Momenta Pharmaceuticals' CEO Presents at Deutsche Bank 39th Annual Health Care Conference - Transcript

Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA)

Deutsche Bank 39th Annual Health Care Conference

May 7, 2014 12:50 pm ET

Executives

Craig Wheeler - CEO

Analysts

Robyn Karnauskas - Deutsche Bank

Question-and-Answer Session

Robyn Karnauskas

Okay. Good afternoon. Thank you all for joining us. My name is Robyn Karnauskas, I am an analyst at Deutsche Bank, in biotechnology. With us next we have Craig Wheeler, the CEO of Momenta Pharmaceuticals. So thank you very much, Craig. For those of you who are paying attention to the URN app, you are able to ask questions anonymously and I will read them. And I encourage you to use it. There is a prize for anyone who can write a question and give me something to ask, Craig. And you can raise your hands as well. So, thank you for joining us.

So I guess I'll start of with one of key topics of your quarter's call, the Supreme Court ruling and all these different options and timeline. So I was just wondering if you could try help us understand, may be for the audience, just overview of the three different options, and how do we really think about the probabilities for which fund, like what have we seen in the past historically with the Supreme Court.

Craig Wheeler

So I'll start over again just make sure its clear. So we have been obviously on the going of a patent by we and our partner Sandoz with Teva on their Copaxone tablet. And if they -- I gave the history of it yesterday, but the long and the short of it is that the Orange Book patent expires this May, May 24 of this month. And then there was one patent, the 2015 patent which expires on September, 2015, a non-Orange Book patent. And we had appealed a District Court law. We won that on appeal that their patent, the 2015 patent, some of the Orange Book patents were ruled unenforceable because they were (inaudible) ambiguous in terms of how they constructed their claims and definition of it.

So we were proceeding, preparing to launch on the 24th, if we actually get our approvals and may be another question you have. And then, recently Teva actually won an agreement with the Supreme Court to grant search to review the Appellate Court decision. And so, yesterday, in our earnings call, I went through for investors trying to just outline for you what it meant to go to the Supreme Court and what the four different options were that the court should rule on. Before I do that, I should take a couple of moments and tell you why this case is at the Supreme Court.

The Supreme Court normally would not look at the merits of a patent case. In fact, I think we may be the first Hatch-Waxman generic case to go to the Supreme Court; if not the first one of very, very few. I mean, I think this was one of 200 or 300 cases before the Supreme Court that they actually agreed to hear out of a very long list. They were looking at it not because of the specifics of the patent case that we had, but they are looking at an issue of law on the ability of the Appellate Court to de novo review a district court's decision in terms of claims construction. So since the claims construction was wide, the patent case was decided how it was in the district court. If the appellate court didn't have the right to review that, the logic goes that, therefore, the district court's ruling would stand and their (inaudible) for 2015 patent would be valid. So the court here is really looking at a matter of law that has been disputed in -- by legal scholars and some lawyers for some time, in terms of the amount of deference that an appellate court should give a district court. So that’s the issue that the Supreme Court is looking at.

So they are not going to rule specifically on our patent, although they may interpret the law and, therefore, say whether the ruling stands or not. They are looking at, are they going to change how appellate courts work with district court. So the kinds of ruling I listed yesterday are four to come down. One, as they could just reaffirm that the appellate court, which has been the rule of the land 15 years in appellate court law, has de novo review of all claims construction decisions. If they rule that then the case would go no further, it would just reassert that the appellate court ruling is correct and we'd be free and clear from any potential liability.

Second option is they could modify the law and they could modify the law in a number of ways. They could say the appellate court has no right over reviewing district court. We think and our lawyers think that is very unlikely, because you always have to have some kind appellate oversight for what happened in district court. Or they could modify to a lesser degree. In a case where they decided to modify, there are three possible outcomes. One, if they could modify how appellate courts work with district court. But in their interpretation of that law they could still reaffirm that the patent was rightly decided and, therefore, we are clear at that point in time.

They could rule that they are going to change the law but that is not their job to figure out if this patent under the new interpretation of the law stands or not. And, therefore, remand the case to the appellate court most likely. In that case, we would not have clarity. We'd have to go back to another appellate court, set a breeze and trial. And that could take us certainly well beyond the expiration of the patent, potentially into early 2016.

