Momenta Pharmaceuticals, Inc. Q2 2010 Earnings Call Transcript

Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA)

Q2 2010 Earnings Call Transcript

August 2, 2010 10:00 am ET

Executives

Beverly Holley – Director, IR

Craig Wheeler – President and CEO

Rick Shea – SVP and CFO

Analysts

Bret Holley – Oppenheimer

Ritu Baral – Canaccord

Simos Simeonidis – Rodman & Renshaw

Eric Schmidt – Cowen and Company

Joseph Schwartz – Leerink Swann

Eric Wold – Monness, Crespi, Hardt

Owen Gibbs [ph] – Rabbass [ph]

Lynne Yati [ph] – Stockstock Partners [ph]

Operator

Good day, ladies and gentlemen and welcome to the Momenta Pharmaceutical Second Quarter 2010 Earnings Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded. I’ll now introduce your host for today, Ms. Beverly Holley, Director of Investor Relations. Ma’am, please go ahead.

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 second quarter of 2010 and provide a corporate update. With me on the call today with prepared remark are Craig Wheeler, President and Chief Executive Officer and Rick Shea, Senior Vice President and Chief Financial Officer. 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 management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating to our beliefs regarding the potential commercial market for generic enoxaparin, the potential for other generic enoxaparin product received FDA approval. The FDA has reviewed generic Copaxone, our product development plans, the company's revenue, expenses and other results of operations, including the quarter ended June 30, 2010 and current and future development efforts and commercialization efforts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements can be identified by terminology such as anticipate, believe, could, could increase the likelihood, hope, target, project, goal, potential, predict, might, estimate, expect, intend, is planned, may, should, will, will enable, would be expected, look forward, may provide, would or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors referred to in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2010 filed with the Securities and Exchange Commission under the section Risk Factors, as well as other documents that may be filed by Momenta from time-to-time with the Securities and Exchange Commission.

As a result of such risks, uncertainties and factors, the company's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. Momenta is providing the information in this conference call as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements whether as a result of new information, future events or otherwise.

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

Craig Wheeler

Thank you, Beverly. Good morning everyone and thank you for joining us on today's call. We'll provide a quick update on corporate developments starting with the approval of M-Enoxaparin and then discuss quarterly financials and move onto Q&A.

The most significant recent event was the highly anticipated approval of the ANDAs for enoxaparin which occurred on July 23. The application filed by our collaborative partner, Sandoz, was the first ANDA approved and at this point remains thus sole ANDA approved for generic Lovenox.

This approval marks the milestone not just for enoxaparin but for our broader goal of applying innovative analytic and process technologies to enable approval of generic earnings [ph] of complex drugs and biologics. The FDA has demonstrated that it’s a high standards for characterizing and demonstrating the quick ones for the complex mixtures.

Of course, we at Momenta feel that is the appropriate approach. They’ve also shown they will recognize the advancement in analytic sciences that allows applicants like Momenta and Sandoz to meet these high standards. We are proud to be a leader in this field and are pleased that we’ve been able to gain the first approval.

As expected around such a high profile event, many series, opinions and even some facts have been raising around the investment community since the approval. My goal in the next few minutes is to provide some clarity on the situation to help investors to understand the approval and its impact on Momenta.

First, regarding the product launch, our collaborative partner Sandoz launched the product immediately following the approval on July 23. Demand has been strong and we are pleased with the product's pricing.

We have seen no resistance to uptick of the products in the market and expect we will continue to see robust demand as the launch continues. Based on what we’ve seen so far, we believe there's plenty of room for the brand and Sandoz to compete profitably in this large market.

At this time, we do not see incentives in place for Sanofi to consider launching an authorized generic as long as we are the only generic competitor in the market. Of course, Sanofi-Aventis will do their own analysis and we cannot predict what action they may take.

Second, I would turn to the economic picture for Momenta. As the first generic launched, we have met the criteria for $5 million milestone payment from Sandoz. We are due to be paid a profit share between 40% and 50% as long as we have sold generic in the market.

We do have to repay our proportional share development and legal cost incurred during the past six years. This is paid through a deduction from the profit share owed to us, capped at a maximum of 50% reduction in profit share for each quarter until the costs are fully paid back.

Although, we cannot disclose an exact number, our analysis shows that assuming sales and demand continue, we expect to pay that all owed development cost within the first three quarters post launch and possibly sooner. It is too soon to predict whether or how long we will continue to hold sole generic position. So it's premature to provide any revenue guidance at this time.

