Shares of The Medicines Company (NASDAQ:MDCO) crashed on Friday, after it was denied an extension for its key product Angiomax, a blood thinning drug by the US Patent and Trademark Office (PTO). The existing term of this patent is scheduled to expire on 23 March 2010. The company is keen on extending the terms till 2014.

The issue started in 2001 with the company filing for exclusivity with the PTO and its application being rejected on the grounds of late application submission. Since then MDCO has been pleading the PTO for accepting the late filling as it was due to some unintentional circumstances but every time the former has rejected the requests.

The Medicines Company went on to sue the patent office, the Food and Drug Administration and the Department of Health in order to set aside the denial of extension. But, the company may soon have to wind up as they are running short of arguments.

After this news, shares of Medicines dropped 15 percent after rising 20 percent earlier in the week.

Investors are expected to focus on the resolution of the Angiomax patent issue. Shares of The Medicines Company recently went down 16 percent to US$7.83. The stock of MDCO is 19 percent below from the point it was at a year ago. However, on 16 March due to court’s order, PTO has given interim extension to the patent until May 23rd, 2010.

It is very clear from all these latest developments that company’s share can fall further if they are not getting any further extension on patent as Angiomax accounted for 95 percent of MDCO’s total revenue in 2009. Although the company can again pursue a patent extension through the courts, and the PTO will be expected to comply with the court decision in the event, litigation remains an expensive process and chances of success appear limited.

Eventual beneficiaries in the event of the patent not being granted will be generic companies like Teva Pharmaceutical (NASDAQ:TEVA). Relatively inexpensive generic variations of Angiomax can flood the market wiping MDCO out of the market.