And then, the fourth thing which we think is actually really the less probable outcome if the appellate court could say we are redefining the law, and with that redefined law, this patent decision was wrong at the appellate court and we would lose at the Supreme Court. We think that is a very low likelihood. Because if they -- that's changing a decision of the appellate court and I think if there was meaning towards thinking about that they will probably remand it back to the appellate court rather than make that decision of the Supreme Court.

So we got two cases where we can win outright. One, where we get remanded down to a appellate court level and one where we would lose at the Supreme Court. And again, that one we will lose outright at the Supreme Court, we think is the lower probability. So that's kind of options that we are looking at. It's -- because it's very hard to think about what the -- what precedents might be out there because there's not a lot of them. And particularly, there are none that look at redefining this law in terms of how appellate courts work with district courts. We are good at rewriting laws. If you guys remember, how we redefined how Hatch-Waxman worked too with our previous patents but. So you have to kind of look at the body of law and that is what our lawyers are doing when they are saying that they think we have a pretty good chance of prevailing in this case, because the one thing to remember and I have seen a lot of a kind of misinformations out there about all this what treble damages and everything is that the standing rule right now in the court is that the 2015 patent is invalid because of unenforceability, right. So that is we are not working against the patent with existing. They're actually looking to overturn an existing decision but the patent is not a legitimate patent. So it's kind of a different kind of way of looking at it than when you look at what generic companies are actually trying to coverage the patent that is in existence, right. This one is already been ruled by the appellate court. So that's -- and I can answer any more details again if you want more direction.

Robyn Karnauskas

Yes. I just wanted to see like make it clear because all of this is new to me, yesterday, understanding all the different options. But so the first option of affirming the current law of no deference to the district court ruling, do you think that is the mostly likely outcome over, you said adopting a new standard or changing laws unlikely, right?

Craig Wheeler

Well, that is where I think the legal community is split. In our case, we -- when we went through the appellate court there was -- there's a three-judge panel on the appellate court, not three-judge panel ruled in our favor. And then, they actually requested -- Teva requested to go en banc with the decision, where its where all the appellate court judges sit. The en banc request was denied which mean on our case, all of the judges agreed that this is not an issue they want to take en banc.

So that bodes pretty well for us in terms of opportunities. But the challenge is that there is another case that was going through at the same time, and I alluded to this yesterday in the earnings call. I'm going pretty deep into. I have to sit with my lawyers a long time to be able to get particular about this, but there is another case that was going through called Lighting Ballast. And Lighting Ballast had a similar set of issues around claim construction, though different in a couple of notable ways. And then, Lighting Ballast, they had appealed en banc and actually en banc was granted. In that en banc panel actually agreed with the current standard that the appellate court has de novo review of claims construction. However, the panel was 6-4 split decision by the appellate court judges in Lighting Ballast.

Whenever you have a split decision at the appellate court that is when the Supreme Court starts to take notice, because if they cannot break a deadlock or have pretty close to a deadlock at the appellate court it signals that there is a matter of how to interpret law to the Supreme Court. So that gave the attention. And Teva's lawyers did a good job of kind of raising the issue hey, we are here first, why don't you just take this case and look at the issue. And so, here we are at the Supreme Court as opposed to Lighting Ballast, because our case was actually sitting for a cert decision at Supreme Court, while Lighting Ballast is still back of that en banc here. So it is tremendous issue of bad timing. The -- and all of the previous decisions on the patent, judicial overreach at appellate court to district court was never really something that was considered in any of the decisions anywhere along the way. So wherever we are and was taken advantage of us, we now have to look through the profit.

Robyn Karnauskas

Okay. Excellent. And so the timing of -- remind me again the timing for whether or not what the decision will be again, will be when approximately?

Craig Wheeler

So the Supreme Court has actually already put their date for briefs, which will be between July and September. So the case will likely take place in October, in the next session of the Supreme Court. So sometime in October you can anticipate oral arguments at the Supreme Court. If you look at traditional timelines of the Supreme Court, we can expect the decision anywhere from the earliest in December all the way through somewhere around June or July, so sometime in that timeframe. What really dictates what happens at the Supreme Court is, if it's a simple and easy decision tends down quickly, if you have to have majority and minority briefs written and developed and everything, it tends to take a little bit longer before it comes out. And so depending upon who the court view the issues may determine how quickly we would get a resolution in terms of what could come down.

