Momenta Pharmaceuticals (NASDAQ:MNTA)
2012 Citi Global Health Care Conference
Feb 28, 2012 11:00 AM ET
Unidentified Company Representative
I'd like to draw your attention to our safe harbor statement and risk factors included in our SEC filings. Momenta Pharmaceuticals is using innovative characterization tools, methods for determining structure and process and applying patented methods and approaches to identifying the structure, the process and the biology for complex mixture drugs and we do that in order to develop a portfolio of both generic and novel products. So we are based in Cambridge, Massachusetts, approximately 200 employees, and our approach was validated with the approval and launch of a generic Lovenox in July of 2010. We reported $366 million of cash as of December 2011 and we have collaborations with Sandoz division of Novartis with generic Lovenox and generic Copaxone and recently signed six products Follow-On Biologics collaboration with Baxter.
So just to recap 2011, a very eventful year for us. Generic Lovenox generated over $1 billion in sales to Sandoz and for most of the year for the first three quarters of the year, we were earning a profit share on those sales and then earned royalty during most of the fourth quarter of 2011. Competitor generic Lovenox was approved in September of 2011. We managed to keep that product up in market temporarily to an injunction but that injunction was stayed in January of this year. We did sign a collaboration with Baxter in December; I'll talk more about that. They have paid in the first quarter, their $33 million upfront payment in connection with that collaboration.
We are still working through the courts to enforce enoxaparin patents and I'll discuss that a little bit more as well. Our ANDA for generic Copaxone is and continues to be under review at the FDA and we did acquire the Sialic Switch assets of Virdante and exciting novel drug platform opportunity for the company.
So our product pipeline is generic Lovenox, nox product that was approved in July of 2010 and Sandoz continues to market that product. M356 is our generic version of Copaxone to MS product and that NDA is under review at the FDA. We're working on multiple biologics and currently working on those in collaboration with Baxter with whom we recently signed a six product deal and we are working on a novel drug, M42 is our oncology candidate, heparin based oncology candidate which we are hoping can get into the clinic sometime in 2012.
So I'll move directly to Follow-On Biologics and the Momenta approach to Follow-On Biologics we believe is different from our competitors. So what we're trying to do with our technology is, we are trying to use the analytical technology that we applied to generic Lovenox and that we have applied to generic Copaxone, now to biologics and what we are trying to do is through our analysis of the structure of branded biologic drugs, we then select a cell line using the same cell line system as the brand in order to create an equivalent product, really a true bio generic for these biologic products so using the same cell line and trying to engineer the same process conditions as the brand and again using our superior structural characterization technology to accomplish that.
So with existing biosimilars there is our acknowledged differences between the biosimilar and the brand and there are portions of the product that are unknown. So we're using our technology first to substantially reduce the portions of the product that are unknown and then over time to reduce the differences between our products and the branded product and so we're using the FDA's the same approach that we applied in generic Lovenox to this process. So the FDA has come out in several ways with their discussion of how they are approaching regulatory review of this biologics and initially their guidance came through an article in the New England journal.
More recently their guidance came through the biosimilar user fee pathway and discussion of that approach and more recently now they have come out with specific guidelines on the 351K biosimilar pathway and would like to point out that they emphasized that they would start with understanding the structure of the product that is being filed under the IND. That is the first step. The structural characterization and its only by understanding the differences or similarity of the product with the branded product that the clinical pathway can be determined and this is going to be done on a case-by-case approach. The language that the FDA used in describing their process contained language that suspiciously looked like the language that we use in describing our approach to characterization and talking about identifying fingerprint like structures as ways to demonstrate structural similarly and structural equivalence. So again we believe that this demonstrates that we will have differentiation in this market that we will have an approach that the FDA will differentiate and that by showing that we have more equivalent structural characteristics to the brand that there will be an offset within the clinical pathway and ultimately with the interchangeability of the product and we would point out that the guidelines indicated that the first interchangeable product could be granted a period of exclusivity.
So again the entire market approach here is to reduce clinical studies, thereby reducing costs, reducing time, its product launch and then once the product is approved, obtaining interchangeability which we think is going to be a game changer in the market. So the collaboration agreement we signed with Baxter really capitalized on our strengths and our differentiation. So under the collaboration we have, two products that have been named in development for additional products which will be named, we have responsibility for the product development through IND, Baxter has monetary responsibility for clinical study as well as the commercialization of the product and Baxter has made an upfront payment of $33 million and has a potential for over $400 million of milestone payments and these really breakdown into two types of milestone. One site is the milestone's true IND and so the milestone's true IND will offset substantially our cost to develop these fixed products through IND and as Baxter opts in to the remaining four products as we demonstrate technical aspects of the product to Baxter and they expect the products and as we file INDs and have INDs accepted, we'll be earning milestones that will be offsetting our cost.
Now once the products are commercialized, we get a base royalty, if it’s a biosimilar product but we have the opportunity to take that base royalty or high single digit royalty and more than double the royalty rate if we can achieve interchangeability or have limited competition. So there's significant upside for us in this deal. We also have the possibility, a one-time option to opt into a profit share on for additional products and that could be up to as high as 30% profit share.
So we're very excited about the opportunity here with Baxter. We think that Baxter really has aligned with the strategy that we're approaching in the market, Baxter has great experience in operating within a highly competitive markets and that's on a global basis. So compared to some of the competitors that we have out there, large Pharma companies, large biotech companies, we in Baxter we believe can be differentiated with our structural characterization approach but also our approach to markets on a global basis. So again, we're very excited about this collaboration and think that this is going to provide us substantial long-term value.
