Momenta Pharmaceuticals Q1 2009 Earnings Call Transcript

Momenta Pharmaceuticals Inc. (MNTA)

Q1 2009 Earnings Call

May 07, 2009 10:00 AM ET

Executives

Beverly Holley - Director of Investor Relations

Craig A. Wheeler - President and Chief Executive Officer

Richard P. Shea - Vice President and Chief Financial Officer

Bruce A. Leicher - Senior Vice President, General Counsel

Analysts

Bret Holley - Oppenheimer

Presentation

Operator

Good morning ladies and gentlemen, and welcome to the Momenta Pharmaceuticals First Quarter, 2009 Earnings Call. This call is being recorded. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session at the end of today's conference.

I would now like to turn the call over to Ms. Beverly Holley, Director of Investor Relations. Please proceed.

Beverly Holley

Thank you and good morning. I want to welcome all of you to Momenta's conference call to discuss financial results for the first quarter 2009, and provide a corporate update.

With me on the call today, with prepared remarks are Craig Wheeler, President and Chief Executive Officer, and Rick Shea, Chief Financial Officer. Also on the call with us are Rod Riedel, Vice President of Regulatory Affairs; and Dr. Kei Kishimoto, Vice President of Biology. Following our remarks, we'll open the call to questions.

Before we begin, I'd like to mention that our call today will contain forward-looking statements. Various remarks that Momenta Pharmaceuticals may make about its results of operations, regulatory filings and review, intellectual property rights, development and manufacturing efforts, litigation, legislative developments, operating expenses, belief, future expectations and plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those stated or implied by these forward-looking statements as a result of various important factors including those discussed in the risk factors section of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 as well as other documents that the company files with the Securities and Exchange Commission from time to time.

In addition, any forward-looking statements represent the company's views only as of today, and should not be relied upon as representing its views as of any subsequent date. While the company may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so whether as a result of new information, future events or otherwise, and therefore you should not rely on these forward-looking statements that's representing the company's views as of any date subsequent to today.

With that, I will now turn this call over to Craig Wheeler, Momenta's President and Chief Executive Officer.

Craig A. Wheeler

Thank you, Beverly. Good morning everyone and thank you for joining us. This morning I'll provide an update on recent corporate development at Momenta beginning with M-Enoxaparin.

Following my remarks, Rick will provide a financial overview.

Regarding M-Enoxaparin, since our last call, we have made progress both on the legal and regulatory front. The 180 day market exclusivity period for generic Lovenox expired on April 1, 2009 without the approval of a competitive product. The expiration of the exclusivity period means we are now eligible to receive final approval from the FDA.

In our recent development, on April 24th, the Supreme Court denied Aventis' petition for Supreme Court review of the patent case. This means that the lower court of appeal's determination of unenforceability of the patent stands. As a result, there is no longer a patent barrier to marketing a generic version of Lovenox.

On the regulatory front, as would be expected, the FDA continues to review our ANDA, including our immunogenicity amendments filed in September of 2008. We are in regular communication with the agency and responding to their questions as they arise.

I'd now like to turn to the matter of heparin supply. As we mentioned previously, as the result of the global contamination issue, the FDA has been conducting plant inspections of Chinese suppliers of heparin. This review process includes inspecting those facilities that supply Heparin to Sandoz for the manufacture of M-Enoxaparin.

As a reminder, Sandoz purchases heparin which it further processes into USP grade heparin. That USP grade heparin is the starting material for M-Enoxaparin. Sandoz noted in the most recent Novartis earnings call that all four of their suppliers have now been inspected. We have no indication that there are any concerns resulting from the inspection and we are waiting for the formal FDA responses.

However, any disruption in the heparin supply has the potential to impact our supply chain. We and Sandoz are taking action to diversify our sources of heparin and are closely monitoring our supply chain including, the recent inspections by FDA. It's also important to note that we are still in active dialogue with the FDA regarding the sourcing and processing of our heparin supply.

In summary, we have made progress towards our goal of commercializing M-Enoxaparin. We continue to believe our ANDA addresses the issues raised in the Sanofi-Aventis Citizens Petition and that our method for thorough characterization have enabled us to produce a generic version of Lovenox that meets the FDA's requirements for sameness.

We and Sandoz continue to work towards the goal of launching the product as soon as possible after receiving regulatory approval, and we continue to prepare for a potential 2009 launch. However, as we had previously stated, there is no mandated time table for the FDA to act on the ANDA and the timing of any potential approval is uncertain.

I'll now discuss M356, our generic version of Teva Copaxone, which we are developing in collaboration with Sandoz. The ANDA for this product is currently under review at the FDA.

As we noted in our last call, in response to our Paragraph 4 notification to Teva in July of 2008, Teva filed a patent infringement suit against Sandoz and Momenta in August. We and Sandoz filed our initial response to Teva's suit in November 2008.

The next major step in the district court is the exchange of discovery, leading to pre-trial motions and counterclaim and claim construction. We and Sandoz plan to vigorously defend the suit, and to seek a decision at the earliest possible stage in the case.

