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Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA)

Barclays Capital 2012 Global Healthcare Conference

March 14, 2012 2:30 PM ET

Executives

Rick Shea – Chief Financial Officer

Analysts

Doug Gale – Senior Analyst, Barclays Capital

Doug Gale

Good afternoon. My name is Doug Gale I cover Biotech Pharma at Barclays Capital as part of the life sciences team. I’m trying to do it in sort of integrated basis. Up next we have Momenta Pharmaceuticals represented by its CFO Rick Shea.

Clearly a company that is I think really interesting from both technology stand point as well as no shortage of news flow and excitement in the industry. Covering generics manufacturer or generics industry as a whole though I know Momenta is not a generics company, but it certainly has a lot of the elements of litigation and patent challenges that bring a lot of the intrigue and usually attracts a lot of best interest.

So perhaps at the start I think what I thought would be helpful for some people to sort of explain exactly how you define yourself as a company. And what did exactly is that you do and your platform for development of both biosimilars or you know biobetters I think you would even perhaps argue as well as potentially novel therapeutics?

Rick Shea

Okay Doug thanks very much by the way for inviting us. And what we like to say Momenta is a biotechnology company that happens to be working on developing and commercializing generic products, follow on biosimilar or bioequivalent products as well as novel products. And our aim has always been to balance the work that we are doing in the generic programs with moving forward with novel drugs as well. So I think when we first emerged back as we are going public 2004 we were thought of as a sugar company, complex sugars, heparins, polysaccharides. And we’ve also been thought of as a characterization company, a company that was good at figuring out the structure, the chemical structure of complex mixture products.

And I think we are evolving into something broader we are evolving into a company that more broadly can solve complex issues relating to any complex mixture drug and that could be anything from a polysaccharide like Lovenox to a polypeptide, synthetic polypeptide like Copaxone to glycosylated proteins, antibodies, fusion proteins any of these products. We are applying our technology to understanding that. And I will add that as we’ve moved from Lovenox to Copaxone and from Copaxone to biologics we are beginning to work as much on the biology side of the equation as we had been working on the structural chemistry side of the equation. So we are beginning to see ourselves as a company that has the ability to apply cutting edge science to problems of biology.

Doug Gale

And when you think about your processes in your analytical technologies as a platform kind of go forward basis. How defensible do you think it is and perhaps walk people through your IT platform as it relates to the company as a whole as well as the individual product?

Rick Shea

Well we’ve always stressed that most of our lead versus our competitors is doing something that other people are not doing, having a significant amount of knowhow, making an investment in technologies and equipments, that most other companies certainly not companies of our size are making and also thinking creatively and ahead of the competitors in the way that we are thinking about these complex issues. Where we’ve developed IT has really more been product specific I suppose to platform specific.

So for example, in the case of Lovenox we are litigating two patents attempting to keep competitors Amphastar, Watson and also Teva out of the market by asserting patents that are relating to developing specific technology relating to the manufacturer and control of specific product attributes of Lovenox. For example, one sixth in hydro-structure or technology relating to change sequencing these are the types of patents that we’ve developed as we worked on a particular product.

Doug Gale

And then with the Lovenox product obviously last year you had the PI put in place against Amphastar, Watson and it was listed you are currently now in litigation, continue to be in litigation. What is your view or sort of walk through timing of the sequence of events that could potentially allow you to get that market to yourself again?

Rick Shea

Well the timeline is first the court of appeals needs to issue a ruling on why they lifted the temporary injunction. They lifted the injunction following a hearing on January 24 and January 25 now into listing off to the PI. And we expect within the next month or so to get the ruling on why they lifted that PI. Now if that’s a narrow ruling simply addressing a higher hurdle than the district court has or injunctions such as theoretical higher standard that would be fine.

If it’s a broader ruling addressing the enforceability of our patent that’s something we will have to take into consideration in our arguments in the file that’s coming up in October defending those patents. But clearly the district court judge spent fair amount of time looking at the patents, hearing some arguments from Amphastar and Watson regarding the validity of those patents. The issue is actually fairly narrow in that case so that judge found pretty emphatically and definitively that our patents were valid and warranted preliminary injunction. So we will just have to see how that case develops as we go forward we have a trial scheduled in October and a ruling following the trial could be two to six months following the trial.

Doug Gale

Okay and then you know right now obviously Watson and Amphastar are in the market although (Inaudible) and the market seems to be unclear right now. Teva seems to be surrounding or surfacing around whether or not their product is going to be approvable or not. Do you have any insights in terms of perspectives and as you think about Momenta’s performance and what your share of that will be?