Robyn Karnauskas

Okay. Well, and then, in thinking about going forward and launching I guess at risk, how historically -- how well has Sandoz done as far as making these decisions? What is the risk around launching at risk, like what are the key risks that you think? And when you are in that room with them discussing and agreeing to that, what are the key things that come up?

Craig Wheeler

Well, there is a lot of things that come up. Obviously, there is a lot of factors that have to come into the decision, right. One is, you have to look at -- it really is an economic decision, right. You look at the opportunity and you look at the potential cost. And then this one is, there is many, many moving parts. I mean, first, let's look at the kind of how you think about the risk here. You have to look at what are the range of potential damages if you lost and what is the possibility you lose. And so, I think the calculus first is, where do we think we are positioned in the court. Is it something where we actually feel we have a good chance of losing or good change of winning our bias? Collectively, it's that we have a better chance of wining or losing, but that is just something that Teva case hasn't even not started yet.

And then, you have to look to what kind of risks are there with launching. If you did lose, go all the way through that. We lost the case, and we lost the damages and et cetera, et cetera. And you see a range of different issues and it is not really Sandoz. But if look, you have to look at the whole industry and that is what really being looked at is, what are the kinds of damages that are set. And there are certainly some very landmark cases where there have been very, very big damages or settlement. But the majority of cases are actually more around -- and maybe how much revenue was gained and what kind of profits, and it's based on also a number of things in court. How well each company argues in court when they get there, but it's also depending upon the market, how that market is evolving. This market is evolving in a number of ways, right. It's not just as a generic launching up but what happens with the oral penetration, which guys are doing very well right now. So those type of things. I would get back again to those kind of discussions as well. So that is all the stuff that is going on. It's just thinking about what’s that continuation of that risk.

The opportunity side is the other one here. And this is not really tricky, those are facts, right. You could tell us just not take any risk and just wait. But on the other hand, when you see the penetration of orals, you see how quickly Teva is penetrating the market with the three times a week formulation and you forecast that out to 2015, that is a very different market, if we waited year and a half to launch the product. And so, you have to kind of factor the potential and all of that is going into the calculation. So I think Sandoz is -- and are -- they are very, very good partner; they are very experienced partner. It’s their final decision then we actually look to them to do a lot of this work because they have done that many, many, many times before, because they have been in the generics business for a very long time.

So we are pretty confident that we will get to whatever the right answer is with them. But I would say that our discussions are certainly broad ranging but I think very constructive.

Robyn Karnauskas

Great. Does anyone else have any questions on legal?

Unidentified Analyst

(Question Inaudible)

Robyn Karnauskas

Oh, sorry. I was just going to say that. Go ahead.

Unidentified Analyst

(Question Inaudible)

Craig Wheeler

You know --

Robyn Karnauskas

Repeat the question I guess for the webcast.

Craig Wheeler

Well, the question is, how quickly three times a week is penetrating, when a generic launches? How do we view how sticky the three times a week, which would be -- and are we competing with QD versus three times a week, et cetera?

So the long answer is -- the short answer is, I am not really sure. But I will give you a longer answer on it, and in terms of all the things we have to think about. First, you have to start with the MS market. And I actually think the market we are competing in here is the MS market, not the Copaxone market. And here is why. This is a really, really unusual generic market because it's an entire class MS therapy, the entire class has no index, none. And so what happened is, as every new product has come in, every product has raised their price. So every product in the MS space now, all of them, even the old ones. And I used to run Chiron, I used to market Betaseron. And Betaseron at that time, I have been here eight years, was $14,000 a year. It's now $60. Every drug is $60,000. So this is a huge category for all the payers. So getting a generic in there first, they would be rated against Copaxone, so not three times week, they would be rated against Copaxone.