As a policy, we and Sandoz will not comment on the pleadings and orders in the case but these are publicly available from the court or through services like Pacer.

In addition, in September 2008, Teva filed a Citizens Petition requesting that the FDA not approve ANDA or a 505(b) (2) application for generic Copaxone, without clinical studies due to the chemical complexity of Copaxone, and the limitations of methods for analyzing a complex product such as Copaxone. Other parties have also filed documents to the Citizens Petition.

In March, the FDA denied the Teva Citizens Petition without reviewing its matter. I'll provide some context for that action. The FDA issued a guidance document last year stating that the FDA would rule on Citizens Petitions filed after the 2003 Medicare Modernization Act that seek to prevent an ANDA approval within 180 days from the filing of the Citizens Petition.

Then FDA noted in its guidance document that it would dismiss as premature Citizens Petitions of this time if the 180 day period expired prior to the time of final approval of appending ANDA without acting on its merit. This demission with Teva CT therefore is procedural and does not limit Teva's actions in the future.

We agree with Teva's assertions that the composition of Copaxone is highly complex. This is precisely why we chose to acquire technology to Copaxone. We believe that we have developed a noble method to analyze and thoroughly characterize Copaxone and that M356 ANDA will meet the FDA's requirement for demonstrating the sameness of M356 to Copaxone.

I'll now turn to MI18, our novel anticoagulant currently in Phase 2a clinical study. We're very pleased to report that in April we enrolled 500 patients in the EMINENCE trial, completing the patient enrollment phase. The EMINENCE trial compares M118 versus heparin in an elective PCI setting. We expect to have top-line data on a Phase 2a study in-house in late June.

For clarity, it is our policy to release clinical data at appropriate scientific meetings or in purview (ph) journals. Accordingly, following completion of data analysis, we plan to submit these trial results for consideration for presentation at an appropriate meeting.

As we have discussed in the past, it's our intention to seek a partner for M118 to support our clinical and commercialization efforts, following this trial.

I'd now like to provide an update on M402, our novel heparin based oncology product candidate. We have recently moved M402 out of discovery and into pre-clinical development.

Let me provide additional background on M402. Heparin has long been reported to have anti-cancer properties and multiple clinical studies have suggested that beyond its activity as an anticoagulant, heparin may have a beneficial effect on cancer patient survival.

We believe the potential for heparin like molecules in cancer is significant, due to the broad range of tumor growth and methodic factors that heparin vines and inhibits. However, the potential anti-cancer properties of heparin may not have been fully realized because dosing has been limited by its anticoagulant effect.

We have engineered M402 from a low molecular weight heparin scaffold to create a rationally designed molecule with the potential for anti-tumor activity, including the inhibition of metastasis without dose limiting anticoagulant affects.

At the recent American Association for Cancer Research Meeting in April, we presented data on pre-clinical studies of M402 and two separate post-recessions. The data showed that M402 in combination with chemotherapeutic agents inhibited spontaneous tumor metastasis in murine metastatic breast carcinoma model.

Briefly, M402 in combination with cisplatin was shown to significantly inhibit tumor cell metastasis to the lung compared to animals treated with cisplatin alone.

Subsequent immunohistological analysis showed a decrease in microvessel density in both primary tumors and lung metastases in the M402 treated group. Suggesting that anti-angiogenesis may contribute to the anti-tumor effect of M402.

If you are interested in more detail, you can access PDFs of the posters on our website. We are increasingly excited about the potential for this early stage oncology product candidate and we're now conducting pre-clinical evaluations of M402 designed to support our future IND application.

I'll now turn to follow-on biologics. Our goal for that program is to build a leading competitive position in the follow-on biologics arena, including a portfolio of therapeutically equivalent substitutable biogeneric products.

In order to achieve this goal, we need a suitable regulatory pathway. Although legislation is still not in place, we continue to believe that it is only a matter of time before follow-on biologics become a reality in United States.

We are pleased that bills have been introduced in the House and Senate that would allow for therapeutic equivalent, substitutable biologics that would provide the FDA with the discretion to decide the need for clinical trials on a case-by-case basis.

We do not support mandatory requirements to clinical trials or public guidance documents and we do support the creation of an Orange Book type process of biologic products that includes transparency and identifying the relevant patents being asserted by the innovator and a profit to litigate in parallel with the regulatory review period.

In our FOB program at Momenta, we are focused on developing generic and follow-on versions of marketed therapeutic proteins, which are derived from natural or sell based manufacturing processes. By thoroughly characterizing these biologic molecules, we seem to get in a deeper understanding of the relationship between their manufacturing processes and final product composition.

Our intent is to replicate our development approach with M-Enoxaparin and M356 and pursue the development and commercialization of multiple generic or follow-on versions of marketed therapeutics.

I'll now turn it over to Rick Shea to provide a financial update.

Richard P. Shea

Thank you, Craig. Revenue for the first quarter of 2009 was $4.0 million, approximately equal to the $4.2 million of collaborated revenue for the same period last year.

Research and development expenses for the first quarter of 2009 were $15.8 million compared to $12.9 million for the same period in 2008. The increase in R&D was principally due to increased clinical costs for M118 and increased manufacturing costs for M356.