So moving on to generic Lovenox. Sandoz reported sales in Q4 of 225 million, over $1 billion in trailing fourth quarter sales. We earned $26 million in the fourth quarter because with the launch of an authorized generic in October of 2011 our economics changed in the deal to a hybrid royalty profit share. So for most of Q4 2011, we were in a royalty and that's a 10 to 12% royalty and then towards the end of Q4 we returned to a profit share.
Through January we continued in a profit share but when the court of appeals stayed the preliminary adjunction against Amphastar and Watson that again made it a competitive situation, Watson and Amphastar have launched at least on a limited basis that has changed the economics now to a royalty. So we are in a royalty of 10 to 12% and that began in variable 8 January of this year.
So I do want to mention that the vile formulation that we submitted to the ANDA was approved. It’s a small portion of the market but it does give Sandoz the full product presentation range and we would like to point out that we were granted 180 day exclusivity in connection with that. So certainly as we look ahead to a generic Copaxone where we were the first to file. This gives some indication that the FDA at least in this case was willing because of the passage of time; they did grant us the 180 day exclusivity in connection with the approval of this ANDA.
So we are continuing the patent infringement suit against Amphastar and Watson and parents at Equity, against Teva as well and right now the trial is scheduled for October of this year. So certainly we haven't yet seen why the temporary injunction was lifted by the court of appeals. We should see that decision with the next month or two but we certainly believe very strongly in the strength and enforceability of these patents and so certainly investors you could see that there could be significant upside in us winning the patent litigation and being able to enforce those patents and enforce damages against Amphastar and Watson in the case of these patents. So as I said, the economics right now with respect to generic Lovenox are straight royalty at 10 to 12%.
So moving on to generic Copaxone M356. Copaxone originally filed as an NDA there's been a lot of talk recently whether Copaxone falls within the biosimilar guidelines. We would state that our position is that cortically Copaxone is not within the biosimilar guidelines. It does not meet the technical requirements of a biologic and in addition Copaxone was filed as an NDA and we filed our ANDA prior to the biosimilar pathways having been established and therefore under the guidelines that have been put forward we are continuing to have our ANDA reviewed under the 505(j) pathway and as an ANDA. So we very strongly believe that the FDA is still considering Copaxone as an ANDA product and we are continuing to be reviewed under that pathway.
There are seven orange book patents and two non-orange book patents that have had issues that we are litigating and the ANDA reviewed by the FDA is proceeding. We have said recently that review with the FDA is going well. Its interactive. We are in frequent contact with the FDA. We believe that the FDA is intensified to approve our ANDA for generic Copaxone without clinical studies under the ANDA pathway and we believe that we will be able to demonstrate to them that our product needs the criteria, the same criteria under the ANDA pathway and we can get the product approved.
So I am going to skip the little (inaudible) here on how polymer chemistry works but this is really just to illustrate that this product is the synthetic peptide. It's what we would call a highly heterogeneous but nonrandom molecule and therefore our technology is well suited to deconvoluting this complex mixture and demonstrate to the FDA that our products is an equivalent product. So we did collaborate with Sandoz on this product, the 50-50 profit splits, worldwide on this product going forward. So we don't have the economics as we have with generic Lovenox that changed depending on the competitive situation. So with generic Copaxone under any competitive situation we do have 50-50 profit split.
So on the FDA site; we'll point out that (inaudible) filing citizens' petitions under the new rules. The FDA waits six months and has three times rejected those citizens' petition. Further evidence we believe that the FDA wants to continue to review this under the ANDA pathway and as I said we were litigating seven orange book and two non-orange book patents, the trial was completed in September of last year. We are expecting to hear from the district court, probably somewhere in the Q2 to mid-year although we can't predict exactly what the timing of that ruling will be from the district court.
We mentioned also couple of issues that Teva has raised regarding their low volume formulation backset the FDA has required them to go back and do clinical studies on a low volume formulation we believe has no relevance to our ANDA because our formulation is the same. It’s the not different from the formulation that's presently on the market and I will mention that we have several issued patents relating to message for manufacturing glatiramer acetate, similar to the approach that we took with generic Lovenox, so we will seek to enforce those patents against any other competitors who attempt to market a generic Copaxone.
So just briefly I'll mention that M42 is novel oncology candidate. It’s a heparin based candidate in which we've taken advantage of the non-(inaudible) and anti-metastatic properties of heparins by down regulating the anti-coagulation and therefore getting a production that we could be very interesting oncology drug candidate. So we're hoping to get that product into the clinic in 2012 and think that this product could be very interested and differentiated from some of the current oncology drug candidate.
During 2011, we did acquire the Sialic Switch of Virdante. This technology was obtained from Rockefeller and Rockefeller Institute and we're working to establish the scientific principal upon which technology was based and the initial application being sialated product. The advantage with sialated IVIG product is that it would increase the potency. You could decrease the dosing and that would be significant in a product which is obtained from blood plasma. So that could be a significant opportunity, a significant market. It would be a new drug. So it would not be an abbreviated pathway, we don't believe but it will be a new drug but we think it’s a significant opportunity and we're also excited that we can apply this technology really to a broad class of anti-body products. So we believe this is an exciting platform that could be applied to our new drug discovery technology.
So in summary, we are continuing to support the marketing of generic Lovenox and we will continue to very aggressively enforce our patents against competitors whether its Amphastar, Watson or potentially Teva and we will continue to do that and as I said, we think that presents a significant upside opportunity for investors. We're continuing to work with the FDA to ensure the approval of a generic Copaxone and are waiting the ruling from the district court and the patent case and very excited about the Follow-On Biologics opportunity working with Baxter to develop six Follow-On Biologics and finally hoping to advance M42 our oncology candidate into the clinic this year. So that is the product portfolio of Momenta Pharmaceuticals and thank you very much.
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