Medicines Co. Settles with APP

The Medicines Company (MDCO - Analyst Report) recently entered into an agreement with APP Pharmaceuticals regarding generic versions of The Medicines Company’s lead product, Angiomax.

Angiomax (bivalirudin), which was acquired from Biogen Idec, Inc. (BIIB - Analyst Report) in 1996, is used as an anticoagulant in patients undergoing coronary angioplasty. Angiomax is the company’s lead product, accounting for 99.8% of total revenues in 2010.

APP admitted that the two patents challenged by it are valid and enforceable and would be infringed by its generic version. The patents, which were the focus of the patent infringement lawsuit, are slated to expire on July 27, 2028. APP also agreed to dismiss its appeal of a court decision to treat the patent extension application for Angiomax as having been filed on a timely basis.

Background on the ANDAs

The Medicines Company received Para IV notices about APP’s ANDAs in September 2009 and April 2010. The company responded by filing patent infringement lawsuits.

Details of the Settlement Agreement

Per the terms of the settlement agreement, The Medicines Company granted a license to APP and its affiliate under which they can launch a generic version of Angiomax in the US on May 1, 2019. The generic could be launched earlier under certain specific circumstances and could include an authorized generic version which would be supplied by The Medicines Company.

The companies also announced a fill/finish manufacturing agreement under which APP will manufacture and supply Angiomax finished product to The Medicines Company. This agreement will provide The Medicines Company with an additional source of Angiomax finished product – the company recently lost a fill and finish manufacturer.

A third part of the deal related to a license and supply agreement under which APP will supply The Medicines Company with acute care generic products (therapeutic areas including treatment of acute cardiovascular, neurological and infectious diseases in hospital).

Our Take

The settlement agreement with APP does not come as a major surprise. Earlier, The Medicines Company had entered into a similar deal with Teva (TEVA - Analyst Report) to delay the entry of Angiomax generics. With Angiomax accounting for a major part of the company’s revenue, a delay in the entry of generic versions of the product is a huge positive.

Although The Medicines Company is still facing patent challenges for Angiomax from other generic companies like Hospira (HSP - Analyst Report), Mylan (MYL - Analyst Report), Sun Pharma and Dr. Reddy's Laboratories (RDY - Snapshot Report), we believe the company will enter into settlement agreements with these companies as well to delay the entry of generics.

We currently have a Neutral recommendation on The Medicines Company, which carries a Zacks #3 Rank (short-term Hold rating).

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