The net loss for the first quarter of 2009 was $17.9 million or a loss of $0.46 per share as compared to a net loss of $13.3 million or loss of $0.37 per share for the first quarter 2008. Overall, the increase in the net loss was the result of an increase in the self funded R&D expenses and lower interest income.

We ended the first quarter of 2009 with $87.9 million in cash and marketable securities compared with $108.5 million at the end of 2008. Our cash burn for the first quarter was $20.6 million. The increase in cash burn for Q1 was partly due to the timing of R&D expenses which fluctuate from quarter-to-quarter and due to balance sheet items, higher receivables and lower payables and accrued expenses at March 31st compared to December 31st.

We continue to project full year cash burn, excluding any potential new collaboration revenues to be approximately $55 million.

This concludes my financial review. We'll now open the call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We'll take our first question from Bret Holley with Oppenheimer.

Bret Holley - Oppenheimer

Yes hi. Thanks for taking my questions. I was just wondering, maybe you can't comment, but I'm just wondering if you could give kind of view of how the new FDA leadership may or may not expedite the decisions on generic Lovenox?

Craig Wheeler

Bret, thanks, this is Craig. I mean, obviously, we can't comment too much on the internal workings of the FDA because we just do predicting like anybody else out there would be. But our current sense is the application is moving forward and there doesn't seem to be any delays are being incurred because of uncertainty in leadership, our new leadership coming in. So we're... I guess I would say business is usual at this point.

Bret Holley - Oppenheimer

And regarding the Orange Book for follow-on biologics, I guess the question... I haven't seen any specific proposals for that and I'm wondering how the legal process might be complicated in the absence of such an Orange Book.

Craig Wheeler

Yes, 'm going to turn that over to our Chief Counsel here to comment on that.

Bruce Leicher

The proposals are actually to have a transparent like process which would necessarily used the Orange Book and they varied depending on the bills that are pending ranging from the Waxan bill (ph) to the Senate health bill.

But from our perspective we are fine whether its an Orange Book or not, as long as it's clear that one can go through the patent clearance process in advance at the time when it'd be eligible to launch.

Bret Holley - Oppenheimer

Okay. Thank you very much.

Craig Wheeler

Sure.

Operator

: (Operator Instructions). We'll take our next question from Eric Werner (ph) with Leerink Swann.

Unidentified Analyst

Hi, good morning guys. Thanks for update on your manufacturing facilities. I was wondering, can you kind of give us any insight of what was inclined (ph) from the Shanghai Number One warning letter to FSR... not exactly Lovenox.

Craig Wheeler

Yes. So obviously we can't comment on other people's applications. Warning letters are public in terms of what was happening with that manufacturer. We don't anticipate that that will have any direct part on our product.

As we said, our manufacturers in China have been inspected and we have no indication of any problems with those at this point in time. We are still awaiting final FDA documentation of that. But at this point of time we have nothing but positive results.

Unidentified Analyst

Okay. And then how does the EU guidelines for, on the generic low-molecular-weight heparin, how can that potentially read through its U.S. policy and how does this affect your EU strategy?

Craig Wheeler

Yes, the EU guidelines as far as we can see do not read through directly at all into U.S. policy. Now this application in the U.S. has been accepted under the 505J and prosecuted under the 505J regulations. And so both statutorily and the way the FDA is handling it, we seem to be directly on track with all the U.S. regulations. So I don't see any directly lead through it all.

Unidentified Analyst

Okay, perfect. And how does that affect your EU filing or potential EU filing?

Craig Wheeler

Well clearly, in the EU we're going to have to take into account what the EU regulations are. So we and our partner will navigate that appropriately in Europe. But we haven't disclosed our European strategy at this point.

Unidentified Analyst

Okay. Thank you so much guys.

Craig Wheeler

Sure. Thank you.

Operator

And we'll take our next question from Zial Bakhri (ph) with Cowen.

Unidentified Analyst

Thanks guys. It seems since the last conference call, things maybe a little status clear on the M&A time front at the FDA. Can you give us a sense of how your discussions with the FDA might have changed or progressed since then?

Craig Wheeler

Yes, well, we have a policy where we're not commenting on specific interactions with the FDA. But the way I will characterize the general tone is we are prosecuting questions as they arise. The FDA clearly is actively reviewing the application and the FDA also is clearly reviewing the entire heparin situation in China, which is why we've commented frequently on their inspections. We have no indication that they're changing in expectations, no clinical trial requirements if that might. So we feel we're on track. We don't notice any intended change.

Unidentified Analyst

Right. Okay. Thanks guys.

Craig Wheeler

Sure.

Operator

(Operator Instructions). It appears we have no further questions. Mr. Wheeler, I'd like to turn the conference back over to you for any additional or closing remarks.

Craig Wheeler

Sure, thank you. And thank you all for joining us on our call. We look forward to updating you on our progress in the coming months. Thank you and good bye.

Operator

Thank you, ladies and gentlemen. Once again, that does conclude today's conference. We thank you for your participation.

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