But the second piece is, now that the payers have something in their hands that's a generic. If you remember, in first-line therapy there is not a lot of differentiation between these agents, first-line therapy and MS. They now have a tool, so they can begin to do step edits, co-pay differentials that will actually allow them -- it actually may expand the use of Copaxone because it will be the only generic against all the products. So we look at that as an opportunity. And I've actually become more bullish about that, giving the product longer life, because you don't see a lot of these other products that have generic coming soon. And I have been on panels with payer positions, etc cetera, where I don't have to talk about this stuff because they are talking about it. Why would we use. I was sitting next to somebody at a panel, it was from -- I don't remember it was United or someone that a doctor said, why would we start a patient on anything else if we had a significant discount with the data we have currently in hand from the other MS therapy.

And so, it's not going to work that way everywhere. I mean, there were high control plans, and there are low control plans. Teva has got, obviously, a lot of efforts out there in terms of trying to promote their own activities and discredit generics, et cetera. But this is -- I mean, this is an absolutely unique space because there is no generics probably in the space. So we -- I don't know how it is going to evolve, but I think it could turn out to be very advantageous over the longer term because of those factors.

Robyn Karnauskas

We have follow-up in this question and then we will get one in the back. So what do you think about Tecfidera, just we spoke to -- with Biogen this morning that we are seeing the (inaudible) for using generic Copaxone that may be not your plan? What do you think about Tecfidera versus just the other?

Craig Wheeler

Well, I think Tecfidera is a very good drug obviously. I mean it's been a very good drug in MS space. I have been in this space for a long time on the brand side and now on the generic side. So I don't want to undermine at all what Biogen is doing. However, I will point out there was actually plan that actually had already stepped that it is Copaxone to Tecfidera. They stopped doing that because heavy rate of price when Tecfidera launched that was the same price so I don’t keep those in, but they were already thinking about in terms of trying to do it. And it really depends. If you look on the data on Copaxone, Teva has done a very good job with this.

For early stage patients, they can do very well for a very long time on Copaxone and so, not everybody but a large proportion of patients. And so there is a fair clinical rationale from – many physicians that are very seasoned using this drug, they are giving it to the first time patients. It's not – its an injection, so (inaudible) but it actually works pretty well. And I think the impetus on the cost of the orals and the injectables are the same, as very well so you can take what you want. But if you start seeing significant discounts with the generic then I think you will see again some of the higher proposals that they starting to think about that. And some of the patients as well -- I mean, even with co-pay assessments many of these patients out there are paying $5,000 plus a year for these therapies.

Now, if you look at that range of co-pays out there, it's a very high copay for a drug. And I draw hardship for many of the patients. So – if there is a lot of puts and takes, I wish I had a crystal ball to tell you all we play out, I can only tell you kind of what I am seeing in the market and how to evolve. But it’s also competitive moves that could be made. And I just -- I mean, my main goal is, let's get something in our hand so we can get out there and compete because there is tremendous opportunity as always.

Unidentified Analyst

Last week Mylan kind of implied that market formation may not start at – on May 24 because of "processes" at the FDA. Could you characterize at least broadly your dialog with the FDA around approvability? And then, may be handicap are we talking, we …?

Craig Wheeler

Yes. So that’s a very good question. And I was smiling when I saw that in a transcript. And because they have taken a very bold stand at being the market creation, May 24 et cetera. And I have always felt that that was not really a wise position to take and we have never taken that position. And let me tell you why. First, it is absolutely true that the FDA has prioritized our applications. They told us that because they – when we negotiated this GPhA with them when they put user fees in place, they’re prioritizing applications and working off the backlog. I think were up submitted per user fees based upon first generic in a market, first to file and Orange Book patent expiration, okay. So what prioritized? The FDA has also stated that they are using that to prioritize, those are not necessarily target approval day, but they have been consistent with that. So some how -- and if this is out of the what Mylan says, creates a huge expectation about May 24, if you get approved or don't get approved, if you, that is great or it's a disaster. Where from the FDA's perspective it's definitely a day, they will be when they are done, right.

And the reason I have been very conservative in terms of how we talk about this is, we only see one part of the process that is going on in the FDA. And that’s where I give you confidence. When I talk about, I feel our application is in good place, given them what they need to approve the product. And that is the process that goes on with the office of generic drug for our -- review of our application. But we also look through this with an enoxaparin, which was our first drug that launched. Which is -- there are two other process that are going on in the agency.