Rick Shea

Well it’s clear that this is now really a three way generic market with Amphastar watching competing against the Momenta Sandoz product. And it’s pretty likely that Santa Fe (Inaudible) AG will re-launch so you really have three generic players. Whether Teva gets approved or not taking it from three to four players is much less significant I think from a market point of view and the kind of royalties that we will be getting back. So I mean Sandoz has been in this business the long time, I think they understand the customer dynamics. And so we are optimistic that we can maintain a reasonable market share. I think the real question is what kind of pricing results from this kind of competition.

Doug Gale

And then the other big case is obviously Copaxone with the decision expected sometime over the next few months. I think sort of the day sort of comes up in May or I think we are looking for a decision sometime midyear. So we think that’s normal timeline how do you feel in an update in terms of the approvability of your product and the likelihood that you will be able to get it approved from the FDA, if the legal framework the legal pathway gets resolved?

Rick Shea

Well I don’t think it’s a question of if the legal pathway gets resolved. I mean the legal pathway will get resolved the patent will all be overturned and that would have to hold up an appeal, an alternative would be that some of the patents are overturned and some of the patents hold. And depending on which of those patents and there is one process patent that runs till September 15, I mean ideally if that one gets knocked out and we are facing a June 14 that’s preferable in waiting an additional year.

With respect to the FDA that’s a completely separate process and we are very confident in the quality of our A&DA and quality of our science. We have a very good working relationship with the FDA. We’ve had a lot of give and take. We’ve had a very robust dialogue with the FDA. And we feel pretty confident that we can get a generic Copaxone approved as an interchangeable Copaxone without clinical studies, without full safety and efficacy study. So we continue to believe that.

Doug Gale

And what gives you that confidence regarding you not needing a full clinical trial right now?

Rick Shea

Well because we believe that we are presenting a compelling case to the agency and based on the fatality of the evidence that use the FDAs phrase, we believe that we are really completely surrounding the branded product with comparative analysis, both from a structural point of view and a very detailed way, a very sophisticated technology that we are using to demonstrate chemical and structural equivalents to the branded products.

But as well as are also looking at the biology in the same way that we did extensive studies comparative studies to lay the FDA’s concerns about the potential for immunogenicity for Lovenox. We are doing very similar work with respect to Copaxone to look at the biology of products and to work that will get the FDA comfortable and not only have we demonstrated the cultures the structural, chemical structure of the product is equivalent to the brand but that’s the biology of the product also equivalent to that brand.

Doug Gale

And I think there is a sense where I certainly talk to people who have sort of echoed the view of Copaxone will be impossible to get an AB rated version of Copaxone given the fact that it’s almost sort of a random polymerization is how it’s been characterized. And I know that that’s not the view of your company and perhaps walk through what it is that you have done in terms of the analytical, technology to sort of reverse engineer as you allude to some of the biological processes, manufacturing of the compound to address that issue in terms of reaching that AB rated standard.

Rich Shea

Well I mean you are referring to really just the structural side. I mean you are referring to the heterogeneity of the product. It’s a synthetic peptide it’s highly heterogeneous but the process parameters are barely narrow for a product like this and there is predictability so to the way in which the amino acid chains are polymerized and depolymerised in the process it’s not a random process. So we are pretty comfortable that we understand this polymer chemistry and now we can adequately explain to the FDA how our product is structurally equivalent to the branded product.

Doug Gale

Okay and then sort of stepping back to sort of a bigger picture standpoint, last month we did get initial proposed FDA guidance in terms of the pathway provided similar. I was curious in terms of your reaction as a company in terms of it met your expectations and certainly in terms of it went the threshold for a pathway for interchangeable products.

Rick Shea

Yeah, I would say the FDA guidelines exactly met our expectations. It was consistent with what they have previously put forward in the article in the New England Journal outlining their general approach. And it really was consistent with everything that FDA has been talking about and again they’ve been talking about totality evidence. They’ve been talking about a two step process where the first step is to look at the structure of the proposed generic product, in comparison to the structure of the branded product that is the first step. And they said that is a substantive and significant first step.

So companies that have been taking the European approach of spending relatively little time and effort and money on designing an equivalent product, that have been just developing similar products meeting say European standards to similarity. We think are going to run into significantly more questions and more hurdles with the FDA. Because the FDA is going to be looking at structure and this is something that’s been a theme both in looking at complex generic drugs and also looking at new drugs.

Doug Gale

Okay and then obviously you signed in December the partnership with Baxter. And I was just curious to hear your perspective on what ultimately led you to Baxter as a partner versus some of the other companies at the time that were continue to look for partnerships in terms of biosimilar space?

Rick Shea

Well, we are very happy with Baxter as a partner and are happy with Baxter as a partner for several reasons. First, they were willing to make a significant investment in the space for developing six products. And the way the economics of the deal woks, we have received a $33 million upfront payment with a possibility of about $400 million in milestones. Well the first approximately $100 million of those milestones is getting those six products through an IND acceptance.

