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Form 8-K MEDICINES CO /DE For: Jun 06

June 6, 2016 6:53 AM EDT






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): June 6, 2016

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 8.01. Other Events

On May 9, 2016, The Medicines Company (the “Company”) announced it entered into a purchase and sale agreement with Chiesi Farmaceutici S.p.A. (“Chiesi”) and Chiesi USA, Inc. to sell three of its acute cardiovascular care assets, Cleviprex® (clevidipine), Kengreal® (cangrelor) and the Company’s rights to Argatroban for Injection (the “ACC Products”). The Company expects to receive at closing approximately $261.6 million in cash, which includes the value of product inventory, and Chiesi will assume certain liabilities related to the ACC Products. The Company may receive up to an additional $480.0 million in the aggregate following the achievement of specified U.S. net sales milestones with respect to Cleviprex and Kengreal. The closing of the transaction remains subject to the satisfaction or waiver of customary conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

In connection with the anticipated completion of the Company’s sale of the ACC Products, the Company is filing as Exhibit 99.1 hereto certain pro forma financial information giving pro forma effect to the sale of the ACC Products as of the dates indicated therein.

Item 9.01. Financial Statements and Exhibits.
(b)     Pro forma financial information:
Attached as Exhibit 99.1 hereto and incorporated by reference are an unaudited pro forma consolidated balance sheet as of March 31, 2016 and unaudited pro forma consolidated statements of operations for the three months ended March 31, 2016 and the year ended December 31, 2015, in each case giving pro forma effect to the Company’s anticipated sale of the ACC Products.

(d)     Exhibits:
See the Exhibit Index attached hereto.







SIGNATURE
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:  June 6, 2016        
By:    /s/ Stephen M. Rodin
Stephen M. Rodin
Executive Vice President and General Counsel







EXHIBIT INDEX


Exhibit Number
 
Description
99.1
 
Pro Forma Financial Information









Exhibit 99.1

UNAUDITED PRO FORMA FINANCIAL INFORMATION

On May 9, 2016, The Medicines Company (the “Company”) announced it entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with Chiesi Farmaceutici S.p.A. (“Chiesi”) and Chiesi USA, Inc. to sell three of its acute cardiovascular care assets, Cleviprex® (clevidipine), Kengreal® (cangrelor) and the Company’s rights to Argatroban for Injection (the “ACC Products”). The Company expects to receive at closing approximately $261.6 million in cash, which includes the value of product inventory, and Chiesi will assume certain liabilities related to the ACC Products. The Company may receive up to an additional $480.0 million in the aggregate following the achievement of specified U.S. net sales milestones with respect to Cleviprex and Kengreal. The anticipated disposition of the ACC Products has been deemed a significant disposition. The closing of the transaction remains subject to the satisfaction or waiver of customary conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The unaudited pro forma consolidated balance sheet as of March 31, 2016 has been prepared to give effect to the anticipated sale of the ACC Products as if it occurred on March 31, 2016. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2016 and the year ended December 31, 2015 have been prepared to give effect to the anticipated sale of the ACC Products as if it occurred on January 1, 2015.

The unaudited pro forma financial information was prepared utilizing our historical financial data derived from the interim consolidated financial statements included in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on May 9, 2016 and from the audited consolidated financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the SEC on February 29, 2016. Consistent with the requirements of Article 11 of Regulation S-X, the pro forma consolidated statement of operations have been presented on a continuing operations basis. The pro forma adjustments are described in the notes to the unaudited pro forma information and are based upon available information and assumptions that we believe are reasonable.

The unaudited pro forma financial information included herein is for informational purposes only and is not necessarily indicative of what our financial performance and financial position would have been had the sale of the ACC Products been completed on the dates assumed nor is such unaudited pro forma financial information necessarily indicative of the results to be expected in any future period. Actual results may differ significantly from those reflected here in the unaudited pro forma financial statements for various reasons, including but not limited to, the differences between the assumptions used to prepare the unaudited pro forma consolidated financial statements and actual results.

