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Momenta Pharmaceuticals Inc. (NASDAQ:MNTA)

Q2 2014 Results Earnings Conference Call

July 31, 2014 10:00 AM ET

Executives

Eric Shaff - Vice President, Corporate Finance

Craig Wheeler - President and CEO

Rick Shea - Chief Financial Officer

Analysts

Gary Nachman - Goldman Sachs

Sumant Kulkarni - Bank of America

David Risinger - Morgan Stanley

Eric Schmidt - Cowen and Company

Jason Gerberry - Leerink Partners

Liav Abraham - Citi

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Momenta Pharmaceuticals’ Second Quarter 2014 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s presentation, Mr. Eric Shaff. Sir, please begin.

Eric Shaff

Thank you, Operator, and good morning, everyone. We thank you for joining us today for Momenta’s conference call to discuss financial results for the second quarter of 2014. Today’s call is being webcast and you can view the slides we will be presenting in the Investor section of our website at momentapharma.com.

Joining me today on the call with prepared remarks are Craig Wheeler, President and Chief Executive Officer; and Rick Shea, Chief Financial Officer. Following our remarks, we will open the call for questions.

Before we begin, I’d like to mention that our call today will contain forward-looking statements about management’s future expectations, beliefs, plans and prospects. These forward-looking statements include the company’s revenue expenses, potential approval and launch of M356, timing and expectations regarding litigation related to M356, anticipated achievement of development milestones, including milestones under the Baxter collaboration in 2014, forecasted cash usage and burn, potential equity financing and the use of proceeds and expected results of operations, such as our expected product development and collaboration milestones and the timing for clinical and non-clinical trial results, our plans for future research and development investment, and our product development plans and expectations.

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 filed on May 6, 2014 with the Securities and Exchange Commission under the section Risk Factors, as well as other documents that maybe filed by Momenta from time-to-time with the SEC.

As a result of such risks, the company’s actual results may differ materially from those we will be discussing. We are providing the information on this conference call as of today’s date and we assume no obligation to update these comments.

With that, I will now turn the call over to Craig.

Craig Wheeler

Thank you, Eric, and welcome everyone. We are halfway through 2014 and I’m pleased to report that we have made considerable progress in moving our portfolio forward. In today's call, I will first describe the adjustments to our operating plan we have implemented as a result of the Supreme Court's decision to grant Teva's cert on March 31st; second, provide an update on where we are with our generic Copaxone program; and third, describe the progress we have made in our other key programs.

In our first quarter earnings report, I have described some of the steps that we would take in order to keep our portfolio moving forward amidst the ongoing Copaxone litigation. We made the decision that we would reserve any revenue earned from the launch of our generic Copaxone until the Supreme Court’s action is clear.

As a result, we’ve refined our operating plans to focus our efforts on maximizing the value of our growing portfolio with the more limited resources we can draw on. We have made the following adjustments.

First, we have made the decision to discontinue development efforts on our M511 program, the oncology biosimilar that was originally part of our Baxter partnership, providing headcount and dollars to reallocate to other programs.

Second, we have we reallocated some of the resources from the M511 program to a set of earlier stage biosimilar programs will allow us to broaden our technology base and should provide valuable partnering opportunities.

Third, we have adjusted our hiring plans to hold our headcount to approximately 275 people, which represents a 12% reduction from planned year-end headcount. Rick will describe the impact of these changes when he discusses the financials later in the call.

With these decisions behind us, our team has the clarity needed to drive our programs forward and I am pleased to report our employees have remained focused and energized as we have adjusted our operations, and we believe we are on track to achieve our critical 2014 milestones across the business.

Including, approval of M356, our generic Copaxone, submitting a regulatory filing for our first biosimilar M93 and completing the Part A dose escalation phase of our clinical trial for novel oncology drug necuparanib and advancing the program into Part B.

In addition, we have begun planning in R&D day in the fall where we will provide greater visibility for investors into each of these development programs and show you the basis of our excitement.

On the M356 front, we know that our application continues to be reviewed at the FDA as a high priority ANDA. We continue to actively engage with the FDA and expect approval under the 505(j) pathway this year. As expected, we continue to encounter multiple efforts by Teva to interfere with the FDA’s review and approval process for our ANDA.

On May 14th, the U.S. District Court for the District of Columbia heard Teva versus FDA, where Teva challenged amongst other things the FDA's denial of their sixth citizen’s petition and asked the court to prohibit any generic Copaxone ANDA approvals.

