Novavax: A Vaccine Company On The Rise

Company overview and opportunity

Novavax, Inc. (NVAX) is a clinical-stage biopharmaceutical company that uses recombinant nanoparticle technology to develop vaccines for a wide variety of infectious diseases. The company presently has six vaccine candidates undergoing clinical trials, with a seventh (rabies) being readied for a Phase-1 study later this year. Of the six vaccine candidates in active clinical trials, the most advanced are the Respiratory Syncytial Virus (RSV) and Seasonal Quadrivalent Influenza vaccines, both of which are in advanced Phase 2 trials. Getting down to brass tacks, the RSV vaccine is believed by analysts to be the most important short-term value driver for the company, with Lazard Capital recently placing an eye-popping $11 target on shares of NVAX based on this candidate alone.

To provide some context, RSV is a common virus that infects the lungs and breathing passages. Although healthy adults generally recover within a week's time, the infection can be deadly in infants and elderly patients with compromised immune systems. An effective prophylactic medication (Palivizumab) is presently available for preterm babies born prior to 35 weeks, but there isn't an FDA approved vaccine for any other demographic. Because of the global nature of RSV and the enormity of this unmet medical need, an effective vaccine that treats a wide variety of potential patients could be valued well into the billions.

Analysts are optimistic about Novavax's RSV vaccine candidate for two reasons. Firstly, the potential market for a successful RSV vaccine is easily worth 3-4X times Novavax's current market cap of $490M. Secondly, Novavax has repeatedly announced top-line results from its host of Phase 2 clinical trials aimed at creating a broad-based RSV vaccine.

Fundamental and Technical Perspective

As of June 30th, 2013, the company had $40.6 M in cash and cash equivalents, $30M of which was raised through the sale of common stock between 2011-2013. Yesterday, the company announced that it had raised an additional $82.6 M via a public offering (net proceeds) of > 27 M shares at $3.14, giving the company approximately $120 M in cash and cash equivalents. Because of increased expenses related to the company's advancing clinical trials, Novavax's cash burn rate has increased to approximately $3M a month this year, up $1.4 M compared to the same period in 2012.

Revenue generated from the BARDA contract and the PATH clinical development program came in at $7.4M for the first six months of 2013, which is a 37% decrease in revenue from these agreements year-over-year. To provide some context, the HHS BARDA contract was awarded in 2011 for the development of Novavax's seasonal and pandemic (H5N1) influenza vaccines. At the company's recent investor and analyst update, Novavax announced that the company will move forward with the clinical programs funded through BARDA, which is a major achievement both financially and scientifically for Novavax. Specifically, the continuation of this agreement will provide much needed revenue, and it signals that the company is steadily progressing towards a pivotal Phase III study for its nanoparticle vaccine platform. Overall, the company is now on financially stable footing and should have no reason to raise additional capital through dilutive measures within the next three years.

Shares of NVAX are now up approximately 70% year to date, despite more than 10% of the float still being short. The Relative Strength Index (RSI) stands at 56 at the time of writing this article, suggesting the shares are neither overbought nor oversold. Even so, NVAX is trading 13% higher than its 50 day SMA, and almost 42% higher than its 200 day SMA. From a purely technical perspective, NVAX would appear to be ready for a consolidation phase to form a new base near all-time highs for the stock. As such, I believe now is a good time to begin building a long term position in NVAX.

Conclusions

Companies developing the next generation of vaccines, like Inovio Pharmaceuticals (INO) and Novavax, have unquestionably caught the eye of investors in recent years. While these cutting-edge vaccine makers are certainly not the first companies to try to tackle global pandemics with novel technological approaches, they may be among the first in actually succeeding. Simply put, the technology behind non-protein based vaccines appears to have finally caught up with the hype of the past decade, evinced by the plethora of top-line results emanating from synthetic vaccine makers of late. Within this exciting subsector, I believe Novavax is an intriguing speculative play that could easily double in PPS over the next few months if the company continues to report positive clinical data. Backing this claim, the company currently has enough cash where dilution shouldn't be a major risk factor in the short-term, insiders have bought over 300k shares on the open market in the past 12 months, and the company's market cap is markedly lower than what a successful RSV vaccine would be worth (i.e., billions). In sum, Novavax looks to be a rising star in this up and coming sector, and offers investors an excellent risk-to-reward ratio going forward.

Disclosure: I am long NVAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

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Bacterin: New CEO Positions Company For Growth

(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)

Summary and Recommendation

We reiterate our positive outlook on Bacterin International Holdings, Inc. (NYSE MKT: BONE) shares given the company's recent hiring of new CEO and its recalibration of its sales team to focus on its core business in the approximately $1.6 billion bone replacement market and the growing, $400 million breast reconstruction market in regenerative medicine.

For the complete report including models and tables, please contact: research@thecockrellgroup.com

Bacterin is one of the most comprehensive biologics companies of its size in regenerative medicine. The company's new CEO, Dan Goldberger, held an investor call last week to discuss his current review of the business and provided a summary of his strategic position of the business going forward. After the call, we are more confident that management will be laser-focused on developing the biologics markets with bone grafts and dermal matrix products.

Over the past 12 months, the company has been wrought with negative headlines; the receipt of warning letters from the FDA, a subpoena from the OIG and the resignation of founder and CEO Guy Cook. The sequence of these headlines have left shareholders concerned about the sustainability of its business and as a result shares of the company have traded at all time lows.

Despite those concerns, Bacterin's interim management team lead by CFO John Gandolfo and COO Darrel Holmes focused working diligently to resolve its matters with the FDA and OIG. They also raised approximately $5 million in capital, which management believes will be suitable to steer the business towards profitability.

Now, a Commercially Focused CEO

Mr. Goldberger should be a refreshing solution that will reinvigorate the sales force to drive growth. He has a history of turning around and growing revenues in companies with similar characteristics as BONE. In his most recent position, the Stanford and MIT educated executive transitioned lackluster growth at Sound Surgical Technologies into a growth business. He procured financing opportunities for the company that allowed it to deliver double digit, top-line growth with improved gross margins. This transformation eventually positioned Sound Surgical to be acquired by Solta Medical.

A Renewed Focus

Bacterin has developed a comprehensive portfolio of regenerative products. During his inaugural call with investors, Mr. Goldberger mentioned that the Company will continue to increase its penetration of the bone replacement market with its core business products in bone grafting. He also, however, indicated that the Company will leverage the value of its dermal tissue scaffold in breast reconstruction, hMatrixPR. This would represent a new growth opportunity for Bacterin. The Company estimates that the dermal tissue market in breast reconstruction represents a $400 million market opportunity. The dermal tissue market is primarily dominated by Alloderm, the LifeCell product owned by Kinetic Concepts.

Essentially, there are two types of breast reconstruction, implants and autologous. Previously, in autologous breast reconstruction, fat, tissue and muscles were harvested from another part of the body, creating irreparable damage. With cadaveric tissue harvestation, that problem has been solved with products like Bacterin's hMatrixPR. In this process, skin from the donor is treated by removing epidermal layers and cellular components, creating an acellular dermal matrix. The product is then sterilized and packaged. Dermal matrices are used as a scaffold under the lower part of the breast to enable normal body cells to grow.

One major problem with this technology had been that chemical agents used to sterilize the product, could lead to post-surgery infection. There was a 15% higher chance of infection and 10% chance of fluid collection, despite efforts by the surgeon to create a sterile atmosphere by proper drainage, hydration and hemostasis.