With that said, we anticipate we will be generating significant cash for the company in the short term as long as the sole generic position holds. Another generic does enter the market then our revenue will revert from a profit share to a royalty rate ranging from high single to low double digits rather than a profit share, we are now receiving.

Third, I will comment on the implications of the FDA's response to Sanofi-Aventis’ citizen petition. As I said on our approval call, we are very pleased with the high standards that the FDA has set for approving the generic version of Lovenox. We’ve outlined five criteria that are used to be approval.

First equivalence of detailed chemical properties, second equivalence of heparin source material and the mode of depolymerization, third equivalence in their characterized building blocks, fragment mapping and sequence all the saccharide species. Fourth, equivalence in biological and bio-chemical assays and finally equivalence of the in vivo pharmacodynamic profile.

While we do not have information on the enoxaparin application from other companies, I can't say that anyone working to gain approval for this product will meet as sophisticated analytic and deep technical capabilities.

We’ve developed an extensive set of unique analytic tools that have allowed us to meet the FDA standards for showing same lesson. And we believe many of our insights were taken into consideration by the FDA. We’ve established their equivalent standards.

While it is possible others could develop tools to meet these criteria, technical depth required should not be underestimated. But we cannot predict what actions the FDA may take in the future, we’re hopeful that we could retain the sole generic for some time to come.

Fourth, I will comment on the Sanofi-Aventis’ file with the FDA. This was not unanticipated and in fact, Sanofi singled its intention at a press release started out soon after launch. Based on our reading of the FDA CP response, we believe the FDA very well prepared for this suit as our Sandoz and Momenta.

We believe that the Sanofi-Aventis claims are without merit and are cooperating with Sandoz to vigorously oppose the lawsuit. Importantly, the court did not take any restrictions on the sale of enoxaparin by Sandoz. The judge has set a time line leading to a court date of August 17 and Sandoz has and will continue to ship product.

In summary, Sandoz has had a very successful launch and we are looking forward to Sandoz continuing to establish its presence in the market place. We expect Sanofi-Aventis to try to protect its share from a technique such as the lawsuit. But we believe in Sandoz are well positioned to counter this threat.

We believe high scientific bar has been set by the FDA and that we cannot predict whether or when a competing approval may come, we are hopeful we maintain the position of the sole generic in the market place for a significant period of time.

I'll now discuss M356, our generic version of that is Copaxone, which we are developing in collaboration with Sandoz. One of the burning issues for many investors has been, that the approval of enoxaparin provide any read through regarding the approval of M356. We certainly cannot speak to the FDA but we do believe that the experience and insights we gain during the long and thorough review of the enoxaparin ANDA, will be helpful to us as we work with the agency to facilitate their review of the Copaxone on ANDA.

There has been a great deal of speculation as to whether the five point criteria used by the FDA and their decision to approve generic Lovenox is applicable to generic platform. We do think the rate at which the FDA has applied to the enox review does provide insight to the agency thinking. However, these criteria are very specific to enoxaparin and we should be cautious in extrapolating these criteria to any other product.

As we believe the agency might develop famous criteria on a product-by-product basis. The criteria used for generic Lovenox, our low molecular replacement product is not fully applicable to review the generic Copaxone, given the very different chemical composition of the compounds.

However, its similar customized criteria are put forth for the approval of the ANDA for generic Copaxone. We believe we’re in an excellent position to meet those criteria. We also note the FDA's willingness to consider advantages and analytic technologies as they establish same as criteria.

We have done extensive work on the characterization and biology of our product and we firmly believe that we will be able to demonstrate equivalence.

Last, I’ll provide a quick update on our pattern suite. As of today, Judge Jones has not ruled on the Markman hearing and we do not have a specific time line of our ruling. However, because Sandoz, Momenta filed a summary judgment motion prior to the hearing, the court has the opportunity to determine that the patents are invalid, which would negate the need for a quartile. Alternatively, the case will move forward to a trial, a date for which could be scheduled by the year end.

I'll now turn to our follow-on biologics program. We are excited about the implications of the agency decision that generic Lovenox has for our follow-on biologics effort. This has been a strong year for advancing our capabilities in this area.

Earlier this year, healthcare reform finally created a pathway where we can utilize our technology for this forward application for follow-on program.