We believe the court acted correctly in dismissing the suit, not only because of a lack of jurisdiction as the case wasn’t right prior to a generic Copaxone ANDA approval, but because the court correctly acknowledge the FDA’s scientific discussion in reviewing each individual ANDA based on its data and science.

Teva also filed its seventh citizen’s petition regarding the potential approval of the Glatiramer Acetate ANDA. As with all previous petitions, Teva continues to seek to obstruct or delay generic competition. We believe in appropriately to CP submission.

Its past submission was rejected by the FDA and our expectation is that this latest attempt to prove similarly unsuccessful. In Teva’s latest attempt, the company argues that Teva submitted gene expression data should preclude the approval of an ANDA.

We believe this CP similar to past CP’s is without merit. Specifically, we believe Teva’s speculative conclusions are based on a scientifically flawed study. Teva conducted the study on non-FDA approved Glatiramer Acetate source from India and Mexico, and certainly not our product. And Teva has not seen our ANDA nor reviewed science and that has no basis to comment on the approvability of our application.

Over the past six and half years Momenta has worked tirelessly to ensure that the FDA has all the technical evidence it needs to approve our product. Momenta and Sandoz have presented the FDA with extensive data expanding myriad analytic method, including gene expression.

Our analysis has provided multiple measures of equivalence in all aspects of the Copaxone product, including, starting materials, manufacturing processes, structural signatures, physiochemical properties, biologic activity and immunological properties.

We believe that we have set a high technical bar for proving sameness with this product. While gene expression when properly applied can be a useful tool, it is only one very small piece of the comprehensive set of evidence required to prove equivalence.

We believe Teva will continue to use every approach available to it to seek the delay of an ANDA approval. However, we are confident in the quality, rigor and thoroughness of our ANDA and believe the FDA will see beyond Teva’s efforts to abuse the citizen petition process. We remain confident that for those stakeholders waiting for generic approval, we have done everything within our power to enable the FDA to move forward.

On the legal front, the Supreme Court has set a date of October 15th to review the appellate court’s decision invalidating Teva’s 2015 patents. We continue to work with Sandoz to determine the appropriate timing and strategy for launch and do not expect to make any public announcement on our plans until we have an approval in hand.

So I cannot provide further commentary on our strategy. I continue to believe that there will be a substantial demand for generic MS therapy. We look forward to providing for the first time the choice to be safe effective generic product in an MS market that currently has no generic competition to bound the ever rising cost of medicines for MS patients.

Let me now turn to our biosimilars program. As you know, we have to autoimmune anti-inflammatory programs partnered with Baxter that we’re expecting to each milestone this year.

Our lead program, M923 is progressing towards a CTA filing expected by the end of the year, which upon acceptance will allow clinical initiation certainly thereafter. This filing would trigger a technical and a regulatory milestone from the CTA filing will pave the way for entry into the clinic.

M834, our second biosimilar program partnered with Baxter is expected to achieve minimum development criteria this year. The milestones in aggregate represent $19 million of potential revenue. These flagship programs are the foundation of our biosimilars business and we are pleased they’re progressing so well.

I mentioned at the start of our call that we have made the decision to discontinue development efforts on our M511 program as part of our operational adjustments and response to the Supreme Court case.

Our M511 is the program with high potential, was about to enter a very costly phase of development. Without the partner for the program, the cost of caring for on our own, would severely limited our ability to invest in our broader portfolio.

Several other companies that are competing in this product area are already working on their own programs, reducing the opportunity to re-partner the asset in the near-term. Therefore, we have discontinued the development efforts on M511, which will allow us to redeploy headcount and cash resources to other programs.

As I’ve said in the past, we feel it’s critical to maintain a portfolio of assets on our biosimilars business. This allows us to diversify risks, smooth out the potential lumpiness of our revenue curve and broaden our technology base.

I mentioned in our first quarter call that we're investing in an early stage biosimilar [do-pen] (ph). The reallocation of resources from M511 to develop a multiple [do-pen] (ph) products will allow us to further enhance our already active efforts to expand our portfolio, with assets that we believe will be effective to Baxter or future partners and will enhance values for our shareholders, expect to hear a lot more about our [do-pen] (ph) products in the coming months.

