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Executives

Craig Wheeler, President and CEO

Rick Shea - CFO

Rod Riedel - VP, Regulatory Affairs

Ian Fier - VP, Development Operations

Analysts

Jennifer Chao - Deutsche Bank

Michael King - Rodman & Renshaw

Bret Holley - Oppenheimer

Ziad Bakri - Cowen

Biren Amin - Stanford Group

Jennifer Chao - Deutsche Bank

Mike King - Rodman & Renshaw

Momenta Pharmaceuticals, Inc.(MNTA) Q4 2007 Earnings Call February 14, 2008 10:00 AM ET

Operator

Good day, everyone, and welcome to today's Momenta Pharmaceuticals' Fourth Quarter 2007 Earnings Call. Today's call is being recorded. At this time, I would like to turn the conference over to Ms. Beverly Holley, Director of Investor Relation. Please go ahead ma'am.

Beverly Holley

Thank you, and good morning. I want to welcome all of you to Momenta's conference call to discuss financial results for the fourth quarter of 2007 and provide a corporate update. With me on the call today 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 to questions.

Before we begin, I'd like to mention that our call today will contain forward-looking statements. Various remarks that Momenta Pharmaceuticals may make about its results of operations and regulatory filings, intellectual property rights, development and manufacturing efforts, operating expenses, future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those stated or implied by these forward-looking statements as a result of various important factors, including those discussed in the "Risk Factors" section of our quarterly report on Form 10-Q for the quarter ended, September 30th, 2007, as well as other documents that the Company files with the Securities and Exchange Commission from time to time.

In addition, any forward-looking statements represent the Company's views only as of today and should be relied upon as representing its views as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so whether as a result of new information, future events or otherwise and therefore you should not rely on these forward-looking statements as representing the Company's view as of any date subsequent to today.

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

Craig Wheeler

Thank you, Beverly. Good morning and thank you for joining us on our call today. During my comments today I have two objectives; first, I will provide an update on our most pressing issue, our efforts to gain approval for M-Enoxaparin; and second, I'll provide an overview of our plans and goals for the company for 2008.

Gaining approval for M-Enoxaparin remains the top priority for the company. As you know, in November of 2007 the FDA issued a letter stating that the M-Enoxaparin ANDA is not approvable because the application does not adequately address the potential for immunogenicity of the drug product. This type of letter is the formal vehicle The Office of Generic Drugs uses to request additional work on an application. The agency will continue to review the application once its questions have been addressed. At the time, the FDA also indicated that all application for M-Enoxaparin product would be required to address the potential for immunogenicity.

Since receiving the letter, our scientific teams have aggressively working to evaluate all potential immunogenicity concerns for M-Enoxaparin. That work is well under way. Based on our understanding of the medical and scientific literature and our thorough characterization of the Lovenox product, we continue to believe that there should be no differences in immunogenicity between the M-Enoxaparin and Lovenox products. We expect that our additional work will demonstrate this.

We are in active dialogue with the FDA concerning our approach. But we have not yet finalized the determination of the data that will be required to address the FDA's immunogenicity questions. Once we have, through consultation with the agency, reached a decision on our path forward, we'll provide ride investors with an update.

At this time, we are not projecting how long it will take to reach this decision. Our work to date makes us hopeful that we will not need to conduct human clinical trials to address the agency's the concern. But we cannot be assured of this yet. We have a goal to resolve the immunogenicity issues and gain approval by the end of the year, but this will depend on the outcome of our ongoing dialogue.

Momenta has deep expertise with the characterization and process development of heparin products, including low-molecular-weight heparin such as Lovenox.

Work with our novel anticoagulant M118 program has built the strong understanding of the underlying biology of these products as well. With this scientific expertise coupled with Sandoz that it could experience in navigating complex generic regulatory issues, we feel we are positioned to successfully address the agency's is concerns. We believe that our M-Enox application will meet the agency's requirements for approvability under the 505J pathway.

Regarding the Lovenox patent litigation between Sanofi-Aventis and Teva/Amphastar, the appeal hearing took place in early January and a written decision could be issued in the second quarter of 2008. If, as we anticipate, the Court of Appeals upholds the district court decision rendering the Lovenox Orange Book patents unenforceable, it will trigger the start of the 180-day clock for the first-to-file applicant. Following the expiration of that exclusivity period, Momenta Sandoz will be able to launch our product upon approval.

In summary, our goal for the 2008 for M-Enoxaparin is to first, in consultation with the FDA, determine our path forward to address the agency's questions. We will then submit the necessary data and continue the prosecution of our ANDA, with the goal of obtaining approval for our product.

I will now provide some short updates on, and outline our goals for, the rest of the Momenta portfolio. M118, our novel anticoagulant, continues to advance. We believe that there is a clear, unmet need in cardiology for an anticoagulant that has the efficacy, safety and clinical use profile that will enable it to be used for coronary artery disease patients who presents with stable angina or symptoms of the acute coronary syndromes such as ACS. An agent that addresses these unmet needs is likely to establish itself as a new baseline therapy that can used broadly in the acute care setting. We have designed M118 to meet this standard of performance.