Now, with the enoxaparin approval, we also have insights into the rigorous approach the FDA will take in their review of these complex products. We believe the FDA’s approach on enoxaparin further validates power approach to characterizing and understanding our follow-on biologics.

Successful follow-on biologics application will combine world class, complex mixture analytics with quality by design driven biologic process development and control. Our analytic tools have already been adapted to use in biologics and we have now begin both an impressive and intellectual property base which we believe positions us very well to compete in the significant market.

Our attention can now be turned to expanding our follow-on biologics portfolio to partnerships and to our own investment. We've engaged in very productive discussions with many companies who are committed to the FOV field and have generated real interest in our technology and our team. We hope to reach agreement on one of our partnerships to extend our biologics portfolio in the coming months.

I'll now turn to M118, our rationale and generic anticoagulant. We continue to believe that M118 has the potential to become a baseline anticoagulant of choice to the treatment of patients with acute coronary syndromes regardless of treatment pattern.

And we continue to seek a collaborative partner to finance and support clinical development of M118. While revenue generated from Lovenox may provide more resources that contributes to the funding of the M118, we believe partnering its essential to ensuring the successful development and commercialization of the product.

We do believe strong enough parent revenue to allow us to be more flexible and establishing deal terms with its tenth collaborator. Remains committed to the program and look forward to moving it into the next phase of development.

Our second novel product in M402 is a heparin sulfate proteoglycan-based drug target to oncology. Our experience with 118 and M-Enoxaparin has facilitated development of tools necessary to understand and exploit the broad therapeutic potential of heparin and related molecules.

Many complex diseases, including cancer and many inflammatory disorders, are caused by disruptions in multiple biologic pathways. Applying these tools allows us to tailor products such as M402 that have the potential as a single agent to modulate multiple targets involved in the disease process.

We are now conducting activities in support of our future IND submission for M402 and we hope to see the product candidate enter the clinic in the first half of 2011.

Before I turn the call over to Rick, I just want to once more say thank you to the enoxaparin team here at Momenta and our colleagues who have worked on the program on Sandoz. Their commitment to world class science and tireless pursuit of this approval over the past five years has created a milestone for our company and for our industry, for our investors as well, thanks for your support. I'll now turn the call over to Rick Shea to provide a financial update.

Rick Shea

Thank you, Craig. Collaborative revenues for second quarter of 2010 were $2.8 million compared with $6.6 million for the same period last year. The decrease in collaborative revenue was due to the timing of reimbursable manufacturing expenses associated with our M356 program as well as the decrease in reimbursable expenses associated with our enoxaparin as the ANDA review process approached completion.

Research and development expense for the second quarter of 2010 were $11.8 million compared to $17.7 million for the same period last year. The decrease in R&D expenses corresponds with the decrease in revenue as it stirred a decrease in expenditures reimbursable by Sandoz for our enoxaparin and M356 programs.

The net loss for the second quarter 2010 was $15 million or loss of $0.34 per share compared with a net loss of $16.8 million or loss of $0.43 per share for the same period last year. The decrease in the net loss for the quarter was a result of a decrease in self-funded R&D expenses.

We ended the second quarter of 2010 with $68.7 million in cash and marketable securities compared with $95.7 million at the beginning of the year. Our cash burned for the second quarter was $13 million. We expect to record both the $5 million milestone and commercial revenue from sales of enoxaparin in this current third quarter.

It's too early to provide specific guidance but we do expect that in the near term, during the period of sole generic enoxaparin we are likely to be cash positive. So consequently our year-end cash balance is expected to be more favorable than our original projections.

I also want to note that some executive performance based restricted stock grants vested in connection with the product approval. And there will be some selling this week of a portion of those shares to cover the individual’s tax liability. This concludes my financial review. We will now open the call to questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question come from the line of Bret Holley of Oppenheimer.

Bret Holley – Oppenheimer

Yes. Hi. Thanks for taking the question. I'm wondering if you see any early evidence that Sanofi’s kind of detailed with generic enoxaparin as you’re essentially unsafe as having any resonance for any kind of effect on payers and providers?

Craig Wheeler

Bret, we – as I said, I can say that the demand has been strong. We have not seen any evidence of resistance in the markets place. Obviously, the details of that are in Sandoz's hand but so far we've been very pleased with the acceptance of the products in the markets.