Bacterin solves this problem by avoiding the use of chemical agents. Instead, it uses a small dose of gamma radiation to sterilize the product. This process helps the product become more useful, since their integration with the host is considered much superior to other allografts.

hMatrixPR Acellular Dermis was commercially launched 2 years ago for various reconstructive surgery procedures. It is extremely biocompatible, reabsorbing into the patient's own tissue in the healing process. Although Bacterin originally focused on the broader dermal tissue market,a shift has occurred to focus on breast reconstruction. With the increasing demand for this type of surgery, the opportunity for the company to penetrate this market looks good. This is also augmented by the following facts:

the CEO has strong relationships with plastic surgeons via his previous role at Sound Surgical,opportunity to convert surgeons that are on the fence with Alloderm, andhigh barriers-to-entry in the dermal allograft market, including complex technology and quality, consistent products

Regenerative Medicine: Growing Market Opportunity

The regenerative medicine market is an estimated $3.6 billion opportunity, which is growing at a ~15% CAGR. The market is shared between the developed and the developing countries, where there is a large, unmet need. It is in this geography that there is opportunity for sustainable long term growth. However, the allure of newly-discovered geography should not let BONE lose focus on the developed economies. This is the market that will create immediate sustenance for this growing company.

BONE: Undervalued Relative to Peers

As shown in Table 1, BONE currently trades at 1.0 times EV/2014 Sales, which is a 79% discount to its peers that trade at an average 4.7 times sales. A little execution from management and top-line growth will catapult BONE shares to historic levels. Bacterin is evenly placed among peers, neither overachieving nor being at the end of the class. This is, in fact, a sign of steady growth.

In first quarter 2013, total revenues increased by 11% to $8.6 million compared to $7.8 million in the same period last year. The increase was due to the additional sales of $1.3 million which resulted from a new agreement with a large U.S. distributor during the first quarter of 2013. Adjusted operating loss was $1.06 million compared to $0.54 million in first quarter 2012. The company is yet to report positive earnings. The company uses most of its cash to support its operations and depends on external financing. As of March 31, 2013, cash balance was $2.1 million compared to $4.9 million in December 31, 2012.

Risk resolution

According to the Mr. Goldberger, his checks in the field have determined that customers "love" Bacterin products. and he enumerated a five-point plan in during the call which aims to ensure that the Company leverages this attribute:

Resolving channel conflicts in core U.S. markets.Continuing to deliver world class service through field sales activities and customer service organizations. The Company currently has 20 direct sales reps and more than 100 distributors detailing Bacterin products in the United States.Resolve product mix issues that have resulted in shortages on the one hand and excess inventory on the other.Continue to work with our GPO relationships and drive those into new business, andDriving adoption in the health systems where the Company has obtained preferred vendor states, and then use that as a model in new relationships elsewhere.

Longer term, Mr. Goldberger believes he can grow the bone scaffold franchise in spine and ortho and that the business can be scaled effectively.

Backing up what he says

In recent weeks since his hiring, Bacterin has seen significant insider buying activity from Mr. Goldberger, which is always a good sign and suggests that he is confident about the company's prospects.

Conclusion

Bacterin has a highly viable set of products which has created a niche demand segment for itself. We have enumerated some of its problems here, but we believe all these are short term problems that are easily addressable by this strong management team. The arrival of a Mr. Goldberger as the Company's CEO and his track record of turning around companies like Bacterin, present a renewed focus for the business and a solid, near-term opportunity for healthcare investors.

Table 1: Peer Group Analysis

(click to enlarge)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

Business relationship disclosure: For the complete report including models & tables, please contact: research@thecockrellgroup.com. COCKRELL GROUP does and seeks to do business with companies covered in COCKRELL GROUP Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of COCKRELL GROUP Research. Investors should consider COCKRELL GROUP Research as only a single factor in making their investment decision.CertificationThe following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.Unless otherwise stated, the individuals listed on the cover page of this report are research analysts

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Clovis: After Data, Company Looking For Acquisition

Months after presenting incredibly good Phase I data for drugs CO-1686 and Rucaparib at ASCO 2013, Clovis Oncology (NASDAQ: CLVS) is starting to look at potential acquirers with help from Credit Suisse and unnamed consulting firm(s) (link). The company, which held its IPO on NASDAQ in November 2011, multiplied its value by about six times since.

It seems that the company is making a great move for its long-term shareholders, since the company has a $2.25 B valuation based primarily on the two Phase I compounds mentioned earlier. The company has the funding and institutional support for clinical development, but the current bloated valuations given to certain oncology assets (like CO-1686 and Rucaparib) makes it easier to understand why Clovis would shop itself this early in the game.

CO-1686 is the more impressive of the two drugs at this point, and the bulk of the company's intrinsic value. CO-1686 was originally designed by a biotech company named Avila Therapeutics, a covalent drug-focused entity that was acquired by Celgene on March 7th, 2012, in a $925 M deal. The compound was introduced to the Clovis pipeline in a $209 M partnership made in 2010 between Avila and Clovis, and the IND application was accepted not long before the company held its IPO on April 3rd, 2012.

The molecule is a covalent drug that irreversibly inhibits epidermal growth factor receptor (EGFR), which aids cancer cells in proliferation. Clovis is specifically developing it as a non-small cell lung cancer (NSCLC) treatment, since it can bypass certain obstacles in NSCLC cells that other EGFR inhibitors cannot.

A big problem that other EGFR inhibiting NSCLC drugs like Tarceva (erlotinib) and Erbitux (cetuximab) have is their vulnerability to particular mutations in cancer cells that can bypass their mechanism of action. In particular, a frequently seen mutation known as T790M is known to counteract EGFR inhibition in nearly two out of every three cases. Other, less common mutations like L858R and del19 cause similar disruptions.

What makes CO-1686 unique relative to its peers is the molecule's ability to inhibit EGFR in patients that have T790M, l858R, del19 and other drug-disabling mutations while avoiding inhibition of non-mutated (or wild type) EGFR. It was hard to believe that a NSCLC drug could be so well designed, although the Phase I data that Clovis presented at ASCO 2013 seemed to reinforce the notion that the drug works as intended.

In the trial 42 total patients were enrolled, 24 entered the dose escalation phase of the study, and 6 reached the highest daily dose of the drug (1800 mg, twice daily). According to biopsies taken from the 42 patients, 74% were positive for the T790M mentioned earlier, implying that the efficacy results would be a good gauge of whether or not CO-1686 worked as well as it should in lung cancer patients with that mutation.

Patients saw none of the typical signs of EGFR inhibition-related toxicity - specifically rash and diarrhea - up to a 1800 mg daily dose of the compound (N=6) as mentioned. There was 1 possible exception in the 900 mg arm that included diarrhea and some other serious side effects, labeled as an instance of dose limiting toxicity (DLT). Total adverse events (grade 3 or higher) were limited to 4 patients - including the DLT patient, and were explained to be unrelated to the administration of CO-1686. Total adverse events were seen in 62% of the population although the most frequent of these were common symptoms like fatigue and nausea.

Rucaparib is a potent PARP inhibitor - or a Poly(ADP-ribose) polymerase inhibitor being developed for breast/ovarian cancer indications. This compound was originally one of Pfizer's oncology drugs and was named "PF-01367338" during its tenure as drug for solid tumors, although the development was handed over to Clovis in a deal announced in 2011 that gave Clovis full responsibility over the development and commercialization of the compound in exchange for an upfront payment and milestone payments of up to $255 M. At ASCO, this drug seemed to be overshadowed by Tesaro's niraparib which targets the same indications.