Page 1 of 5




THE MEDICINES COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2016
(in thousands)

 
The Medicines Company Historical
 
ACC Products
 

 
Pro Forma
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
430,196

 
$
261,569

 
(a)
 
$
691,765

Accounts receivable, net
42,834

 

 
 
 
42,834

Inventory, net
68,454

 
(1,495
)
 
(a)
 
66,959

Prepaid expenses and other current assets
19,337

 

 
 
 
19,337

Total current assets
560,821

 
260,074

 

 
820,895

Fixed assets, net
34,416

 

 
 
 
34,416

Intangible assets, net
629,935

 
(4,929
)
 
(a)
 
625,006

Goodwill
289,441

 
(27,770
)
 
 
 
261,671

Restricted cash
1,406

 

 
 
 
1,406

Contingent purchase price from sale of businesses
78,000

 
13,700

 
(a) (b)
 
91,700

Other assets
750

 

 
 
 
750

Total assets
$
1,594,769

 
$
241,075

 

 
$
1,835,844

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
$
15,526

 
$

 
 
 
$
15,526

Accrued expenses
103,109

 
19,340

 
(a)
 
122,449

Current portion of contingent purchase price
29,939

 

 
 
 
29,939

Convertible senior notes
258,800

 

 
 
 
258,800

Deferred revenue
21,869

 

 
 
 
21,869

Total current liabilities
429,243

 
19,340

 

 
448,583

Contingent purchase price
89,673

 

 
 
 
89,673

Deferred tax liabilities
315,080

 

 
 
 
315,080

Convertible senior notes
89,150

 

 
 
 
89,150

Other liabilities
12,530

 

 
 
 
12,530

Total liabilities
935,676

 
19,340

 


955,016

Equity component of currently redeemable convertible senior notes
14,167

 

 
 
 
14,167

Stockholders’ equity:
 
 
 
 
 
 

Preferred stock, $1.00 par value per share, 5,000,000 shares authorized; no shares issued and outstanding

 

 
 
 

Common stock, $0.001 par value per share, 187,500,000 shares authorized; 72,131,960 issued and 69,938,978 outstanding at March 31, 2016
72

 

 
 
 
72

Additional paid-in capital
1,223,024

 

 
 
 
1,223,024

Treasury stock, at cost; 2,192,982 shares at March 31, 2016
(50,000
)
 

 
 
 
(50,000
)
Accumulated deficit
(522,313
)
 
221,735

 
(a)
 
(300,578
)
Accumulated other comprehensive loss
(5,377
)
 

 
 
 
(5,377
)
Total The Medicines Company stockholders' equity
645,406

 
221,735

 

 
867,141

Non-controlling interest in joint venture
(480
)
 

 
 
 
(480
)
Total stockholders’ equity
644,926

 
221,735

 

 
866,661

Total liabilities and stockholders’ equity
$
1,594,769

 
$
241,075

 

 
$
1,835,844


See accompanying notes to unaudited pro forma financial information.

Page 2 of 5




THE MEDICINES COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2016
(in thousands, except per share amounts)

 
The Medicines Company Historical
 
ACC Products
 
 
 
Pro Forma
Net product revenues
$
31,375

 
$
(10,207
)
 
(c)
 
$
21,168

Royalty revenues
18,931

 

 
 
 
18,931

Total net revenues
50,306

 
(10,207
)
 
 
 
40,099

Operating expenses:
 
 
 
 
 
 
 
Cost of product revenue
18,797

 
(3,412
)
 
(c)
 
15,385

Research and development
33,491

 
(794
)
 
(c)
 
32,697

Selling, general and administrative
79,298

 
(11,780
)
 
(c)
 
67,518

Total operating expenses
131,586

 
(15,986
)
 
 
 
115,600

Loss from operations
(81,280
)
 
5,779

 
 
 
(75,501
)
Co-promotion and license income
975

 
(342
)
 
(c)
 
633

Interest expense
(9,746
)
 

 
 
 
(9,746
)
Other loss
(262
)
 

 
 
 
(262
)
Loss from continuing operations before income taxes
(90,313
)
 
5,437

 
 
 
(84,876
)
Provision (benefit) for income taxes
(46
)
 
(1,903
)
 
 
 
(1,949
)
Net loss from continuing operations
(90,359
)
 
3,534

 
 
 
(86,825
)
Net loss attributable to non-controlling interest
16

 

 
 
 
16

Net loss from continuing operations attributable to The Medicines Company
$
(90,343
)
 
$
3,534

 
 
 
$
(86,809
)
 
 
 
 
 
 
 
 
Loss per common share from continuing operations attributable to The Medicines Company:
 
 
 
 
 
 
 
Basic
$
(1.31
)
 
 
 
 
 
$
(1.25
)
Diluted
$
(1.31
)
 
 
 
 
 
$
(1.25
)
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
69,210

 
 
 
 
 
69,210

Diluted
69,210

 
 
 
 
 
69,210



See accompanying notes to unaudited pro forma financial information.