Bret Holley – Oppenheimer

Okay. And my other question is I'm wondering what your view on the historical precedence of the FDA rejecting citizen's petitions and simultaneously approving acceptable ANDAs or review, this historical information would suggest that that’s the FDA's normal behavior. I guess, I'm just wondering what your perspective is on that?

Craig Wheeler

Sure. I don't have the historical data but I would expect that the issue at hand here is that they have very, very high technical standards that they've established which we're very pleased to see. And you know, with everything that's happening in the technical side as well as the supply chain side that we were ones that were able to meet their criteria and therefore were approved. I don't really have any ability to comment on the other applications but I know what we've been through over the last five years that has led to the approval.

Bret Holley – Oppenheimer

Okay. Thank you very much.

Craig Wheeler

Sure. Thank you.

Operator

Thank you. Our next question comes from the line of Ritu Baral of Canaccord.

Ritu Baral – Canaccord

Hi, guys. Thanks for taking the question. Is there – what impact on the launch will effect that these vial ANDA has not yet been approved for M-Enoxaparin and what's your clarity on the time line for that particular section of the application?

Craig Wheeler

Sure. Thanks for the question, Ritu. It's really is not going to have a material effect on the launch. The vials are much lower volume product than the syringe and so that’s why we had actually put it second. So we don’t really think of any impact that the launch of the product at all. We're optimistic that that application is moving quick. Obviously, it's behind the syringe. I learned my lesson. I’m not giving any specific guidance in terms of what specific these applications are.

Ritu Baral – Canaccord

Completely understandable and then for supply chain, at least for Momenta and Sandoz, are there any sort of special additional ongoing supply chain in sections above and beyond what the FDA normally does, given the heparin supply chain issue?

Craig Wheeler

Well, we kept folks aware that the supply chain particularly the Chinese heparin suppliers had to go through a whole series of inspections over the course of the year. And I think what’s quite unusual for what many people have to go through because of the impact of contamination and the resultant questions that the FDA got. So I do know that all Chinese suppliers had to undergo some pretty rigorous infections from the FDA over the course of last year. So I would say that’s probably a little bit typical for a normal generic supply but certainly it's been fall through on FDA here.

Ritu Baral – Canaccord

And on ongoing basis do you anticipate sort of continued higher level for scrutiny and increased infection?

Craig Wheeler

Well, I do anticipate that the FDA is going to continue. They’ve got a major initiative going and I’m looking at foreign supply of drugs. But I will state that – even with those any infections, we are making sure that we have top quality oversight of the entire supply chain. Standard has a very good job with that in the past and we’re counting on them to do that in future as well.

Ritu Baral – Canaccord

Great. Thanks guys. I will hop back in the queue.

Craig Wheeler

Sure. Thanks.

Operator

Thank you. And our next question comes from the line of Simos Simeonidis of Rodman & Renshaw.

Simos Simeonidis – Rodman & Renshaw

Good morning. Thanks for taking my question. Craig, can you talk about pricing?

Craig Wheeler

No. I can't.

Simos Simeonidis – Rodman & Renshaw

Okay.

Craig Wheeler

I can say we're pleased with pricing. It’s been – I think there has been several notes that rate number was going on pricing as people going up to the market place. So we are not commenting specifically on the pricing at all.

Simos Simeonidis – Rodman & Renshaw

I think it was worth a shot.

Rick Shea

Let me just make one comment in that connection. There have been some notes out that seem to have differing views on the pricing, but I just caution that you have to pay attention to what they're comparing. Whether they're comparing net sales to net sales or whether they're comparing a discount to a whack. So I would just caution people to pay attention to what they're comparing.

Simos Simeonidis – Rodman & Renshaw

Sounds great. Can you tell us if there's any potential near term milestones coming in – for example June launch or certain number of sales?

Craig Wheeler

Yeah. As I said in the text, we will have a $5 million milestone payable based upon the approval.

Simos Simeonidis – Rodman & Renshaw

Right, but anything after that near-term?

Craig Wheeler

We haven't disclosed any additional milestones. The milestones are confidential in our agreement until we reach them.

Simos Simeonidis – Rodman & Renshaw

Craig, I know you were very careful, so you're not going to answer anything about when you think the (inaudible) and there’s might be, decided upon. Let me try it this way, were you surprised for example that there was one decision on all three applications or where they decided upon, based on when they were submitted?