One, is they have to answer the Citizens Petition when they approve the products. So all that stuff that Teva has been providing, they will have to answer point by point, but the one, I can guarantee they are going to put something else to justify why they approved a generic. So they got to figure that out. And Teva it doesn’t seem that easier by continuing to sourcing them, they knew that they have to do that. So that is one. And companies like us do not participate in that. It's done outside of the purview of the review, so we don't see what happens there.

The other thing that is inevitably happening within the agency, that they have to prepare for a lawsuit, because Jeff like Sinapultide FDA over our approval enoxaparin or that -- FDA's approval to any enoxaparin. It's almost certain that Teva will see FDA here. So the FDA has to anticipate that, plan for that and be ready for that. So there is the two processes that are going on outside of review. And the only thing we see is our review. And then, the review is less transparent than it has been in previous year as well because of PDUFA, which means that they only give information to companies when they do complete response of it.

Now, in the old world, complete response that is used to be a disaster. We got one on a (inidscernible) two years to dig out of that on enoxaparin. In the new world, on generic user fees, the FDA issues complete response letter because it actually allows them to score better in the conventional metric. So in the old world if you have simple questions, you get a call, you talked about the CMC division, you talk to complaints whatever, in the new world you don't get any questions at all and from your patients -- until everybody has finished their review and then they can do all other questions at once and then you answer the question.

And that goes back and it can be a very simple question, in terms of a date or can be a hard question and you send it back and that goes back in and you don't even find out anything about those until everybody is look at your answers and see if there is any follow-up questions or not.

So we are all in this cycle, a whole generics industry. We get the complete response letters and then we submit them. We don't know if the next thing is coming is another complete response letter for approval.

And just to give you final point out. Obviously, a very different from the old world. Before they do for FDA, would issue 50 to 70 of these complete response letters a year. Last year, I think they issued 1,600, 1,700 somewhere between 1,500 and 2,000, right? So they are using for everything. And so, I know my transparency into where I can see the questions and it feels like okay pretty good, but we know this is going to come back. But I know that that is the same thing that our competitors are seeing. I don't know how they can be so confident about, if we are going to come on the approval day, working days, later or whatever it is or patent day.

So we continue to communicate through our investors. We feel very good about our applications. We feel we have given the agency, what they need to approve the product. But I am not going to give guidance before. And that we hope to get approved in 2014, I hope to get approved tomorrow but I can't promise that to you guys. That is how we are thinking about it.

Robyn Karnauskas

Any other questions? I was going to ask one about interchangeability if I could? So…

Craig Wheeler

You have a good question.

Robyn Karnauskas

Great. So just regarding 923. So when -- like how will the investment community know whether or not the FDA has agreed to some plan that incorporates interchangeability? Because other companies already in clinical trials, they are advance a year coming from the high interchangeability requirement may get worth it or could shorten your timeline?

Craig Wheeler

Well, I can – yes, first of all, 923 is our lead follow-on biologic or biosimilar that we are working on. And 923 is going into the clinic towards the end of this year. And it takes us a little longer to develop these programs, because we are really working in like how the FDA is currently right. Because we are trying to get to fingerprint like similarity, which means taking all the time to optimize the process, pick the right cell line and make sure we get a product absolutely close as possible to innovate it. So it takes us a little longer. So we are going into the clinic.

We have chosen to go into the clinic in Europe, because it is very clear to us at least in this first round that part of that determination of potential interchangeability or the potential to skip additional larger trial is really going to be a combination of all the bio-characterization and physical-chemical characterization if we do pre-clinically, as well as some human data which would be supplied by that kind of PK trial that we are doing, which is really one to PK. It's really a kind of an equivalence trial we are trying to extract and mine a lot of data out of it.

So the first thing you will see as you go into the clinic then, I don't think we will have clarity in terms of the trial package until we actually bring that data into the FDA, the human data along with our (inaudible) package after that PK trial is done. And then, I am not sure, we are getting cleared at interchangeability until approval. I don't think they are going to tell us disadvantage interchangeable. I think they are going to say, you have the right package to submit and then they will probably make that management finally as they go through review.

Robyn Karnauskas

But well, you have some sense. We already know what the development plans are there, companies are for certain drugs. Well, you have a better sense of whether or not there were requirements, definitely asking you a little different and…?

