184

 
—

Net income tax adjustments
(9) 
(11,062
)
 
(1,381
)
 
(38,454
)
 
(22,319
)
Net income attributable to The Medicines Company - Adjusted
 
$
11,576

 
$
29,290

 
$
54,272

 
$
76,497

 
 

 

 


 


Net income per share attributable to The Medicines Company - Adjusted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Basic
 
$
0.18

 
$
0.49

 
$
0.84

 
$
1.36

 Diluted
(13) 
$
0.18

 
$
0.47

 
$
0.82

 
$
1.29

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
64,534

 
59,231

 
64,363

 
56,296

Diluted - adjusted
(13) 
66,067

 
61,960

 
66,262

 
59,271

 
 
 
 
 
 
 
 
 

Explanation of Adjustments:
(1) Exclude share based compensation of $8,414 and $5,459 for three months ended September 30, 2014 and September 30, 2013 and $24,736 and $15,627 for nine months ended September 30, 2014 and September 30, 2013.
(2) Exclude restructuring charges relating to headcount reduction of $6,358 for the nine months ended September 30, 2013.
(3) Exclude upfront payments for research and development collaboration arrangements.
(4) Exclude charges related to the acquisition of Incline, ProFibrix and license of Recothrom during 2013 and acquisition of Tenaxis during 2014.
(5) Exclude one time arbitration award to Eagle.

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(6) Exclude amortization of intangible assets and other charges resulting from transactions with Nycomed, CSL, APP, Teva, BMS, Rempex and Tenaxis.
(7) Exclude changes in contingent value rights due to shareholders of Targanta, Incline, ProFibrix, Rempex and Tenaxis.
(8) Exclude non-cash interest expense related to convertible senior notes.
(9) Net income tax adjustments reflect the estimated tax effect of the above adjustments and the impact of certain other
non-operating tax adjustments.
(10) Excludes milestone payment for product approval
(11) Excludes write off of impaired investment
(12) Excludes loss on equity
(13) Reflects impact of note hedge transactions on outstanding diluted share amounts associated with convertible senior notes.


In addition to the financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted financial measures that we believe 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. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways.


Page 12 of 12