Next, I’ll update you on our lead clinical program, necuparanib, which continues to make good progress. As a reminder, necuparanib formerly M402 is our heparan-sulfate mimetic engineered to optimize heparan’s natural antitumor effects for reducing its anticoagulant activity to allow for higher dosing levels. We are enrolling our seventh and will be expected to be our final cohort, with data expected in the second half of this year.

As I mentioned in our last call given the tolerability profile that we’ve seen thus far in the study, we’ve already reached a dose that we will be comfortable taking forward into Part B.

As a reminder, the Part B study will be a randomized controlled study investigating the safety and antitumor activity of necuparanib, administered in combination with Abraxane and gemcitabine, compared with Abraxane and gemcitabine alone in patients with metastatic pancreatic cancer.

We plan to initiate the Part B study by the end of the year and our goal is to share the necuparanib Part A results and the Part B clinical plan with you at our R&D day in the fall.

Lastly, before I turn the call over to Rick, I would like to quickly review our progress in the research front. As we mentioned last quarter, we have concentrated our primary research and developing Fc region recombinant product candidate.

In these efforts, we are seeking to exploit the natural mechanism of modulating IgG function, thereby creating a potential for lower dose, higher potency IgG product that target in inflammatory disorders.

These research efforts are early, but the potential opportunities here for recombinantly produced product are substantial and we hope to provide more detail on these efforts at our R&D day in the fall.

With that, I'll turn the call over to Rick.

Rick Shea

Thank you, Craig. We reported a net loss in the second quarter of $26 million, comparable to the net loss of $29 million reported to the same quarter last year. Revenues for the second quarter were $11 million, compared with $4 million of revenue for the second quarter of 2013 and included $6 million in enoxaparin product revenues and $5 billion of R&D collaborative revenues. An enoxaparin net sales for the quarter totaled $54 million, giving us royalty revenue of $5.7 million, compared with $1.6 million for the prior year’s second quarter.

Under our collaboration agreement with Sandoz, we adjust our share of pre-launch development costs at the end of each of the first five product years through the second quarter of 2015, each product year runs from July to June,

The clawback adjustment recorded this quarter was $2.2 million. The comparable adjustment for the second quarter of 2013 was $3.8 million. However, the clawback amount for this year was offset by a $2.1 million adjustment to royalty revenue earned by estimate product year ended June 2012. So our net adjustment this year was $0.1 million.

We are pleased with the second quarter enoxaparin sales where our market share continued to hold firm. However in June, the FDA approved Teva’s ANDA for an enoxaparin. The timing and the impact of their commercial participation in the market is unclear right now, we'll just have to monitor that going forward.

As a reminder, we continue to pursue our patent litigation case against Amphastar where we will be presenting to the CAFC, a full set of our arguments and a complete record that we hope will persuade the court to more properly define the scope of manufacturing activities that are protected under the Hatch-Waxman Safe Harbor.

Turning to collaborative revenues, the increase to $5 million reported in the second quarter, compared with $3 million for Q2 of 2013, reflects increased reimbursement from Baxter for biosimilars development costs. Approximately, $1 million of the collaborative revenues in both quarters consists of the amortization of the 2006 Sandoz equity premium and the Baxter upfront payment of $33 million.

Second quarter 2014 R&D expense increased to $26 million, compared with $22 million in the second quarter of 2013. The increase was primarily due to increased biosimilars process development expenditures, as well as increased headcount and facilities-related costs.

Our G&A expense for the second quarter decreased to $11 million from $12 million in the same quarter last year due to lower legal and other professional fees. We ended the second quarter with the cash balance of $202 million and the second quarter cash burn was $22 million.

Our operating expenses, net of stock compensation and collaborative revenues, totaled $29 million within our guidance range of $28 million to $30 million. Our cash burn was lower than our quarterly guidance due to favorable royalty revenue, lower capital expenditures and favorable change in receivables.

As for our guidance, for the second half of 2014, we are now projecting that our net cash usage, excluding revenue from the potential launch of M356, will average approximately $26 million per quarter. The projected cash burn for the fourth quarter of 2014 is expected to be partly offset by $19 million from milestone payments earned under the Baxter collaboration, although the cash from all our portion of these milestone payments could be received in the first quarter of 2015.

As a reminder, in our first quarter call we announced the establishments of an at-the-market financing facility, or an ATM. Under this facility, offerings may be made pursuant to shelf registration statement previously filed with the SEC and the company may sell from time to time upto an aggregate of $75 million of its common stock. We did not sell any stock through the ATM in the second quarter.

This concludes my financial review. I'll now turn the call back to Craig.