Craig Wheeler

Yes. Well, the first thing you will know from us once we get agreement with the FDA, what the package is. How our trial package exactly is, our competitors. So we have been able to achieve fewer trials or fewer indications, all that kind of stuff which we are trying to achieve because of the work we are doing.

The second piece, which is interchangeability, I don't think we have a clear view on until we actually get to the approval side, because I think the FDA will first decide what kind of data package they need. That is when we will be able to come out say, we reached agreement that we are going to do x, y, z. And then, beyond that we will file and then the FDA will look at that totality-of-the-evidence and I think that is when the -- I think truthfully that is when they will give us the true indication of interchangeability.

Robyn Karnauskas

And how will you communicate, what are your plans for communicating the regulatory plan that you agree with the FDA?

Craig Wheeler

I think once it's agreed we will actually come out and talk about it. So I would not anticipate that in the coming year because we are just starting the trail. But again, once that is done and we had the conversation we will talk about what our plans are -- for other companies are.

Robyn Karnauskas

Okay. Any other questions from buyers to lawyers? And the other question I want to ask is, recently for instance, many of have asked you this (inaudible) allowing interchangeability and because they have had a history with biosmilars they are comfortable with the human genetics profile. What is the likelihood that that occurred more broadly across Europe, given that they have had biosimilars in their marketplace?

Craig Wheeler

I actually think that you will see more and more countries actually thinking about doing true interchangeability. But most European law -- countries -- and remember, interchangeability is a country decision not any NDA decision. So in Europe you get approved as a generic and then the countries have to make individual decision. Even with regular generic, one of the companies -- countries do not have formal interchangeability. So I expect in many of the countries you may not get a formal designation of interchangeability. But because the governments are primarily, the largest purchasers and many of these will get the fact of interchangeability.

I think that is what you are seeing already in things like Germany with some of the Sandoz products going in, where they slightly see much, much larger uptick as you are just seeing interchangeability is being forced on the system. So it may not be as we think about, as a regulator designation. But I think whether it's kind of driven to the physician level, as France is trying to do or just done at the formulary, national formulary level. I think you will actually see that happen very quickly.

I mean people talk about Europe being the flow adopting place for biosimilars. It was a little bit small on the uptick. But if you look at the differences now, the uptick is actually pretty rapid I mean there is a big differences. I think Southern Europe has always been a very difficult place for generics, Northern Europe is much more accepting, I think you will see that things on the frame.

Robyn Karnauskas

Well, if that is true though. And would you think typically the way we think, I mean we I guess me. Is it biosimilars could take may be 30% of market price but if there is really interchangeability? What is the maximum that you think you could see as far as -- or how it has changed the dynamic? I see now it make the brand lower their price, I mean also may give you an opportunity to take for share. In that interchangeability marketplace what would the dynamic look like versus how we are thinning about a biosimilar impact on the brand right now?

Craig Wheeler

I mean, it really is going to vary market-to-market because when you think about -- once you have products from the marketplace and you are planning against whatever managed care or formulary backdrop that you have it depends on numbers of player in the market, it depends upon the brand behavior, it depends upon do you actually have to pay the cost for sales force in building commercial infrastructure in that, to know how much you paid bid actually discount and how much you could differ or go for share.

And I would imagine when you have high control and therefore there is inability of switch, you would see actually a very aggressive pricing of biosimilars to try to actually compete in the marketplace. Because by definition in that case, the fast track is lower, so they are not going to have -- they are going to have more room to actually make money in terms of putting their penetration.

Robyn Karnauskas

So if you go that you will not be able to have good margins and say M-gen because you are may be you being in the same cell line? Like -- and so you may have similar margins to brand and have less pricing flexibility, what is your view on that?

Craig Wheeler

So the question is, are we going to be able to have the same margins as some of the other generic company is coming out? That is a good question. And I think there is a lot of pieces that -- we are -- when we tend to use, not the newer high yield (inaudible) standpoint of your cell lines, because when you use those you actually get quite away the way from the fingerprint like similarity. So you have to stay fairly close to the original cell lines. And the cell lines for many of these new products are over cell line.

