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Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA)

2013 Barclays Global Healthcare Conference Call

March 14, 2013 09:00 AM ET

Executives

Richard Shea - SVP and CFO

Analysts

Richard Shea

Good morning and welcome. I'm Rick Shea, CFO at Momenta Pharmaceuticals and before I commence the presentation, I would like to draw your attention to the risk factors in our SEC filings and our Safe Harbor Statement.

Momenta Technologies was founded on the basis of technology for de-convoluting complex mixtures and we use our sophisticated and leading edge analytics in order to uncover both the structure and the function of complex products and these include heparin-based products, complex polypeptides as well as biologics.

We have a diversified pipeline of products including two complex generics. We have a marketed generic version of Lovenox and we have an ANDA for generic Copaxone under review with FDA. With biosimilars, we have a global collaboration with Baxter for up to six biosimilars products, and we have two novel drug programs M402, a novel heparin-based oncology drug candidate in Phase I and sialylation technology that we’re applying to IVIG.

Enoxaparin sodium injection, our version was approved by the FDA in July of 2010 at the time of first generic Lovenox to be approved by the FDA after period of five years of review and under our collaboration with Sandoz generics division of Novartis; initially we received the profit share on sales of the product. Currently, we’re receiving a royalty of 10% to 12% on sales of generic Lovenox. Sandoz reported Q4 sales of $85 million.

In connection with our Enoxaparin program, we initiated litigation against Amphastar Pharmaceuticals and their partner Activist and against Teva for an infringement of two Momenta patents. Recently in 2012, the court of appeals found that our patents were not enforceable because of the Safe Harbor provisions of Hatch-Waxman. It’s a ruling and which we disagree despite that interpretation Hatch-Waxman. So, we requested that this case be taken to the Supreme Court.

Now, case that’s been taken to the Supreme Court was really only the request for an injunction and the granting of an injunction at the district court level. The underling patents themselves have never been litigated. So, this is the situation that we think it’s important, it’s important to our underling IP not only for this product but for other products. So we’ll continue to pursue this but certainly would caution investors that we don’t see a near-term resolution to this case. This will take some time to play out.

M356 is our generic version of Copaxone and since this was filed this an NDA drug, we filed an ANDA which was accepted for review by the FDA in July of 2008. Capaxone is a complex synthetic polypeptide and it is clearly not a biologic, therefore we believe that the ANDA pathway 505(j) pathway is an appropriate pathway for generic version and we also have partnered this product with Sandoz. The terms of this collaboration upon commercialization will receive 50% of the profits globally and that would be under all competitive circumstances.

We’ve recently said that the ANDA review is going well and we continue to be in dialog with the FDA about their review of the ANDA. We’re encouraged by the progress that has been made and we’re certainly looking forward to and expecting that the FDA will approve our ANDA under this pathway for an interchangeable version of Copaxone.

As far as the timing of any such action, we think it’s hazardous to make any predictions about the timetable of any FDA action but certainly possible that an approval could occur in 2013, but again I think it’s more important that we continue to make good progress and we certainly see the FDA having a bias towards approving a generic version of Copaxone as an interchangeable generic version.

We are also litigating Teva patents on Copaxone. There are nine patents, orange book patents one, non-orange book process patents. Orange book patents run to June of 2014, process patents September 2015. Most recently, upon a ruling in a District Court that the patents were valid and infringed, we are pursuing an appeal and the grief’s have been filed in the appeal and we are anticipating a second quarter; all arguments most probably in June. So ruling by the Court of Appeal in 2013 is certainly possible.

We’re also working on biosimilars, they are potentially interchangeable biologics. We like to add that because our goal in working on biosimilars is to make products that are substantially more similar than we believe our competitors will be creating; with a goal towards interchangeability which we think will be important for two reasons; one is the potential reduction of clinical studies and then secondarily upon commercialization, we believe a designation of interchangeability would carry weight with physicians and patients as well as with payers and give it a distinct commercial advantage.

So, we use our propriety analytic analysis in order to deconvolute these biosimilars. We believe it's important to select the right cell line, if you don’t know what the right cell line; you can't make a product that is highly similar to if not equivalent to the branded product. And then you need to essentially reverse engineer the process conditions in order to hit the product quality attributes that we have defined for the product in order to make the product that is highly similar if not essentially equivalent to the branded product.

So in contrast we believe to our competitors who are pursuing biosimilar products and primarily using a clinical pathway in order to establish the similarity of the products. We are following our practice which we established in prosecuting with the FDA, the generic Lovenox and generic Copaxone products and we are applying our analytics to these biologic products getting a greater understanding of these products and therefore engineering our biosimilars to be more precisely identical to the branded product.

So, this is totally in line with all the FDA’s comments about biosimilars where in their two-step process, they are essentially looking first at what does your product look like and it’s after understanding what your product looks like and this is both from a physiochemical perspective as well as looking at the biology of the product but they really want to understand exactly the differences that you have, the physiochemical differences that you have with the brand of products before moving on and determining what the clinical pathway will be. And we think there is real opportunity here to potentially reduce the clinical pathway by demonstrating to the FDA product that is more identical to the branded product.