The lack of data supporting CO-1686 and Rucaparib might make it difficult for the company to sell itself at a substantial premium, which is why the market may hesitate to keep CLVS above $80/share. While there is a lot of potential behind the company's assets, the drugs are huge investments at their current valuation and present substantial risk to a would-be acquirer. Most cancer drugs fail in late-stage development because of their inability to replicate positive results from prior trials.

On top of risk of failure, a company would also factor in the expensive clinical trials that would be needed for CO-1686 and Rucaparib, and the time value of an investment that may not generate any revenue for 10+ years.

It's clear that CO-1686 is one of the best early-stage cancer assets out there, but $2.5-3 B still seems expensive for anything in the early stage. We'll just have to see whether Wall Street's current valuation of Clovis matches big pharma's.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)

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Five minutes with ... the founder of a healthcare technology company

'I'd like there to be a much more open and transparent culture in the NHS, in terms of information sharing,' says Frank Hester.

Describe your role in one sentence. My role now is completely varied – from being a spokesperson for our vision of connected healthcare to working hands-on with our teams in the Leeds office, every day brings something different.

Why did you want to work in healthcare? I was inspired by my wife's work as a GP. She worked so hard to care for her patients yet I could see her constant struggle with the lack of connectivity and integration between NHS services.

How do you want to see the sector change in the next five years? I'd really like there to be a much more open and transparent culture in the NHS, in terms of information sharing, procurement and contracts.

My proudest achievement at work was ... being invited to be part of the trade mission to India with David Cameron earlier this year. We've been working alongside Healthcare UK to export SystmOne abroad.

The most difficult thing I've dealt with at work is ... managing to keep our small company values and culture despite growing very quickly.

The biggest challenge facing the NHS is ... achieving the digital strategy. The technology to make it happen is here now, but the NHS will have to make some necessary cultural changes.

The people I work with are ... unbelievably inspiring. We have very passionate, driven staff who are excited to come to work every day.

I do what I do because ... I'm one of those people who believes I can make a difference to the world and I now know our product has made that difference. I regularly meet the doctors and nurses who use SystmOne, and every time they tell me it makes their working lives easier, or has helped patient care, I know I'm still in the right job.

Sometimes people think that I ... am just the chief executive but in reality, I have a very hands-on approach to the company. At heart, I'm still a computer programmer and nothing gives me greater pleasure than sitting down with our software developers and getting to the heart of a technical problem.

Right now I want to ... make sure that we don't take our foot off the gas. We're accelerating at a very quick rate and sometimes that can be a little daunting.

At work I am always learning that ... communication is key. At TPP we have a very open culture and I'm constantly reminded that people working in teams, talking to each other, gets a better, faster result than someone struggling on their own.

The one thing always on my mind at work is ... remembering that everything we do is for the benefit of patients and health professionals.

If I could go back 10 years and meet my former self, I'd tell them ... not to worry about making mistakes. We're always learning and evolving, making mistakes is an inevitable part of developing and growing a product.

If I could meet my future self I'd expect them to be ... exhausted! My team works extremely hard and as a result I do, too, but I have no plans to slow down any time soon.

What is the best part of your job? Hearing stories about how SystmOne has saved someone's life. The amount of information available to clinicians is enormous, and having visibility of that data can drastically change the decisions that are made about how to care for a patient.

What is the worst part of your job? Hitting barriers created by bureaucracy. It's sometimes frustrating for people who are as creative and innovative as we are to wait around for endless processes to be implemented. The NHS is a wonderful thing, but it is bogged down by slow moving management.

What makes you smile? Sitting alongside my staff in the pub on a Friday night. I think the social side of working is extremely important, and, after a hard week at work, having a drink with my staff reminds me how lucky I am.

What keeps you awake at night? I've been a computer programmer for 33 years and I still get excited about how IT can improve the quality of our lives. I'd say the only thing that really keeps me awake at night is me looking forward to getting on with the next day!

If you would like to feature in our 'Five minutes with ...' series, or know someone who would, then you can let us know by emailing healthcare@theguardian.com

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Lunch with company reduces cognitive control, may increase social harmony

Main Category: Psychology / Psychiatry
Also Included In: Public Health;  Nutrition / Diet
Article Date: 31 Jul 2013 - 14:00 PDT Current ratings for:
Lunch with company reduces cognitive control, may increase social harmony

Lunch at a restaurant with friends reduces cognitive control more than lunch eaten alone at a desk does, according to research published July 31 in the open access journal PLOS ONE by Werner Sommer from the Humboldt University at Berlin, Germany, and colleagues from other institutions.

Participants in the study either ate a solitary meal alone at their desk in a restricted amount of time, or took a short walk to a restaurant for an hour-long lunch with a friend. All meals were identical in the kind and amounts of food consumed. After the meal, people who had a restaurant lunch were calmer and less wakeful than those who ate at their desks. They also fared more poorly on performance tests of cognitive control, and neurophysiological measurements indicated decreased cognitive control of performance and error monitoring processes. Since the meals differed in many ways including the presence of a friend, environment and lack of time restrictions, the authors explain "It is impossible to specify at this point, which of the variables above are crucial for the effects observed in our study."

They add, "Reduced cognitive control is a disadvantage when close self-monitoring of performance and detailed attention to errors is required, such as in numerical processing. In other situations, an attenuation of cognitive control may be advantageous, such as when social harmony or creativity is desired."

Article adapted by Medical News Today from original press release. Click 'references' tab above for source.
Visit our psychology / psychiatry section for the latest news on this subject.

How about Lunch? Consequences of the Meal Context on Cognition and Emotion.. PLoS ONE 8(7): e70314. doi:10.1371/journal.pone.0070314

Authors: Sommer W, Stürmer B, Shmuilovich O, Martin-Loeches M, Schacht A

This research was supported by the Wolfgang-Köhler-Zentrum zur Erforschung von Konflikten in Intelligenten Systemen. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

PLOS ONE

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The Medicines Company (MDCO) CEO Discusses Q2 2013 Results - Earnings Call Transcript

Executives

Clive Meanwell - Chairman & Chief Executive Officer

Glenn Sblendorio - President & Chief Financial Officer

Cees Heiman - Head of Europe & Middle East

Michael Mitchell - Head of Global Communications

Analysts

Louise Chen - Guggenheim

Jason Kantor - Credit Suisse

Umer Raffat - ISI Group

David Amsellem - Piper Jaffray

Adnan Butt - RBC Capital Markets

Steve Byrne - Bank of America/Merrill Lynch

Jonathan Eckard - Citi

Biren Amin - Jefferies

Matt Lowe - JP Morgan

The Medicines Company (MDCO) Q2 2013 Earnings Conference Call July 24, 2013 8:30 AM ET

Operator

Good day ladies and gentlemen and welcome to the quarter two 2013, The Medicines Company earnings conference call. My name is Caroline and I’m your operator for today.

At this time all participants are on listen-only mode. (Operator Instructions). As a reminder, the call is being recorded for replay purposes.

And now, I’d like to turn the call over to Michael Mitchell. Please proceed sir.

Michael Mitchell

Thank you Caroline and thank you everyone for joining us this morning for The Medicines Company’s, second quarter 2013 financial and operating results call.

I would like to remind you that this call will contain forward-looking statements about The Medicines Company that are not purely historical and all of the statements that are not purely historical may be deemed to be forward-looking statements that involve a number of risks and uncertainties. Without limiting the foregoing, the words believes,

anticipates, plans, expects, estimates, aims and similar expressions are intended to identify forward-looking statements.

Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are identified in the company’s SEC filings, including the Form 10-Q filed with the SEC on May 9, 2013. Copies of our SEC filings can be obtained from the SEC or by visiting the Investor Relations section of our website.

I would also note that during the call we may refer to adjusted net income measures, which exclude intangible asset impairments, upfront collaboration payments, amortization of acquired intangible assets, acquisition-related charges and restructuring, stock-based compensation expense and interest and income tax.

Please refer to the reconciliation of GAAP to adjusted net income statements in our press release for explanations of the amounts excluded and included to arrive at our adjusted net income and adjusted earnings per share.

This morning Clive Meanwell, Chairman and CEO will provide his perspectives; and Glenn Sblendorio, President and Chief Financial Officer will present operating and financial results, and we also have Cees Heiman, our Head of Europe and Middle East on the line as well available during Q&A.

And with that introduction, I give you Clive Meanwell.

Clive Meanwell

Well, thank you very much Mike and good morning to everybody. The Medicines Company is focused on acute and intensive care medicine, where our purpose is to save lives, alleviate suffering and improve the economic efficiency of approximately 2,500 leading hospitals in the world.

Our strategy is to create value for customers and shareholders from four main ideas; focusing on acute and intensive care medicine, concentrating on leading hospitals, leveraging our resources with multiple products down the same channel and demonstrating real value to customers.

The strategy is working well. During the second quarter and first half 2013 on a worldwide basis, our products were used in a record number of patients. Significant volume growth was reported for all of our products in all of the regions we’re operating in.

Because of the value, our products reached another record quarterly sales number, up 27% on last year and up more than 60% in the last three years. Because of our focus, concentration and operating leverage, adjusted net income is up more than 60% year-on-year.

Our portfolio includes more compounds with successful Phase 3 clinical data readouts than any hospital, Biopharmaceutical Company in the world. We now have a string of new drug applications under review, filed or under construction for the FDA, for the EMA and for Asian Regulatory Agencies.

Over the coming few years we expect to launch five highly innovative new products into the same hospital channel, Cangrelor, Oritavancin and IONSYS worldwide, Cleviprex and Recothrom in Europe and Asia.

We also anticipate a decision on our option to acquire ProFibrix in the next few weeks, as our colleagues there complete the analysis of Phase 3 studies for Fibrocaps. If we go forward, and we are optimistic, we will, and that’s add yet another successful post Phase 3 asset to our portfolio and again, from the same hospital channel where we are already growing Recothrom and having increasing success in our turnaround of Cleviprex.

We also have two important potentially high-value assets in ApoA-I Milano and PCSK9 RNA interference compounds with our close colleagues at Alnylam. These early and late pipeline assets represent significant value in our pipeline on top of our marketed products, which grew 27% in sales.

We are understandably excited by our current and future business and we will present an in-depth review of our commercial activities and of our pipeline to investors in an event on the morning of October 10 in New York City. Details of the exact time, venue and webcast links will be provided shortly, but for now please save the date; the morning of October 10 in New York City.

And so now over to Glenn for highlights of the second quarter and then we’ll take questions.

Glenn Sblendorio

Thank you Clive and good morning everyone. As Clive said, the second quarter was another record period for earnings. We also made significant progress on both our late stage development programs and our early stage programs, which I’ll talk about today.

Let me briefly review some of the financial highlights, starting with net revenues for the second quarter 2013. As Clive said, up 27% over the same period 2012 and aligning well with our expectations.

Each of our major market advancements showed growth year-over-year. For Angiomax sales in the U.S. reflected continued growth in both price and volume, with gains in high-risk patients undergoing PCI. As we have reported previously, patient level is third part audited and the U.S. showed the majority, about 60% of all Percutaneous Coronary Interventions or PCI are now performed with Angiomax to protect against thrombotic complications.

Consistent with our growth strategy, use in high-risk patients, those are the patients having heart attacks continues to grow. The latest data show that more that 46% of all U.S. heart attack patients undergoing primary PCI are given Angiomax, which is an approximate doubling of the market share net segment in the last four years.

Internationally, Angiomax and Angiox sales are up 11% in the second quarter. We did see continued volume growth exceeding 20% in Europe as Angiox adoption continues to increase in high-risk PCI patients there.

The second quarter was the first full quarter of Recothrom revenues for the Medicines Company and it came in at $17.9 million. The team supporting Recothrom is fully onboard and performing well. We saw a 7.6% volume increase in the second quarter compared to the second quarter of 2012 and again that’s for Recothrom. The balance of the revenue came from Cleviprex and Argatroban. These products could together increased 44% quarter-over-quarter.

Overall, second quarter revenue performance puts us on a strong footing at midyear. We are keeping our annual revenue guidance at 20% to 22%, the expected growth for 2013. Keep in mind that the third quarter tends to be flat compared to the second quarter, as procedure volumes in the CATH lab and surgical suites historically slow down during the summer.

The cost of revenues number came in at 37% consistent with our guidance of 37%. As a reminder, given the maximum Biogen royalty on Angiomax and the structure of the Recothrom deal, royalty payments on both of these products stop at the end of 2014. So the gross margin is expected to improve dramatically from 2015 forward.

Now an update on our late-stage for R&D. As Clive mentioned, we have several near-term hospital solutions that we expect to drive revenue growth starting in 2014.

First Oritavancin. On top of positive SOLO-1 results reported in December 2012, we announced positive results of SOLO- 2 and a combined SOLO program finding from July 2.

SOLO clinical data demonstrate that a single dose of Oritavancin, given on presentation of a patient with ABSSSI to a hospital can cure rare and positive infections, including Mercer infections and (b) at least as efficacious as multiple days of a twice daily regiment of vancomycin infusions.

In parallel, to completing the clinical trail for the team, the Oritavancin team, has continued preparing for our global regulatory submissions. We anticipate submitting an NDA in the U.S. in the fourth quarter of 2013 and an MAA in Europe in the first half of 2014. We are now focused on acute bacterial skin infection.

We also continue to assess additional opportunities for Oritavancin development in other Gram-Positive Infections. These include prosthetic joint infections, bacteremia, anthrax and potentially (inaudible). If approved we anticipate Oritavancin to be at least $400 million of global revenue at peak.

Of the Cangrelor we announced on July 1, the FDA acceptance of our NDA filing for Cangrelor and its intended use in patients undergoing PCI and those that require bridging from oral anti-platelet therapy to surgery. We anticipate action on the U.S. filing in the second quarter of 2014. In Europe we planned a fourth quarter 2013 submission. For Cangrelor we believe it can be a $450 million product globally at peak.

IONSYS; our second quarter activities keep us on track for the anticipated U.S. regulatory submission in the first quarter of 2014. The European MAA submission is anticipated in the second quarter of 2014. The U.S. and regulatory agencies are seeking data to support comparability, reliability and stability of the two-part system that was originally the approved version; both made significant progress on that.

Specifically with compatibility, we’ve now established that all three clinical studies have met their objective. Those studies showed bioequivalence device adhesion and usability and the area of reliability tests have essentially been completed with results supporting high levels of reliability as we expected.

Stability studies are ongoing and are designed to demonstrate a shelf life of 24 to 36 months. They are planned to be completed in the first quarter of 2014. As Clive mentioned, and asked you to keep on hold, we have our R&D day on October 10 and we look forward to talking a lot more about IONSYS’s at that meeting. Again to reiterate our long-term deal on IONSYS, we believe that it is a product that can generate at least $800 million of sale at peak.

A couple of words about our early stage R&D pipeline. Again, another focus of our R&D day on October 10. First we believe we potentially have a world-class lipid franchise by the end of this decade, specifically with MDCO-216 or ApoA-I Milano.