Craig Wheeler

Thank you, Rick. And with that, we will now open the call to questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question or comment comes from the line of Gary Nachman from Goldman Sachs. Your line is open.

Gary Nachman - Goldman Sachs

Hi, good morning. Craig on Copaxone, can you say if the FDA has asked for any significant new information in the last couple of months after Teva’s last citizen’s petition? And if you get the approval this year, what are your thoughts on the ability to convert patients back from 3TW and how formularies might handle that?

Craig Wheeler

Thanks, Gary. First on Copaxone, there's really nothing new to report in terms of request for information. We had disclosed that we had submitted gene expression data, but there has been nothing new that has been gone in besides that, we’re feeling pretty good about where we are with the FDA on our application. So, more to come on that soon hopefully.

On our ability to convert people back, I really think that is going to be dependent upon a plan to plan variation. I think the strong control plans certainly have the opportunity to not only potentially convert some patients back, but also potentially convert new starts, put new starts on then the multiple different therapies that could go under Copaxone. Remember this is the first generic MS therapy that’s gone into the marketplace. There's really nothing else out there.

So many of the tools that high control managed care plan use to actually control pharmaceutical costs have never really been able to use in MS therapy, things like co-pay differentials or step-edits and those types of things. So I do expect once the generic is available here that you will see high control plans experimenting with that and that does give us an opportunity to potentially convert some folks back or get early starts that may have gone to other products. But we will have to get into the marketplace first to see how that happens.

Gary Nachman - Goldman Sachs

Okay. And lastly, any update on Baxter’s thinking on whether or not it will exercise its options on another three biosimilars? And if they don’t, how quickly could you look for another partner? Is that a process that you’ve already started? Just give us a sense of that. Thanks.

Craig Wheeler

Sure. I think, first of all, we are committed to our Baxter partnership and we already have a partnership in existence. So we are looking to make sure we can satisfy that partnership first. And I think the selection on those really just depends on where Baxter is themselves strategically, I mean the challenges for and we are watching very carefully is Baxter is going through a lot of restructuring themselves and is splitting the business.

And so we have to see the pace of that goes and how they reestablish the capitalization of the new businesses in portfolios and that’s really decision that Baxter has to make. And so whenever you’re sitting on the other side of our partnership like that, you kind of hope that that situation resolves so quickly and you get clarify in terms of the strategic direction they have. But they do have until the beginning of next year with the possibility of actually signing for an extension on those programs. And so we will have to see as we get closer where they are at in terms of their own restructuring and capitalization and privatization for their business.

In terms of other partners, we don't comment specifically on work we’ve done, but we’ve always said that we have a broader set of portfolio that we are working on, on our own and for those programs which are more numerous than Baxter would under the current contract pick up. We always are looking at potential opportunities and thinking about it. But I can’t comment specifically on any business development activities.

Gary Nachman - Goldman Sachs

Okay, thank you.

Craig Wheeler

Sure.

Operator

Thank you. Our next question or comment comes from the line of Sumant Kulkarni from Bank of America Merrill Lynch. Your line is open.

Sumant Kulkarni - Bank of America

Good morning. Thanks for taking the questions. I have a few here. So on generic Copaxone, you mentioned ‘approval’ this year, but you still continue to believe that this could be an any day approval or would we have to wait for the FDA to rule somehow on Teva’s citizen petition before an approval comes?

Craig Wheeler

So on the approval, of course we don’t comment specifically on our own actions, but it really is something that could come in at any time, because the citizen petition process is typically answered at the time and oftentimes the answer with the approval. That’s what happened with enoxaparin. So we don’t think there is any sequential thing that has to happen, they have to answer things first before they come to us. And so we really look at this through a totality of the review lens and we feel things are progressing well. And so we are hopeful if we can get across the finish line in the near future.

Sumant Kulkarni - Bank of America

Sure. And then how would the company actually Sandoz because they would be selling the product, go about spreading generic penetration, if the once daily brand is deemed to withdrawn for safety reasons around maybe injection site reaction?

Craig Wheeler

I think that the chances of the once a day being withdrawn for safety issues is extremely low. That could make -- I think if you look at commercial decision if they had switched most of the market, but there are not safety issues with the once per day. This has been a very, very well tolerated product for years and years, and so I do not see any risk of that.

Sumant Kulkarni - Bank of America

And then on the agreement with Baxter, could you give us some sense of what the logistics maybe? What are they in terms of getting the green light from the company going forward with the three remaining products? Could that all come at the same time or are the products evaluated one by one?