Craig Wheeler

No. I wasn't surprised. I think my view on this comes back to the review of the FDA’s response to the citizen’s petition. And I think if you go through that and look at the complexity of hurdles ahead of companies, we like anybody else have to have a very rigorous scientific approach. And we think that many things that were in SEP. We worked very, very hard to make sure we did not end up in historic, actually built to technologies to be able to accomplish them. So, no, we weren't surprised.

Simos Simeonidis – Rodman & Renshaw

Okay. Final question and then I’ll jump back to the queue. Should we expect to see a shift in your focus or your allocation of resources towards other areas with the M-Enox out of the way, so to speak – for example more money, putting towards development to 402 or expansion of headcount and things above nature?

Craig Wheeler

Yeah. I think it's a little early for us to be talking about what those trends are. It certainly does give us more financial flexibility to begin to invest in both our new drug arena as well as in a additional follow-on biologics arena, but we're not really ready to disclose those plans yet, as we formulate their move, we’ll come on to street with them.

Simos Simeonidis – Rodman & Renshaw

All right. Thank you very much.

Craig Wheeler

Sure. Thank you.

Operator

Thank you. And our next question comes from the line of Eric Schmidt of Cowen and Company.

Eric Schmidt – Cowen and Company

Thanks for taking my questions. Just another question on the timing of the ANDA approval. Craig, did the FDA ever indicate to you anyway that the timing of your ANDA resubmission starting to clock or was anyway critical to the timing at which you got still be approved?

Craig Wheeler

It absolutely did not. In fact when we – We've been talking to the community in the past year or so, I think, signaling that much of the review is behind us and we’ve been struggling through the infections in China and we’ve been updating you on the inspections in China, so we will receive no timeline in terms of any resubmissions in terms of approval.

Eric Schmidt – Cowen and Company

And then another question. You mentioned in terms of your read in Citizens Petition – the Momenta’s technology was taken into consideration and obviously, high-technological bar was maintained. Can you just review for us the time lines in terms of Momenta's characterization of Lovenox, when you started how long it took when you submitted and if you could provide us with anything you think, is there any estimation proprietary about what you have done?

Craig Wheeler

Well, that's a big question. I'll try to give decent some perspectives on it. First, the work that actually led to our application for generic Lovenox, actually started at back at MIT in regular [ph] technologies and the work that was done on heparin, when some of the original tools were developed. The founding of the company in 2002, was really when the programs took off with a vengeance in terms of trying to apply those tools. And really make sure, we had all tools necessary for the characterization. So that led to the filing in 2005.

Eric Schmidt – Cowen and Company

Okay. And do you think these tools are proprietary? At one point you suggested, you had some and times that we knew, we kind of check up mixture that may be this could be at their hand or how do you think about that?

Craig Wheeler

We've been looking hard at that Citizens Petition but he also has – Let me may be step back and give you a few places to think about where – It's hard for us to say what other people have, but let me point to, where, where we think we have some particular capability and their disadvantages. Like the first, I always point to here and I’ve done it for as long as I’ve been here. This company was founded by some of the world's foremost experts and have restructured chemistry and function.

So we start off the bat with a deep understanding of the structure and where these things go. I was very pleased to see if you go back to that CP – the FDA is focused on analytical characterization. If you go back to the criteria I mentioned in my talk, criteria one and criteria three, specifically looking at busy chemical properties and in fact are building blocks, fragment mapping, (inaudible) although key apprentice. They are taking the approach that we've indicated, which is looking at multiple overlapping approaches to assure you have an equivalent product. And that probably is familiar to many of you guys have been following the company for a while.

The question, I keep getting on this is road map. In some sense it may be, but it doesn’t underestimate the complexity of this. We think we’ve build real competitive advantage here, because it's very difficult to do these types of analysis and maintain true map balance, to ensure you have all the proprietary equivalence. When we develop those approaches, we put some standards and proprietary assets that we have, some of were trade secrets, some were pathogens.

Your question on the enzymes, which is good second point – they identified the additive of the products and enzymatic, but you should to be able to do both the physic chemical characterization and the fragment mapping. We use both standard optimum short enzymes, but also proprietary enzymes that we developed and have been able to do that.

I point to one third thing, here, as well is the agencies took a lot of time if you read through that CP response and pointing out that variations and not understanding – minor variations in the process could mean significant variations in the product. And we found – we have worked at variations in the incoming heparin as well as in process conditions can actually make major variations. And they recognize that through it and so our approach from the start has been to understand these variations and take our analytics. And design them into our manufacturing processes to be able to control to make sure we make exact same product, so. Overall, I'm quite pleased with where we stand, basically what the agency has put in place and the CP response.