In the second quarter we continued our Phase 1 study. We have completed the healthy volunteer stage of the trial and we are moving forward with the ACS patient part of the clinical trial. Additionally, important manufacturing development work with our partner Lonza has continued to its increasing the yield of MDCO-216 protein manufacturing. We expect to report progress on both fronts later this year.

We plan to begin our Phase 2 trial in 2014. Manufacturing improvements necessary for ongoing clinical material continue on plan. As many of you that have followed this program closely recall, manufacturing yield improvements are a key determination in the success of this product.

For ALN-PCS, our global alliance with Alnylam for the development commercialization of Alnylam’s RNAi therapeutic program for the treatment of hypercholesterolemia is on plan. Under the agreement Alnylam continues its pre-clinical and Phase 1 development and The Medicines Company will pick up the work from Phase 2 forward.

Alnylam’s work towards optimizing a subcutaneously formulation for delivering this RNAi targeted PCSK9 therapeutic was reported at their recent Analyst Day. If we continue with progress, we plan to compete in a landscape of antibodies that are being developed targeting PCSK9. This is an important target in cardiology and we have much more to share on this front in the coming months.

Finally, a program that we’ve not talked much about is our partnership with Annovation Biopharma Inc. Together we are pursuing a rapidly titratable anesthetic that we believe can provide improved control of procedural sedation and general anesthesia. This is a promising program approaching clinical trials in the coming months and we look forward to providing you a further update later in the year.

So to wrap up, there are five key anticipated events that we want to point out for the second half of 2013. As Clive said, we are on track for a third-quarter decision on exercising our option to purchase ProFibrix BV. Second, we are planning to see a wealth of re-advance in data at leading medical conferences in anti-infectives, ICAAC, IDSA in September and October.

Third, the European Society of Cardiology Conference is coming up in early September and we anticipate investigators presenting new Cangrelore data. Fourth, we plan to report manufacturing pre-clinical and clinical development findings for MDCO-216, as well as ongoing progress with our program ALN-PCS; that’s the Alnylam collaboration.

Finally, we will have an opportunity to review all of this and more on October 10, the R&D day that Clive spoke about and we hope that you all can join us.

And now I’d like to turn it back to Clive.

Clive Meanwell

Thanks very much Glenn, and I think Caroline if we could, it would be lovely to open it up for questions.

Question-and-Answer Session

Operator

Okay, thank you (Operator Instructions). Please stand by for your first question; it comes from the line of Louise Chen from Guggenheim. Please go ahead Louise.

Louise Chen - Guggenheim

Hi, good morning. I had a few questions. The first question is on the financial guidance for 2013. I know you said that third-quarter…

Clive Meanwell

Louise, we lost you.

Operator

Sorry about that. We’ve lost Louise, I’ve now got Jason. Sorry, if Louise you want to come back into the queue, I’ll put you back in again. But we got Jason Kantor from Credit Suisse in now. Sorry about that.

Jason Kantor - Credit Suisse

Great. I unplugged her phone, sorry about that.

Clive Meanwell

Jason, be careful what you ask, because the operator will just cut you off.

Jason Kantor - Credit Suisse

I appreciate it. So you mentioned both price and volume growth for U.S. Angiomax. I’m wondering if you could break that out and discuss any trends in either. And then also in terms of Angiox, how big do you see that getting to before, the ex-U.S. portion before you run out of patent life there and what is the patent life outside the U.S.?

Clive Meanwell

Jason, thanks. Glenn is just looking at the numbers on the split there.

Glenn Sblendorio

Jason, the split is 50/50. I think the quarter was around 14%; it’s 50/50. And then as for the areas of growth, overall in excess of 60%, which we just spoke about. But really the key driver continues to be the high-risk conditions, which is now at 46%. The number you're looking for is a 50/50 split, price and volume.

Clive Meanwell

And looking beyond Jason for the other part of your question (inaudible) is looking at the numbers, in the U.S. as long as the product has exclusivity it’s going to grow not only because of high risk coronary patients, but also the work we're doing in peripherals which is a huge area of use and opinion leaders are very keen on Angiomax in that area, but we are undertaking a significant study to prove reduced bleeding with Angiomax in peripherals.

There's about 500,000 plus peripheral procedures in the U.S. So that’s a very fertile ground for further growth driving and a completely fresh set of audience, meaning including interventional radiologist, as well as cardiologists.

In the U.S. where you mentioned – we are designed to the fact that we will lose exclusivity in Europe in mid 2015. We have Cees Heiman on the phone and I think up until that point we are going to continue driving in acute MI, primary PCI. There's plenty of business left on the table there.

Also in high risk non-STEMI ACS and then occasionally we have centers that are efficient enough to use Angiox and we’ll call them elective procedures, but in Europe it’s rather tight Cees I’d say for those purposes. Could you give us some comments on where you think the main growth will come in the next two plus years?

Cees Heiman

Yes Clive, absolutely supportive of the statement you just made. I would add one major item to that and that is our geographical growth even within Europe. On top of western Europe we really got going last year in Russia and we expect to continue to see significant growth numbers coming from there.

And the good news also is that we recently received information that the product will be launched in Poland, which is the fourth largest PCI market in Europe in January 1, 2014. So continued growth in Western Europe and significant opportunities in the two major markets in Eastern Europe.

Clive Meanwell

Thanks Cees. Jason, I hope that got to what you needed.

Jason Kantor - Credit Suisse

Thank you.

Glenn Sblendorio

Yes Jason, the specific month is August 2015, so there’s a couple of more months in Europe on the project back.

Jason Kantor - Credit Suisse

Thank you.

Clive Meanwell

Thanks.

Operator

Thank you. I’ll just join Louise Chen back into the call again.

Louise Chen - Guggenheim

Hi, thanks. You guys can hear me okay.

Clive Meanwell

Yes, Louise, thank you. Sorry about that.

Louise Chen - Guggenheim

No, no problem. So I have a few questions. My first question was on your guidance for 2013. I know you mentioned the flat quarter and third quarter versus second quarter, but also I was wondering were there are any other factors making it a tougher year-over-year comp in the second half of ‘13 or are you just being conservative for now, doing it only halfway through the year? And then my second question was on – do you want me to…

Clive Meanwell

No, give us all your questions.

Louise Chen - Guggenheim

Okay. The second question was on Oritavancin. We've gotten quite a few questions regarding how the hospital will basically maximize the profitability on using this drug, because the ER and the actual in-patient are separated and just wondering how they will decide between the two of them that this drug is most profitable for the hospitals and institution as a whole.

And then maybe the last question is on IONSYS. Just wondering if you have comparable PK to IV opioids and if so, what evidence do you have of this? Thanks.

Clive Meanwell

Yes, great. I'll do the last two, but let's get Glenn to answer the question on guidance.

Glenn Sblendorio

Yes, thanks Louise. So we've not changed our top line guidance for the year of 20% to 22%. That being conservative, we do have historically and we always mentioned really for modeling purposes that the third-quarter tends to be, when you look at Angiomax along flat to the second quarter, and a strong quarter than in the fourth.

So right now we don't see anything on the horizon to change guidance. At this point, yes, about other things. If you’ve noticed, we haven’t changed our expense guidance. Clearly if ProFibrix moves forward, which would be a very good thing, we’ll take a look at our expenses as it relates to that and would adjust expenses accordingly, but steady as we go at this point mid year.