Craig Wheeler

So I can’t comment on Baxter’s internal process, but I can comment that we actually have a joint decision making committee with them where we evaluate different products that could enter the portfolio. So we work with them on looking at potential future products. Their criteria are going to be established based upon their own priorities and their own portfolio but they bring that into the decision-making process as we go through with them. We do have kind of a list that we would probably jointly evaluate and pick from at the right time.

Sumant Kulkarni - Bank of America

And then moving onto M511, before taking the decision to discontinue, was there a partnering effort already underway and did industry participants have a look at that product?

Craig Wheeler

So we certainly looked at potential opportunities and how quickly partner we become who also was out there on the competition front. But we were in a position where we had to take a different tact very quickly because we originally picked up that program, so we’re taking it forward. We weren’t running into this Supreme Court problem where our resources were more constrained.

And the issue with that program is that it was just about to enter the very heavy development cost stage. So we’re going to have to really increase our burden on this. So what we’ve done with that program is we’ve wrapped it to a very good technical point. It’s performing very well. We’re very well pleased with where the program is. Now it’s performed scientifically and it certainly will be available in any future partner endeavors.

But I do want to emphasize that one of the reasons that we decided not to take it forward is that we view those partnering efforts just because of where the product was and the fact that most of the other major companies that would be interested in the product already have picked up their product. It was one of the earlier round products.

We can get a harder product to partner at this point in some of that, kind of, second generation program. And so I don’t want to create over-expectations on our ability to re-partner that program at this point.

Sumant Kulkarni - Bank of America

My last question is how open is the company to commercializing its biosimilar in perhaps less circulated markets overseas that tied you over until you get all your plans in place?

Craig Wheeler

Yes. So our view on particular products that we’re partnered with Baxter are, we are looking globally with these products. So it's certainly a possibility. I think the thing that was, we are developing one single product for global markets. So we are not doing different products. And so there are complications in terms of how you think about bringing products that you under developed one place to others, et cetera. So it’s on the radar, it’s not clear to me but it is going to be possible to do those earlier than U.S. and Europe.

Sumant Kulkarni - Bank of America

Thanks, Craig.

Craig Wheeler

Sure.

Operator

Thank you. Our next question or comment comes from the line of David Risinger from Morgan Stanley. Your line is open.

David Risinger - Morgan Stanley

Yes, thanks very much. So Teva stated on its conference call this morning and I apologize that this question was asked, I dialed in a little late. But Teva stated that they are considering applying with the FDA in the near-term to stop manufacturing the once-daily Copaxone. My question on that is, do you believe that that will cause the FDA to act more quickly on your generic Copaxone application? And then second, Sandoz finally updated comments on whether they would launch a generic Copaxone if that was approved or not? Thank you.

Craig Wheeler

Sure. I can’t -- I obviously can’t comment having not heard the Teva commentary that that Teva has said. I actually believe that this application process is in FDA's fast-track approval. So it certainly could have some impact on them but they already have prioritize buckets. So hopefully we’ll see something come out of that process. But it is already a prioritize program.

In terms of launch, as I said in my comments that we are working with Sandoz to determine the appropriate timing of launch and we have no intention of talking about that at all until we have approval in hand.

David Risinger - Morgan Stanley

Thank you.

Craig Wheeler

Thank you.

Operator

Our next question or comment comes from the line of Mr. Eric Schmidt from Cowen and Company. Your line is open.

Eric Schmidt - Cowen and Company

Thanks and good morning. Another question on M356, Craig, you didn’t say this explicitly but should we assume that your gene expression data are of high quality and match the innovator profile?

Craig Wheeler

Yes, you can assume that.

Eric Schmidt - Cowen and Company

Okay. And how long do you think it would take the FDA to turn around information like that and review such results?

Craig Wheeler

Well, theoretically, the approvals we’ve done pretty quickly. The point that I have always made on this is that gene expression is one very small piece of a packet that’s needed to show sameness in this product. And so we always fall back and rely on the completeness of what we put in our application. That’s why I, kind of, went through points on the call as I look to discuss it in our application.

And so when these CPs come in and they’ve come in many times now, you can anticipate that most of the questions that would come up because of those CPs have already been anticipated and answered in our application. So we feel pretty confident about where we are with our application and the totality of evidence we provided the FDA for approval.