Eric Schmidt – Cowen and Company

Question, may be for Rick on the accounting side. Going forward in your financials, are we basically going to see a single line for revenue from the partnership that includes things like the $5 million milestone, the profits on ongoing basis and on subtraction for the cost reimbursement or is going to be multiple lines or maybe health side?

Rick Shea

My guess is that it will either be a single line or two lines and showing the milestone separately or may be combined to one line but we’d be disclosing the size of the milestone. I don't think the offset will be shown separately. We’ll reflect the revenue and of the offset.

Eric Schmidt – Cowen and Company

Okay. And then I think you and Craig both made some comments about how you expect to generate significant cash in the short-term. Is it feasible to expect that you will be cash flow positive, even during these periods where you have up to 50% offsets on cost reimbursement?

Craig Wheeler

It is possible.

Eric Schmidt – Cowen and Company

Okay. Thanks a lot.

Operator

Thank you. Our next question comes from the line of Joseph Schwartz of Leerink Swann.

Joseph Schwartz – Leerink Swann

Hi. Congratulations, again. I was wondering since there are many different places that Lovenox is used, what are your expectations for the areas with the most rapid uptake for your generic versus areas where there maybe some more stickiness for the brand?

Craig Wheeler

Yeah. Joe, thanks for the question. But we're not commenting specifically on the uptake in different market segment. Sandoz is doing effective job out there and trying to get this thing in the market place and we don't want to complicate anything they're doing.

Joseph Schwartz – Leerink Swann

Okay. And then in the general sense, the FDA took a long time to review the Lovenox application and seemingly learned a lot as they went along, so I was wondering, in the general sense the FDA review timeline for 356 relative to and M-Enox, is your sense that there is a need to develop or rigor a scientific approach there, will take less time, more time, do they seem less or more engaged any sense that you have there will be helpful?

Craig Wheeler

It's really hard for me to predict. I know that the agency is quite engaged I think that the fact they have experience and taking through these complex products should benefit us. We shouldn't underestimate that the factor there are significant headquarters of the agency. I'm optimistic that they will be able to do it faster, but it's probably not proven to predict.

Joseph Schwartz – Leerink Swann

Okay. Great. Thank you.

Craig Wheeler

Thank you.

Operator

Thank you. And our next question comes from the line of (inaudible).

Unidentified Analyst

Hi, guys. Good morning. Can you help us understand what percentage of the U.S. market or the U.S. Lovenox market can you supply?

Craig Wheeler

Wendy. Thanks for the question. We have been asked that question and it seems a lot of numbers are floating around there. So we can confirm that our launch capacity was between 35% and 40% of the market and we are ramping up now to drive additional share.

Unidentified Analyst

Okay. As long as you're under the 50% mark, would it make sense for there to be really drastic price decreases in the market because it seems like the two players can behave rationally?

Craig Wheeler

Well, I think the market like this is, is always one way – Players are going to act in their own best interest. And I suspect that there is room in this market place, for both the brand and Sandoz to compete very effectively. But pricing decisions are really up to – Sanofi-Aventisas in terms of where they had to go, but as I said at the start in my comment, I think this market is actually large enough to have both the brand and Sandoz to complete effectively with a good market share.

Unidentified Analyst

Okay. Thanks for your update.

Craig Wheeler

Thank you.

Operator

Thank you. And our next question comes from the line of Eric Wold of Monness, Crespi, Hardt.

Eric Wold – Monness, Crespi, Hardt

Well, Hi Craig. I’m just wondering, related question to Eric questions. Do you believe that it's possible to – Successfully from the FDA's point of view, characterize Lovenox or enoxparain mixture using methodologies available in the academic literature and published leadership?

Craig Wheeler

I do not believe it's possible using just published academic literature. I think there's certainly a lot of body of knowledge that has been generated and published over the years. But those are starting points. We use a lot of what came out of the academic world. IMT and others is a basis for what we did. But what it took to take that and apply it to the customization of tools, the necessities actually and doing the broad analysis that we have to do with the brand product, actually took quite a bit of investment, internal to the company. That was why we founded the company and basis and so that’s the work that we put in, since we actually pulled it out of the academic setting.

Eric Wold – Monness, Crespi, Hardt

Great. That’s helpful. Thanks.