Page 3 of 5




THE MEDICINES COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
(in thousands, except per share amounts)

 
The Medicines Company Historical
 
ACC Products
 
 
 
Pro Forma
Net product revenues
$
255,148

 
$
(28,653
)
 
(c)
 
$
226,495

Royalty revenues
53,859

 

 
 
 
53,859

Total net revenues
309,007

 
(28,653
)
 
 
 
280,354

Operating expenses:
 
 
 
 
 
 
 
Cost of product revenue
119,931

 
(13,450
)
 
(c)
 
106,481

Research and development
123,606

 
(5,233
)
 
(c)
 
118,373

Selling, general and administrative
337,943

 
(13,174
)
 
(c)
 
324,769

Total operating expenses
581,480

 
(31,857
)
 
 
 
549,623

Loss from operations
(272,473
)
 
3,204

 
 
 
(269,269
)
Legal settlement
5,000

 

 
 
 
5,000

Co-promotion and license income
10,132

 
(3,715
)
 
(c)
 
6,417

Gain on remeasurement of equity investment
22,741

 

 
 
 
22,741

Gain on sale of investment
19,773

 

 
 
 
19,773

Loss in equity investment
(144
)
 

 
 
 
(144
)
Interest expense
(37,092
)
 

 
 
 
(37,092
)
Other income (loss)
400

 
19

 
(c)
 
419

(Loss) income from continuing operations before income taxes
(251,663
)
 
(492
)
 
 
 
(252,155
)
Benefit (provision) for income taxes
29,743

 
172

 
 
 
29,915

Net (loss) income from continuing operations
(221,920
)
 
(320
)
 
 
 
(222,240
)
Net income attributable to non-controlling interest
(10
)
 

 
 
 
(10
)
Net (loss) income from continuing operations attributable to The Medicines Company
$
(221,930
)
 
$
(320
)
 
 
 
$
(222,250
)
 
 
 
 
 
 
 
 
(Loss) earnings per common share from continuing operations attributable to The Medicines Company:
 
 
 
 
 
 
 
Basic
$
(3.32
)
 
 
 
 
 
$
(3.33
)
Diluted
$
(3.32
)
 
 
 
 
 
$
(3.33
)
 
 
 
 
 
 
 
.

Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
66,809

 
 
 
 
 
66,809

Diluted
66,809

 
 
 
 
 
66,809


See accompanying notes to unaudited pro forma financial information.


Page 4 of 5




THE MEDICINES COMPANY
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION


Anticipated Sale of ACC Products
On May 9, 2016, the Company announced it had entered into the Purchase and Sale Agreement to sell the ACC Products to Chiesi. Upon closing, the Company expects to receive approximately $261.6 million in cash from Chiesi, which includes the sale of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of Cleviprex and Kengreal. The Purchase and Sale Agreement contains customary representations, warranties, covenants and indemnities for a transaction of this nature. The closing of the transaction remains subject to the satisfaction or waiver of customary closing conditions, including the expiration or termination of the waiting period under Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Pro Forma Adjustments
(a)
Represents adjustments to reflect the anticipated disposition of the assets and liabilities associated with the ACC Products associated with the transaction described above for an estimated $261.6 million in cash, including product inventory, and contingent consideration of up to $480.0 million with an estimated fair value of $13.7 million. The net assets to be disposed of primarily include developed product rights with a net book value of $4.9 million, inventory of $1.5 million, and goodwill of $27.8 million.

(b)
Represents the estimated contingent consideration measured at fair value due to the Company from Chiesi upon achievement of certain sales milestones included in the Purchase and Sale Agreement. This estimated contingent consideration at fair value is a preliminary estimate based on a probability-adjusted discounted cash flow model and is subject to change upon the completion of a risk adjusted revenue simulation. In a probability-adjusted discounted cash flow model, the Company determines the projected probability and time period in which each sales milestone will be achieved and then determines the fair value of each milestone payment. In a risk adjusted revenue simulation, the chances of achieving many different revenue levels are estimated and then adjusted to reflect the results of similar products and companies in the market to calculate the fair value of each milestone payment. The Company will disclose the final estimated contingent consideration at fair value when the sale of the ACC Products is completed.

(c)
Represents adjustments to eliminate the direct operating results of the ACC Products as if the anticipated disposition occurred on January 1, 2015. Adjustments to cost of revenue, research and development expenses, selling, general and administrative expenses, co-promotion and license income and other include amounts that are directly related to the ACC Products. Adjustments to the income tax benefit (provision) were based on statutory rates in effect during the periods.

Page 5 of 5



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