Eric Schmidt - Cowen and Company

And do you think you are on a fast-track review process at the FDA, so you don’t perceive there to be any slowdown pending of Supreme Court review of litigation?

Craig Wheeler

I definitely did not perceive any slowdown. If you ask me, if I believe that fast track is passive, I would like it. I don’t have different opinion but I do not see any slowdown.

Eric Schmidt - Cowen and Company

Okay. Moving to 511 and just the decision to discontinue things there, what kind of assurances can you provide the investment community, given that you are not willing here to talk about the identity of other programs we are working on that you won’t be in a similarly too competitive, too costly development program with some of the other players in the biosimilar space having already announced FDA submissions or Phase 3 trials. I mean, why should we think that you’re eventually going to have a nice niche here?

Craig Wheeler

Well, I think the M511 program was pretty unique because that was the partnered program that we had developed. And we basically had put our money into it and it was approaching the point where the development cost were going to get large, scale up into the clinic et cetera, that were contractually Baxter’s responsibilities. And so when they gave us that product back, it was -- some of it wasn’t anywhere in, any of our planning and spending and long range plans et cetera.

When we were optimistic, that we were going to be launching our generic Copaxone on patent expiration and they have to get out there early with pretty good revenue stream on Copaxone, we had the ability to see scenarios where we could afford to do that on our own. But we were in a much more constrained situation now where we look to doing that program on our own and it has to move fast.

I mean, it’s in a competitive market. It’s not what we’re saying that we’re not going to be competitive in it, we will have to commit to that spending all the way through, full forced be able to get that to the market place. That effort would have in the current fiscal situation that we have consumed much of the dollars that we have for our entire FOB business. And so when we looked at that, we said that it just doesn’t make sense when we have to actually begin to be more prudent in terms of what we have or are spending our dollars like those.

So it really wasn’t that we looked at that and said, this is just not going to be a competitive program. We looked at it strategically as a business and said we have to make some hard choices. This is the choice that one where it seems to believe the most strategic flexibility for the company by stopping that program. That’s why we did it.

Eric Schmidt - Cowen and Company

I guess, I get the decision on 511 but in terms of other biosimilar programs, it just seems like all the big biologics are going to be pretty well picked over, very competitive. Many programs already gain in phase 3. So why shouldn’t we be concerned that whether it’s you or Baxter going forward with the collaborative next programs. Why should we assume that you are also going to be a little late to the game if I put that way?

Craig Wheeler

Well, I think you said that for any competitor in the game, right. So, are on the approval pathway at this point in time. You know our strategies are there to try to reduce clinical trial and get them into changeability, more rapidly than others. We’re trying to pick programs. We’re in that lead pack for the programs that we’re picking. So, we’re well aware of these strategic elements necessary for success here.

And as I said in the past, the kind of programs that we’re trying to build here are ones that would be competitive in any event. If we didn’t get the competitive advantage we’re trying to get, it still will be competitive products form the market place. And therefore ones we’re investing in but if we’re successful and getting into changeability or successful in skipping trials, it gives us even higher value for the programs. So that’s how we think about the business strategically.

So you shouldn’t think about it as driving blindly off a cliff into where we’re going to be behind competitors, not have competitive products. We’re actually thinking very carefully about selection of products and where we have them, how we drive them forward. And parenthetically, the 511 program that we’re looking at, we don’t think would have been a late non-competitive product.

We thought it would be an expensive product. And I think if we had, at this point in time, been through the FDA and knew that we could be successful in reducing trials and therefore not face those larger expenditure, we made a different decision. But facing those required investments with uncertainty in the pathway, ensuring about the rest of our portfolio until we actually had more uncertainty around partnership didn’t make sense for us.

Now that’s got a long way to say, if this is an uncertain business, you got to think about where you think the advantages are going to come and think about where we are in terms of competing but we’re not driving into non-competitive situations.

Eric Schmidt - Cowen and Company

So may be last question on this front, should we assume what the R&D day later in the year that you’ll disclose multiple biosimilar programs?

Craig Wheeler

You should assume that we will disclose multiple things at our R&D day -- multiple programs.

Eric Schmidt - Cowen and Company

Okay.

Craig Wheeler

Yeah that’s been for purpose. Eric, let me just comment on that because that’s a good question. We’re looking at R&D day as a chance to kind of get the dialog off of -- not to respond dialog for investors but try to get dialog beyond courts and FDA approval and to actual showcase what is in the rest of the company in terms of science, in terms of products, in terms of approach.