Clive Meanwell

Thanks Glenn. Louise, on the Oritavancin, the matter of hospital profitability, I think that of course there are a series of pathways of patients with acute skin infections. Some patients come to the ER and are discharged immediately, perhaps even on oral medication; there’s a large number of patients in that group. Obviously that’s not a target group for any IV drug.

Then there’s two groups of patients in the middle ground who are thought who need intravenous drugs, one group, which does not have comorbidities, and one group, which perhaps does. The ones that don’t have comorbidities are really candidates for having a rapid turnaround therapy, perhaps an ideal group of patients for Oritavancin.

The third group, which may or may not be admitted, but need IV again could well be an attractive valid proposition for oritavancin. And the fourth group are those that are very, very sick and absolutely need admission because of they are toxic.

We think group two, which comprises of several hundred thousand patients a year would be the ideal place to demonstrate improved profitability for hospitals with a drug like oritavancin, also possibly group three, and we know for a fact that half of the hospitals that we are currently dealing with in pre-launch discussions are losing money on this DIG and we believe they are very, very interested in moving patients out of the hospital within a day or less than 24 hours, so that they can get reimbursed differently.

So I think that with a large number of patients presenting to hospitals in this setting, we estimate somewhat between one million and two million people. There are plenty of patients in whom rather substantial improvements in hospital efficiency could be achieved and those are the ones you want to go after. And the value proposition is going to be, I think very, very high, depending of course on how we price this.

Now on the IONSYS, the comparison of pharmacokinetics versus IV opioids, all those studies have been done and there’s almost perfect equivalents with IV opioids and also remember, there are seven randomized clinical trials in Phase 3 that were performed, which also clearly show as that from a clinical point of view, its at least as good with improved ease of use, the safety relative to IV opioids. So I think we have a plethora of data to demonstrate the important issues you’ve raised their.

Louise Chen - Guggenheim

Thank you.

Clive Meanwell

Lets say it is summarized in the press release as well, right Michael.

Michael Mitchell

No, but its I think quite a summary I think.

Clive Meanwell

And Louise, if you if you want to get a hold of that information, we can absolutely give you that. The team can put that together, because its in the public domain.

Glenn Sblendorio

Yes, there is an 8-K that we filed in December of last year after we did the deal, but never used the data.

Clive Meanwell

Yes, it’s all there.

Glenn Sblendorio

We’ll follow up with you Louis to make sure you get that.

Louise Chen - Guggenheim

All right. Thank you.

Clive Meanwell

You’re welcome.

Operator

And so the next question we have comes from the line of Umer Raffat from ISI Group.

Clive Meanwell

Umer, go ahead. We seem to be having trouble with Umer’s line.

Operator

Sorry, I think we are having a lot of problem with the system. Just give me a second, I’ll override again. Umer you are now live.

Umer Raffat – ISI Group

Can you hear me now?

Clive Meanwell

Yes Umer.

Umer Raffat – ISI Group

Okay, great, thank you. I had two questions, number one on IONSYS, I remember last time we talked about minor adjustments that were being made to IONSYS. I just wanted to check up on the status on that and if that IONSYS post adjustment has been shared with the FDA and I had a follow-up.

Clive Meanwell

We’ve completed all the adjustments, we have all the data, we are very happy with the data. We a compiling a variety of supplements to the FDA; I think everything’s done. The comparability, the bio-equivalence of this system as Glenn mention, and of course the usability as well, that’s all been completed. So we are good to go there.

Umer Raffat – ISI Group

Okay, great. And then a quick follow-up, the second question is actually off topic on Angiomax. So have you guys received any notification from FTC on the ATP settlement?

Clive Meanwell

No.

Umer Raffat – ISI Group

Okay, great. Thank you very much.

Clive Meanwell

Okay, those are easy questions Umer; you’ll come back. Okay, so lets keep going.

Operator

The next question is from David Amsellem from Piper Jaffray. Please go ahead.

David Amsellem - Piper Jaffray

Thanks. Just a couple. First I wanted to get – this is for you Clive; to get your latest thoughts on the Hospira case and specifically what you think is the potential that this can be settled as of the case with Teva and APP and I guess how you are thinking about Hospira’s willingness to either settle or take this all the way through to trial and court decision?

Clive Meanwell

Almost all conversations of this nature are under confidentiality agreements David and were they to be happening, it would be inappropriate to comment on them. So I’m not going to comment on whether or not we have discussions or settlement with Hospira.

It is well known that our general approach to this issue is to look for settlements that make sense and that are completely within the boundaries and the guidances that came out of SCOTUS and by the way, I think because of the prior adherence for that, that’s why I could Umer very clearly just a moment ago.

We have a high respect for Hospira. We’ve worked with them on many projects over the years. We know their leadership. We think they have a great leadership group and I’ll leave it at that. I think that it would be inappropriate to try and reveal things that may or may not be happening in the background.

David Amsellem - Piper Jaffray

Okay. Question on IONSYS; one of your competitors, Excelerex (ph) has been – well potential competitors has been talking about the potential that your product has a relatively high cost to goods and therefore you won’t be able to compete aggressively on price. So you’ll have relatively higher price point for the product relative to their product. So I just wanted to get your thoughts on that commentary.

Clive Meanwell

Well, I know Excelerex (ph) has been loosening around the road raising money, and I congratulate then on that secondary offering, its terrific to see them moving forward. As to whether or not they are in a position to comment on our business, I’d be a little guarded on that one and certainly their ability to predict what price we are going to sell IONSYS for, its good to know that they believe we are going to be selling IONSYS, because we certainly are; at what price, it might be a bit premature to talk about.

So I think price, utilization, value, making a difference in hospitals, that’s a complicated equation, but as you know, because we’ve demonstrated it with Angiomax and we’ll continue to demonstrate it with everything we do, that we do value based pricing and we are not going to be tethered unlike their product, we are going to be tethered to any sort of comparative pricing games. We believe that our customers deserve to get value from us, and that’s what we’ll do. A little premature for me. I’m glad that Excelerex (ph) has figured it out.

Glenn Sblendorio

David the other thing I would say is that this is an established channel for us in surgery, so we’ll get tremendous leverage and cost efficiencies from a field force, a commercial presence that’s already there for us, so just something else to think about.

Clive Meanwell

David, our position independent of friends and colleagues of Excelerex is this; IONSYS is a breakthrough product. It is going to transform how patient controlled allergies is delivered, period. Now that’s our view and we think it’s a very valuable innovation. So we’ll be going for it big time.

David Amsellem - Piper Jaffray

Okay, and then one quick one if I may just on Recothrom. I know you talked about your efforts to drive volumes. Do you think that there is also pricing power in that market?

Clive Meanwell

I think it’s very tight. I think hospitals, they have various choices. The pricing opportunities in this space are very tight. I think you have to drive growth through volume and that’s what we are doing. So I don’t see an awful lot of opportunity on the pricing side, no.

David Amsellem - Piper Jaffray

All right. You were very helpful. Thank you.

Clive Meanwell

David, thanks for the questions.

Operator

Thank you. The next question we have comes from Adnan Butt from RBC Capital Markets. Please go ahead.

Adnan Butt - RBC Capital Markets

Good morning everyone. I hope you can hear me. I have two questions; first on Fibrocaps. Does the product just need to show efficacy or is there a specific efficacy threshold that needs to be crossed for the acquisition decision to be made?

Secondly, on oritavancin, has the company sought or will it be seeking QIDP designation from the FDA? And then lastly on the Paragraph IV litigation, there is one trial coming up. Any other trials that are coming up or expected over the next 12 months or so? Thanks.