So, under the 351(NYSE:K) process, in guidelines established by the FDA, the amounts of the clinical work that’s required to be done does vary according to the amount of analytical work and the product characteristics that you can demonstrate to the FDA.

So we have partnered biosimilars program up to six products with Baxter and today three of the six products have been named M923 and MA34 are indicated for autoimmune and inflammatory diseases and M511 is a monoclonal antibody for oncology and we are saying that M923 we are targeting I&D filing in 2014.

Under the Baxter collaboration, we received $33 million upfront and we received additional milestones based on regulatory and technical criteria. In 2014, we do have the potential of receiving up to $26 million in potential milestones, though for M923 that would be I&D acceptance and accompanying technical development milestone for the M511 and MH34 products. There is an earlier stage proof of concept milestone that we’re targeting for achievement in 2014 again totaling $26 million.

Now, importantly in this collaboration, we structured the collaboration so that if we are successful in reducing clinical studies that we obtained a significant amount of benefit for that reduction. So if we can reduce clinical trials so that essentially eliminating the need for Phase III study or reducing the need for our Phase III clinical study that the savings are shared between us and Baxter up to a maximum of $50 million per product.

So, if you look at the cost of developing a product through I&D, the milestones partly covered the cost of that development but if we were to achieve a reduction in clinical studies then substantially more of the development cost would be funded by that additional clinical milestone.

So, let me just say a little bit more about the biosimilar collaboration. Certainly recently the FDA has continued to say that the amount of clinical work is dependent on the physical characteristics of the products. So they have been very consistent in this approach. I think there is a lot of thinking out there that the pathway is still murky that the FDA guidelines are still in process and that the entire process is still uncertain, but I think the FDA has given clear directional guidance.

But unlike the practice in Europe, unlike the EMA the FDA is going to be dealing with these products on a case-by-case basis which we think favors our approach because we tailor the amount of characterization that we do both physiochemical characterization and bio-characterization to the product specifically.

So, again this is a great opportunity for us, up to six products that we’re collaborating with Baxter, if they are products that we identify that Baxter not interested in pursuing, we are free outside of the collaboration to pursue those products. So this continues to be an open-ended business for us and lot of opportunity there.

Moving on to our novel drug, we have two novel drug programs. First of these is M402, novel oncology candidate. This is a heparin sulfate mimetic. So it’s potentially a reengineered low molecular weight heparin and it’s been known for many years that heparins have anticancer properties, anti-proliferative, anti-metastatic but companies haven’t been able to exploit these properties because of the anticoagulation. They haven’t been able to increase the dose efficiently.

We reengineered this product to substantially reduce the anticoagulation and therefore taking advantage of the anticancer activity of the product. So, this is a very interesting product that could be applied broadly across a verity of tumor types and different types of cancers. It would be a combination therapy because it’s not an antitumor agent. But this is a pretty interesting product and it is a dose escalating Phase I study right now.

So, we have Phase I, II study, Part A, Part B. Part A is a dose escalation phase. We’re testing it currently in combination with gemcitabine and again we’re in the dose escalation phase. We continue to increase the dose and if the study proceeds as we hope, we will reach a target dose in 2013 and hopefully will have completed the dose escalation phase by the end of 2013 and move on to the Part B which would be an efficacy study.

So, our other novel program is a sialylation technology. This technology was originally discovered at Rockefeller University, was in-licensed by startup Redante (ph). Redante (ph) couldn’t get it to work and preclinical models, so we in-licensed the product. With our capabilities we have been able to replicate the work done by Jeff Ravetch at Rockefeller. So we believe that we can carry forward this technology. There really two pathways that you can use with this.

You can have a product that is an IVIG based product in which you then sialylate the IVIG and that would the product and the sialylation substantially increases the potency of the product and this is important for the patients because generally patients get intravenous transfusions of the IVIG over a lengthy period of time, if you could decrease the dose or decrease the period of time for the infusion, this would have a substantial benefits of the patient.

But an alternate version of the technology, use of the technology would be to sialylate the Fc portion of the IGG antibody and this approach could potentially be used for a variety of antibodies, not just the IVIG-type products. So, this is a very interesting opportunity for us.

What we are targeting by the end of 2013 is to have a drug candidate that we can then move into preclinical. So, just to give an idea of the IVIG market, it’s a very fragmented market. There is a lot of indication that are used. There are three primary players in the IVIG market. We are asked whether our collaboration with Baxter on biosimilars; whether we are talking Baxter about IVIG and certainly they are aware of our working with this technology.

But certainly on a sialylated IVIG product it would make sense to partner that particular product in order to obtain a sufficient supply of IVIG. If we go the recombinant road, within an Fc sialylation; then we wouldn't need to use IVIG as a source material. But this is substantial market which we think could actually grow quite a bit, if this technology was successful and the amount of dosing could be substantially decreased. So again, very exciting opportunity for us.

So that’s Momenta again; broad pipeline, complex generics, biosimilars and novel drugs and we look forward to updating you. Thanks. I can take a couple of questions here before moving into the breakout if you have any questions here otherwise you are welcome to join us across the hall in the breakout session.

Question-and-Answer Session

Okay, we will move across the hall then. Thank you very much.

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Source: Momenta Pharmaceuticals Management Presents at 2013 Barclays Global Healthcare Conference (Transcript)

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