That being said, we have to look at from product-to-product and where the costs are. There are some products out there which have a very high amount of antibody in a syringe and those products are going to be therefore more driven by the cost of those substance. There are others which are much less frequent injections and even much lower dose. And those products, if you look at their cost structure its much more driven by utilization of plans, much more driven by the cost of syringe until finish, devices other than the active ingredient. So it points the good one, but it just depends in terms of how you think about manufacturing technologies.

So the way we are thinking about it is, if there are places where we maybe disadvantaged, can we actually take advantage of original cell line with some newer manufacturing technologies, may be at lower scales, more efficiency, more or higher utilization those types of things. So we are looking at ways to overcome if we happen to be a 30% or 40% below the yield of some of our competitors and also trying to choose our products in the right way.

Robyn Karnauskas

Okay. Question on 402. Since you were smiling yesterday while [Ruchi] (ph) was asking a question about 402, that got me really excited, I do current Celgene and the graft thing, this should be a positive for us. How do we think about the cost of developing 402 I mean, in post the Phase 1 trial? And how are you thinking about strategy? Because you don't have an oncology sales for that. How are you thinking about the next step for instance?

Craig Wheeler

Yes. So it is a good question. 402 is our lead novel drug and we will be disclosing our Phase 1 results in the second half of the year and moving it to our randomized trial. Right now we are developing it at one indication. So we have chosen this indication because -- allows us to get a quick read and relatively a short trial. So that’s a affordable trial even for a company like us.

If we broaden this program out to where other prices were, it has real potential in colon cancer, breast cancer et cetera those become much larger, much longer trial. And so, I would imagine that we would probably see from at least a partner for portion of the market to be able to fund a broader effort, if we get really positive results, particularly about those randomized profit.

If we don't, then we are -- obviously, we would not take the program forward, if we don't price in a more niche market. And things are going well for us. It may well be a countdown that we didn't launch on our own into a smaller oncology market. But some other broader markets we would definitely think as partners.

Robyn Karnauskas

Well, let me ask you that then as a follow-up. Lot of big pharma and even biotechs are -- have everything in house so that they can lower the price point for condo drug. So how do you think about that, putting into a pharma because rock seems expenses? There could be a cheaper one if rock seems expensive. So how are you thinking about the cost dynamics and peoples trying to afford a double or does that not matter?

Craig Wheeler

No, it matters. And I worry about that, a great deal. Looking at oncology pricing, another way I handed it, my clinical team is -- we got a have evidence that we have real differential advantage. I think on oncology. And for those of you know (inaudible), I think predominate of our pipeline is oncology, I have put a lot of time in it. It's the market which is going to change, because you are seeing more and more expensive therapies. People talk about personalized medicine but usually it means that you are tailoring several expensive therapies into a single patient.

So that we -- at risk types of things that are happening, the contact and verbal change. But the most important thing, I think any of us that are starting to think about competing on oncology have got a focus on, is we have got a have a real meaningful difference and that is what we are shooting for. And I think the world of -- or the days we had a 20 days survival advantage and therefore, could market our drug they would have price advantage disappear very quickly.

And I think it has to be meaningful expansion of life or quality of life in those kinds of metric. So that is what we are looking forward, we are hopeful that, be able to give a meaningful contribution and therefore justifies the economics.

Robyn Karnauskas

Okay. And I apologize. Someone asked a question on the (inaudible), probably want a price, there is no price. What is the expected price difference between Copaxone and in generic?

Craig Wheeler

It again depends on competition. I would say for those we are thinking about is that, you should look at -- if there is one competitor out there, four out there, or two competitors or three competitors because competition will determine the price of it, does not any generic market. I mean, I am not commenting on Copaxone specifically but it goes back at the enoxaparinc market. In time we were single, we will probably set 80% of the brand price, as soon as competitors came in that started to drop. Don't look at out quickly -- in our trend drop in the second because that one was probably the most bizarre fall in price of a generic that anybody have seen us or Sandoz, where because of confidence of pricing decisions that were made by the authorized generic, as well as by our competitors that price collapse pretty quickly.

Here I think if you look at two competitors Teva, Mylan and Sandoz those are probably the most experienced companies competing in this space (inaudible).

Robyn Karnauskas

Okay, Craig. Thank you very much.

Craig Wheeler

Thank you.

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