Clive Meanwell

Okay, thanks so much. On Fibrocaps, we haven’t revealed details of the option agreement in terms of what the thresholds are, but it is over our option. There are no prearranged thresholds of performance. I think it’s within our purview to decide. We are though very excited about what our colleagues at ProFibrix are doing and we are confident that they are going to have great results.

On the oritavancin, yes, we absolutely intend to apply for QIDP GAIN act provisions, and then on the Paragraph IV, the only trial dates that are set at the moment are the Hospira trial dates, which are in late September 2013. No other trial dates have yet been set.

Adnan, I hope that answers your three questions hopefully. We may have lost Adnan.

Operator

He is still there. Okay, the next question comes from…

Clive Meanwell

Okay lets move on. Sorry, Adnan if you want to loop back Adnan, don’t hesitate to get back in the queue. Sorry.

Operator

Okay, the next question comes from the line of Steve Byrne from Bank of America. Please go ahead.

Steve Byrne - Bank of America/Merrill Lynch

Hey Clive, it seems like the CMS is particularly focused on cardiovascular related procedures and treatments, at least with respect to DRG cuts for readmission. Is that in your opinion due to that group of costs that are represented in a particularly high percentage of hospital costs or is it more of a high cost per patient indication?

Clive Meanwell

It’s a good question Steve. The last 10 or 15 years has seen raging debates about what’s the appropriate volume and what are the appropriate patients to be treated with cardiac surgery or specifically in our case, Coronary Angioplasty and Stenting.

There has been huge pressure, both from academic circles and CMS to avoid putting stents in people who merely have stable angina. But the data showed quite honestly are a little mixed and our view is that quality of life matters and I think it is clear that putting a stent into a stable angina patient does improve at least quality of life, even though it may not improve nitrile reinfarction or deaths, but that’s a controversial area, which is why we as a company have focused on the acute MI end of the spectrum and the non STEMI ACS end of the spectrum, where we think there is a lot of value in the healthcare system to be created and we’ve been doing that.

So the short answer is, DRG is timing out because, both the cost of the procedures are high and I think there may be a sense that there’s been some overuse of these procedures over the last 10 or 15 years and they want to keep that well-managed and actually I think we have to agree with that. I think we only want the right patients to undergo stenting and that occasionally means we lose volume opportunity, but I think we’ve been able to work our way through that.

Steve Byrne - Bank of America/Merrill Lynch

And on oritavancin, other than filing what are the next studies that you are queuing up for other indications other than skin?

Clive Meanwell

Well, now that we know the drug is so active and with this really quite appealing safety profile with a single intravenous dose, there’s a variety of things that we could prioritize. The one that captures my fancy, but this isn’t yet the filing and is the area that Glenn mentioned already, which is prosthetic joint infections. More and more people of course are walking around with false knees, and false hips and because we are living longer and getting osteoarthritis and so on, and many of these joint infections unfortunately don’t go in perfectly and some of those develop difficult to treat infections.

We think that it requires a long period of treatment and at the moment they are being treated on long-term intravenous drugs. So we believe that that might be a good target for oritavancin now that we understand its clinical performance better.

Other areas, obviously bacteremia is always a challenge, because bacteremia in which patient group, but I think that clearly we will understand ourselves better in bacteremia. We also have some interesting data in anthrax and although I think its becoming a credit area and I think it’s a very special situation, clostridium difficile might be important.

Now there’s one other area that Glenn didn’t mentioned, but I think we are not sure about, which is endocarditis. Very difficult studies, but again chronic therapy where much longer period is the dosing, it maybe of interest. Remembering especially that this drug has shown astonishingly good microbiology now, and I think now we can back that off with very, very impressive MRSA results in the clinic, so long answer. The short part of it is probably bone and joint prostheses would be a good place to start.

Steve Byrne - Bank of America/Merrill Lynch

Okay, thank you and just one small financial one. The sequential increase in the basic share count, 1.5 million shares is that exercising of options and if so what is the remaining balance of options outstanding?

Glenn Sblendorio

Yes, Steve it is the exercising of options. I don’t have the remaining balance. I know its on our regulatory documents, but clearly as we reached new highs in the last year or so there has been a lot of option exercise. So sort of had that number I think. Do we have thought or an estimate on that?

Clive Meanwell

I do not have that, but in addition to the option exercise we also have the impact of the, when we cross the threshold.

Glenn Sblendorio

So Steve, if you’re really analyzing the fully diluted number it also includes the convert where you basically put the shares as if they were converted.

Most of which is in the public. I’d be happy to follow-up with a call. I know this whole area shares outstanding has been a little confusing because of all of the exercises in the convert. We’ll look to work with you in the third quarter to make sure that we provide more clarity.

The key document that is coming out in terms of locking in of the number of shares outstanding is obviously the Q, which will be filed in early August and this is something that we’ve been talking a lot about internally to be sure that all of you as you build your models got clarity not only on what could, but also the impact of the convert.

Clive Meanwell

Let me be a bit unsound. If you had to pick a number today, of shares outstanding, what number would you pick?

Glenn Sblendorio

I think we will follow-up Clive.

Clive Meanwell

You want to follow up. Mike is more cautions than me Steve, you can see.

Steve Byrne - Bank of America/Merrill Lynch

Thank you.

Glenn Sblendorio

Okay. Thanks Steve.

Operator

Thank you. The next question we have comes from the line of Jonathan Eckard from Citi. Please go ahead.

Jonathan Eckard - Citi

Thank you very much for taking my questions. So the first question is, if you could just give us an idea of when we might be able to get an update on your plans or efforts on expanding the IP around Cangrelor and then the second question was on IONSYS.

Could you give us the ideas of the types of controlled substance programs the hospital would need to adopt in the distribution of IONSYS and would this be able to offset the need or needs around having a similar program for a more free distribution?

Clive Meanwell

John, good questions. We have a very focused and aggressive life cycle program for cangrelor as you would imagine and I think we’ll leave it at that for now. As to when we might talk about that, I think that’s a little hard to say.

I think we know we have longevity in Europe, at least 10 years. We are little tighter in the US, that’s something that’s under debate and its there where we want to make sure that the lifecycle is aggressively pursued, but the time being we are just working on it. I hope you forgive me for that.

On the controlled substance program, I think we see IONSYS as an opioid product. It’s going to – now you require all the bells and whistles of an opioid distribution system for hospitals. Obviously we will not be developing initially at least for outpatient use; that could be something down the road.

And so all of the controls which are in place already in preparation for launch and were all in place when J&J first had the product launched in Europe and then about to launch in U.S. I think that’s familiar territory for our team, but there are no, what shall we say, there are no easy ways to do it, there are no shortcuts. Opioids are opioids and although the drug has tremendous safety built into intrinsically, we would expect to comply with all of the rolls of opioid distribution for hospitals.

I hope that’s a helpful answer, please follow up if there is anything else.

Jonathan Eckard - Citi

Sure. May be if could just ask one quick question. Regarding oritavancin, when you foresee your own internal projections for the launch of this drug and we look back at Cubist who has presented charts about U.S. GRAM-positive and eight MRSA drug launches over historic ones, you know that obviously these ones do take time to build.

Do you see, based on your vision, that oritavancin has a potential to buck some of these trends a little bit with regards on the upside, based on some of the economics and needs that you see within the hospital system?

Clive Meanwell

Well, first of all I think if we can go to school anywhere, we can go to school with Cubist experience. I think they have done a fabulous job over the years building Cubicin and we are very admiring of what they’ve achieved.