Craig Wheeler

Sure. Thanks.

Operator

Our next question comes from the line of Owen Gibbs [ph] of Rabbass [ph].

Owen Gibbs – Rabbass

I just want to clarify that you believe that you would have not got approval for your generic enoxparain on the basis that you’ve are going to be able characterize say, 80% as opposed to 100% of Lovenox.

Craig Wheeler

Well, I think that is our definite belief. And I think if you look at those approach that the FDA is taking, where they are actually requiring validation because they are looking at overlapping and I thought of a message. If you only had 80% when you started using overlapping methods you would actually show differences. So you really do need to actually have the complete and thorough characterization to be able to meet the criteria you're looking across difference dimensions.

Owen Gibbs – Rabbass

Thank you.

Craig Wheeler

Sure.

Operator

Thank you. (Operator Instructions) Our next question is a follow up from the line of Ritu Baral of Canaccord. Hello, your line is open again.

Ritu Baral – Canaccord

Sorry about that. Thanks for taking the fourth question, guys. On your sort of bio similar partnership approach, what's the structure of the deal that Momenta think will be ideal? Is it sort of a drugs approach like your Sandoz deal and can you give us your thoughts on up fronts versus sort of back end economics for this market?

Craig Wheeler

Yeah. It's very hard to sigh what the ideal is. I think what we are looking for in partnerships, is people who actually bring complementary skills and capabilities to the party. So we bring both the process expertise and the characterization expertise for biologics. But we do not have the large biologics scale of capabilities that supports the commercial capabilities in the company, so we would look for similar kinds of partnerships to the kind that we construct with Sandoz for Enoxparain and is what I would say. It might be products. It might be suites of products. It depends on the deal and the platform pieces that we use. But I think it could be shapes of deals and multiple flavors.

Ritu Baral – Canaccord

Great. Thanks.

Craig Wheeler

Sure.

Operator

Thank you. And our next question comes from the line of Lynne Yati [ph] of Stockstock Partners [ph].

Lynne Yati – Stockstock Partners

Thank you so very much. Given that – It’s a period of exclusivity, is significant – you will be generating quite a bit of cash as you mentioned within three quarters or so. You will be paying back the legal aspects of developmental cost. Are there other, either molecule types or disease states that you would want to put the extra cash and I'm not asking you to spend it right away. Are you working towards researching or is the focus of the company is going to be just on the existing molecules?

Craig Wheeler

No. I think there is – There are certainly areas that we think want investment and those are the places we are going to have to prioritize among – I would point you to several places. One, obviously now that we have clear picture of both of the agencies approach who are looking at this complex molecules as well as the pathway follow-on biologics of the place where we certainly could continue and continue our increase our investment.

The second is that as we've said from the start at this company, as the refinement of these tools allows us to begin to look at biology, in a I guess a degree of our dilution that we couldn’t have without these tools to allow to us to begin allusive structure activities, relationship and therefore to begin to build out the novel drug pipeline of the company.

Just like we've done with heparin, with M118 and M042, I believe we have an equivalent capability to build out novel and improve biologics. And so I think the new drug place of investment also offers significant opportunity for the company. Well, obviously, after sort those out I can tell no I had no short of good ideas for my scientist over the last week in a half and so. We’ll have to figure out exactly where we go as we do our planning process over the next few months.

Lynne Yati – Stockstock Partners

Okay. And then as a follow-on in addition to our own compound, for you are looking at the possible license. Those success that you've had with enoxparain, opening up the possibility that other drug company who want to license on a non-exclusive or exclusive basis, your technology to look at their own compound and has there been any interest in that area in the past?

Craig Wheeler

I think I would say there has been interest for licensing the technology in the past. We have been hesitant to least our licensees for the technologies, because we actually feel that the value of the company is driven heavily by a product investment and we don’t want to dilute that technology by giving, getting into the hands of other people. So those deals are possible and we quite possibly could some of them but they are going to be very selective on the technology platform. They are really building this company to be a product company.

Lynne Yati – Stockstock Partners

Great. Thank you so much.

Craig Wheeler

Thank you.

Operator

Thank you, sir. And we have no for the questions. I will turn the conference back to your speakers if they have any further remark.

Craig Wheeler

Thank you all for joining us today on our call and we look forward to updating on your progress in the coming months. I really appreciate all the questions today and thank you and good-bye.

Operator

Ladies and gentlemen thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone have a good afternoon.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!