And so it real is we want to take away a little bit of -- of what we have internally and research that we’ve done. And you can anticipate on that day that you will see a fair amount around -- some of those programs you will see a fair amount around our biology programs and you will see all the phase 1 data for our oncology program as well.

Eric Schmidt - Cowen and Company

Craig, we’ll look forward to that and just one last question on -- back on Enoxaparin actually. Do you think that the Teva generic which was recently approved also enfranchise your IP, do you have plans to litigate there to?

Craig Wheeler

So there is already been a litigation there, so there’s already a case there.

Eric Schmidt - Cowen and Company

Okay. Thank you.

Craig Wheeler

Yeah.

Operator

Thank you. Our next question or comment comes from the line of Difei Yang from R.F. Lafferty. Your line is open. Mr. Yang you may need to unmute your phone. Okay, I will remove you from the queue.

Our next question or comment comes from the line of Jason Gerberry form Leerink Partners. Your line is open

Jason Gerberry - Leerink Partners

Maybe first question just on the biosimilar -- the royalty structure on these products with Baxter. Could you just remind us maybe if these competitive triggers that could allow you to bump up your royalty rate beyond high signal digits. If you can provide any granularity in terms of, if you were able to get into a market, the number of competitors necessary to bump up that royalty rate, this is my first question.

Craig Wheeler

So royalty rate, I mean, there is a number of factors in there and we haven't given the specifics of them, but I can tell you it is things like the number of competitors. It’s thing like first approval, its things like interchangeability. So they kind of add on to each other and they last when both conditions hold. So you are exactly on the right track and thinking about the things that will allow us to get up to -- get up to those higher royalty rates

Jason Gerberry - Leerink Partners

But to clarify, the ceiling would be a doubling of the high-single digit royalty rate, is that correct?

Craig Wheeler

I think specifically what I said was slightly more than doubling.

Jason Gerberry - Leerink Partners

Okay. And then I guess most of the Capaxone questions have been asked, but just a few, just technical theme as the timelines around this case. When should we expect the briefs to become available? They may be available already, I haven’t looked, but if you can provide any commentary? And if you are still expecting potential for decision some time in early '15 or mid '15?

Craig Wheeler

Yeah. So the brief should be available in the next couple of weeks. I would say two to four weeks you should be able to see the briefs for the court. With the court date of the 15, you could see a decision by the end of the year or potentially first quarter of next year, but we’re anticipating that that will be roughly the decision timeline for the court.

Jason Gerberry - Leerink Partners

Okay. And lastly just given what we’ve seen regarding the India source which has been highlighted in Teva’s CP. Why wouldn’t you guys consider a settlement structure that could allow you to come in as an AG with some known quantities of products given that it would seem like you are the primary threat to the Capaxone franchise? Thanks.

Craig Wheeler

Yeah. So, as I said, in past calls, this is the generics business, and so we’re not going to comment on settlements, but it is the generic business, the settlements are always possible. So it’s certainly things that we are always thinking about.

Jason Gerberry - Leerink Partners

Okay. Thank you.

Craig Wheeler

Thank you.

Operator

Thank you. Our next question or comment comes from the line of Liav Abraham from Citi. Your line is open.

Liav Abraham - Citi

Good morning. Just one quick question on your gene expression studies, you mentioned that the FDA hasn't requested incremental data from you since the filing of the Teva’s most recent petition. But I was wondering whether you have decided to proactively initiate incremental gene expression studies in line with the augmented analysis that Teva presented in its latest CP in anticipation of the potential request for incremental data by the agency?

Craig Wheeler

Yeah. So I think on gene expression, again we can’t comment specifically on filings, but we actually feel that what we file was a very robust gene expression analysis. So we didn’t just duplicate what we viewed as flawed analysis from Teva. We actually did our own work. We had work internally that was already ongoing. And so, we -- our belief is that we effectively answer through the totality of our application, including our gene expression data, the questions that have been attempted to be raised by Teva in its latest CP.

Operator

Thank you. I'm showing no additional audio questions in the Q&A at this time. I will turn the conference back over to you.

Craig Wheeler

Great, thanks very much. I appreciate all the questions today guys, and hopefully we will be able to give you more on Capaxone soon. And I really look forward to seeing most of you at the R&D Day. So as soon as we get an announcement on that soon and hoping to get on your calendars. Thanks everybody and we will talk to you soon.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.

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