Times change. I’m sure Mike, Bony would agree to me that the hospital environment has become more and more challenging and I certainly hope we’d be a very bold person to say that we could outdo Cubist in the launch of a product, in the anti-infective space. So I wouldn’t claim any possible upside relative to their fantastic program.

On the other hand, I think that the issues are increasingly focused on the economics of care and the efficiency of hospital throughput of patients. The American Healthcare System has challenges, but we are extremely optimistic about the way the American Healthcare System is adapting and will adapt to its challenges. I mean of all the Healthcare Systems and particularly hospital systems we’ve worked with around the world, this is the one that can rapidly take on new processes of care, turn on a dime and improve economics, and that’s the game we are in, is to help them to do that.

So without really answering your question, vis-à-vis to this achievement, which we think are definitely the benchmark, we think the world has become even more challenging and it’s all about the economics of care, as well as of course patient satisfaction and safety and effectiveness, but I think time will tell.

Jonathan Eckard - Citi

Great. Well, thank you very much.

Clive Meanwell

You’re welcome.

Operator

Thank you. The next question we have comes from the line of Biren Amin from Jefferies. Please go ahead.

Biren Amin – Jefferies

Thanks Clive for taking my questions. I guess an accounting question. For the next quarter, should we account for the $5 million that was awarded to Eagle through arbitration?

Clive Meanwell

Good question. Glenn?

Glenn Sblendorio

We didn’t revise our guidance at this point, but let me just – on the accounting, it’s in this quarter. In the second quarter we just reported, so its in the numbers that we did report. We had nothing accrued. It was $5 million, so net of tax it was probably about $3 million, so that’s over.

Does it impact our longer term outlook on expenses, it’s something that we’ll look at in the third quarter and the reason we’re being a little cautious there is we are waiting for ProFibrix, and I think ProFibrix will be the event that we would talk about expenses. But right now we have not changed guidance.

Clive Meanwell

Yes, but just to be clear Biran, we included the settlement fee of $5 million in the second quarter numbers.

Biren Amin – Jefferies

It is in there.

Clive Meanwell

Its in what we reported this morning, and for the record it cost us $0.05 on earnings after tax.

Biren Amin – Jefferies

Got it, and then I guess moving on, I had heard Glenn mentioned Cleviprex U.S. or European filing. I’m just trying to understand why you would want to spend resources on this product given the lackluster U.S. launch to date?

Glenn Sblendorio

Well Biren, we agreed that it was lack less to U.S. points, but we are seeing, I think quite encouraging signs of turnaround in the U.S. That product is up more than 80% year on year now off a very small base.

We have an opportunity in Europe, which is very different. First of all, in many of the key markets that we are looking at, including Germany, Intravenous Cardene is not even available and they are using, if I can put my medical had on a moment with you, they are using dinosaur like products in this space, very old drugs, which I think don’t have the precision, safety and effectiveness of a very, very advanced calcium channel blocker; of course Cardene is pretty good, we think Cleviprex is slightly better. So in the European context it is a very different mix.

The second thing, and I may get Cees to talk about this, is we believe the value of the products is much better established now to our research and development programs and we believe that the pricing of Cleviprex has been one of its biggest, the biggest missteps was to under-price Cleviprex relative to the value it creates.

At the time, that it was launched in the US, we hadn’t adequately explored and demonstrate that value. We now have, both in cardiac surgery and in other places, including as you know in acute heart failure where we’re very excited about the future.

So in the European context case, I think our assumption is we would go out with a very focused program against a very different competitive group and with a considerably higher a better value proposition; is that a fair case.

Cees Heiman

Yes Clive, absolutely. It will be a very, I would call it a balanced introduction. It’s not something where we will run in every country after every target, but we’ll be selective, both in terms of the number of countries and especially as Clive mentioned, the countries with the old-style therapies, if I may say it like that, where we see great opportunities.

And then also within each of these countries we are currently working very hard to identify the key accounts where we see the largest opportunity. So it will be a very targeted, very efficient launch in I would say a selected number of countries initially and based on that we will decide how we potentially rollout the products further in Europe.

Glenn Sblendorio

And Biren, I concur with your view that this is the lackluster historically. I think as a company we are not particularly happy about where we were, but we are quite pleased with the general direction this is taking. So I don’t expect you to be convinced today at all, but maybe over the next year or two we might be able to get you to a different place.

Biren Amin – Jefferies

Okay, and then maybe if I may Clive on IONSYS, I’ve got a couple of questions. I think there’s some criticism on IONSYS as far as its onset of action and whether that may potentially limit its adoption. And then my second question is, on today’s call you mentioned peak sales of around $800 million to $1 billion. I believe previously the company has centered around $800 million as peak potential. What kind of change and why provide this new range today? Thanks.

Clive Meanwell

Well, I don’t think we did say anything different. Maybe Glenn mentioned $1 billion while I wasn’t listening, but no. If that is what you heard we apologize. We are staying where we were, which is we think it can do more than $800 million at peak and hopefully we won’t misguide on that.

As far as the onset of actions, I’m puzzled, I don’t know where those data come from, because all the data I’ve seen is it’s almost a perfect replica of intravenous fentanyl or intravenous morphines. I mean you can’t get quicker than that, even if you do absorb it through the tunnel, which is maybe where that story is coming from. I’m battled by that.

We’ll follow up with you and if we feel there is some significant data that showed differently, we’ll come back to you. But I don’t think there’s any evidence that it doesn’t work on to the action very rapidly.

Glenn Sblendorio

Biren, just for the record, I went back and checked, what we had said. I think the exact words were $800 million or more, nothing more than that and I think that’s consistent with everything we’ve said in the past, so sorry if there’s any confusion on that.

Biren Amin – Jefferies

Sounds great. I may have misheard. Thanks.

Clive Meanwell

Thanks Biren.

Operator

On queue the next question we have comes from the line of Cory Kasimov from JP Morgan. Please go ahead.

Matt Lowe - JP Morgan

It’s actually Matt Lowe in for Cory today. Most of my questions have already been answered, but I guess one remaining one is how much patent life do you assume for oritavancin, cangrelor and IONSYS when you’re providing these peak sales expectations? Thank you.

Clive Meanwell

As a general statement we take the most conservative, what have we got in the back today? We don’t generally model out, at least in our guidance for lifecycle activities other than the obvious things like Hatch-Waxman extensions and pediatric extensions, which is somewhat easier to predict.

So I think, well these are fairly conservative Matt and as we go forward and develop more data we can perhaps amend then, but right now you can take these as being what’s in the public domain for excessivity periods, is what we are assuming for our peak sales.

Matt Lowe - JP Morgan

Okay. That’s helpful, thank you.

Clive Meanwell

You’re welcome. I think -- any more questions Caroline?

Operator

There’s no further questions coming through, so now I’d like to turn the call back over to Clive Meanwell for closing remarks.

Clive Meanwell

Well, thanks very much. Really we are standing on the threshold of really substantial growth we believe; five, possibly six sequence of launches down the same channel, with the kind of leverage that I think a unique hospital position product can achieve.

We believe that the growth cannot only be brisk, but very sustained in this company and that our focus and concentration on acute care medicine in leading hospitals is a very, very attractive area. It’s a large market where we have some emerging expertise and certainly some track record, which we believe can be converted into significant value for shareholders going forward and that’s exactly what we intend to do.

So, thank you so much everybody for attending the meeting. We look forward to seeing as many of you as possible on October 10 in New York City in the morning for our R&D program and pipeline update and thank you very much indeed for your attention today. Bye-bye.

Operator

Thank you for your participation in today’s conference ladies and gentlemen. That concludes the presentation. You may now disconnect. Have a good day.

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