So if you think about it we have $133 million approximately to get six products to IND if the cost is more than that then we bare the risk of that increased cost. As we get into the clinical studies Baxter is bearing the cost of the clinical work and also bearing the cost of the commercialization. Of course we will work with Baxter in designing clinical studies appropriate to these types of products. Our objective, our regulatory objective is to reduce clinical studies and to gain interchangeability for our products. And this is something that will be focused on right from our first interaction with the agency.

So our thinking is not, develop a product quickly, get it into clinical studies as quickly as possible and then on the backend think about how we can get the FDA to agree to interchangeability. Our approach is to right up front design a product that’s equivalent to the brand and right from the first meeting with the FDA we will be discussing with, how can we reduce clinical studies, how can we gain interchangeability and have that designed in for the product and have that designed into the product development.

And that’s not only the structural process developing of going from pilot scale off to clinical scale off to commercial scale. But it’s also all of the non-clinical work you do, so it’s the animal studies the tox work, it’s the immunogenicity work it’s biocharacterization it’s all those work, all those pieces of evidence that provides you a total view on how this product is going to behave. Like the brand it’s going to be acetate and efficacious as the branded product.

Doug Gale

And when you engaged in talks with other potential partners did they have a different view of how they wanted to approach things and would that often the breaking point or was it simply in the end the financial terms opportunity?

Rick Shea

Well, part of it was the financial terms. I mean we like the fact that Baxter is very competitive globally, commercially and products that have relatively low margins. So in that respect they are different from other big pharma companies that we may have considered talking with. As far as big biotech you saw that the two big biotech players went after partners with deep pocket Novartis not necessarily have deep pockets but they put up $400 million we weren’t ready to put $400 million necessarily to work with Amgen and Biogen went with Samsung again they are going to be pointing above for the cost. The players like Sandoz, Teva, Aspira, Watson really pursuing a different strategy then we were and so we really found an ideal partner and collaborator in Baxter.

Doug Gale

And so when you say strategy alluding to the fact that those companies you are going to be pursuing more of a biosimilar rather than interchangeable.

Rick Shea

Exactly, exactly they are focusing more on differentiating their products through the clinic rather than through the structural design and process development of the product.

Doug Gale

And when you think about the marketplace down the road the advantage of being interchangeable is clearly that you can get an AB rating you can get that swapped out and by works the innovators on marketing were rather than having to duke it out against numerous other companies. What could potentially could be in some product category fairly crowded with numerous different products and confusion on the part of clinician and in terms of what work has been done.

Rick Shea

By designating your product as interchangeable the FDA is putting a stamp on that product saying that the patients would not be concerned to switch to this product. So it has everything to do with safety and efficacy for the patient and comfort for the physicians that this is a quality product that matches the brand. I mean that’s what it’s all about. Now that’s what’s going to give you a market differential.

Doug Gale

And obviously right now the company has largely had been focused most of the investor attention has been focused on Copaxone and Lovenox as well as perhaps the Baxter relationship and the biosimilar opportunity. But as you alluded, this as a company that is hoping to leverage your technology platform into innovative drug. Perhaps talk about both the products that you have in the pipeline today as well as your plans and the view in terms of building the portfolio of innovative products?

Rick Shea

Sure, we have two novel products that we are very excited about. One is an oncology product it’s a heparin based product and we see that going into the clinics very soon. I mean it’s very different than other cancer therapies I mean heparin are known to have anti-metastatic, anti-coagulant properties. They are multi functional, multi targeted. They are really very different than the single target therapies out there right now. So we think this is a very interesting treatment modality and excited to get that into the clinic.

The second product is dilated IVIG. We acquired the technology around this product from a start-up company and this was technology developed in Rockefeller University we think with our background, with our scientific expertise of knowhow, we have a good chance of understanding how this sialylation mechanism works and apply it to a product like IVIG where there is real need. If this product is successful it will increase the potency thereby allowing a decreased dose now with plasma and a constrain apply this could be a usually valuable product.

Doug Gale

Okay and then what’s the view in our remaining time should have touch on the plans are thought enough to building up the pipeline down the road in terms of bringing things on. What is the focus right now, given how much you have on your plate that you need to sort of let things mature right now?

Rick Shea

Well, we have a lot on our plate. But certainly we are always thinking ahead we are perhaps thinking ahead two, three, five, ten, fifteen years from now. But certainly I think the next step for us would be more biologics, follow on biologics beyond the six with Baxter. And that could be either expanding the collaboration with Baxter it could be taking forward those products on our own. There is many ways we could go with those types of products and it would also be adding novel products. Most likely candidates for novel products initially would be biobetter. So the learnings that we get from biosimilar products we could have applied to improve biologic products that would a natural fit for us. And that’s probably a direction that our discovery group will be taking over the next few years.

Doug Gale

Okay, great. Well I think we are almost out of time if there are any questions in the audience and then we will be going upstairs. Great.

Rick Shea

Great, thank you very much Doug.

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