M118 has been designed to provide broad inhibition of the coagulation cascade. This design combines the best clinical attributes and we believe overcomes the key limitations of current anticoagulation therapy. We've designed M118 to be reversible with protamine sulfate, monitorable with point of care assays, have a short half life, a consistent in vivo 10A-2A ratio and predictable PKA rate profile.

In addition, an important feature of M118 will be its flexibility to follow-up patients diagnosed with ACS in an emergency department into multiple treatment settings including angioplasty and CABG surgery. We believe M118 is the only therapy both on the market and in development that has the potential to offer physicians a consistent baseline anticoagulant that can be used in medical management of ACS as well as in PCI and CABG.

Last year we've released a subset of our preclinical data that demonstrated M118 was exhibiting those characteristics needed to become the baseline anticoagulant of choice. The data indicated a broad therapy window with no increased risk of bleeding events compared with compare therapy. Reversibility and dose response were also demonstrated forming the basis for advancing the compound into human trials.

In October 2007, we reported the top line results from our Phase 1 study of intravenously administrated M118 and initiated the Phase 2a program evaluating the safety and feasibility of using M118 as a procedural anticoagulant during elective PCI or angioplasty. This early human data continues to exhibit the characteristics we have expected based on our design of the drug.

In the clinic to date, the top line results from the Phase 1 IV study shows no serious adverse events or dose-limiting toxicities. Importantly, M118 produced rapid, measurable dose-dependent increase in anticoagulant activity in a linear manner across all study cohorts. Reversibility with protamine sulfate was also demonstrated in our Phase 1 study. Our Phase 1 study with subcu M118 is ongoing.

In the Phase 2a studies for M118, called EMINENCE, we are expecting to enroll approximately 600 patients with coronary artery disease who are planning to undergo a PCI. Primary objective of this initial Phase 2a study is to evaluate the safety and feasibility of using M118 in patients undergoing a PCI to treat their coronary artery disease. In addition, it may also provide an early indication of efficacy in reducing adverse outcomes.

Our goals for the 118 program for 2008 are to complete the Phase 2a study and initiate the Phase 2b program in medical management of ACS in the second half of the year.

Let me also comment on our thoughts regarding partnering M118. Because of the significant cost and extensive infrastructure required to globally develop a cardiovascular drug such M118, it has been our intention to secure a development and commercial partnership following the completion of the Phase 2a study. To that end, we have initiated preliminary discussions with potential partners and this will be an important focus of the program in 2008.

M356 is our generic version of Teva's multiple sclerosis drug, Copaxone, a highly complex polypeptide mixture, which we are developing in conjunction with Sandoz. For competitive reasons, we are not detailing specific timelines for this project. Technically, this project represents an important next step for the company, demonstrating our characterization and process technologies can be applied to complex mixtures beyond the sugar sequences in a drug such as Lovenox.

In 2007, we made significant progress in our characterization and process development activities, and we anticipate advancing our development program in 2008. We are continuing to invest in the science underlying the development of M356, including developing and validating methods for characterizing complex peptide mixtures, and gaining a better understanding of the pharmacologic activity of the product. We are also taking steps to define and put in place our regulatory and commercial supply chain strategy for M356. The goal for M356 program in 2008 is to substantially advance the program on all fronts, scientific, process development, manufacturing, and regulatory.

Now, let me turn to our glycoprotein program. First, I would like to discuss our view of the market. In our view, follow-on biologics represents a significant commercial opportunity, with over $30 billion in sales currently attributed to biologic products. Many companies have signaled their intent to compete in this attractive new marketplace, but few have defined differentiated strategies that we believe lead to a clear competitive advantage.

We believe success in this market will require a global scale and an ability to differentiate one's products from other biosimilar products, both with the various regulatory agencies and in the global marketplace.

Last year, we told you we were working to develop the tools needed to apply our technology to glycoproteins; progress has been good and we have reached the proof of concept stage for many elements of our characterization and process platform. We intend to be a leader in follow-on biologics, and we believe that Momenta's technology will enable us to uniquely demonstrate equivalents to innovative products.

Our intent is to develop follow-on biologics that are not simply biosimilar, but have the potential to be biogenerics, interchangeable and substitutable for the branded biologics.

Our approach with proteins is an extension of the expertise we develop with heparins and peptides. As in other areas, we are creating novel and proprietary methods and tools for glycoprotein. Advances in 2007 came in several areas, including; understanding and characterizing the complexity inherent in glycosylated proteins; evaluating the range of variation in innovator molecules; and finally, establishing and controlling linkages between structural variation and process variation.

We expect to continue development and refinement in these technical areas during the course of 2008. This technology will be at the core for our strategy to create technology-enabled substitutable biogenerics.

Under our 2006 collaboration with Sandoz we are applying our technology to two of their glycoprotein products. This work is continuing. Beyond those two products, Momenta remains free to develop follow-on biologics on our own or to seek other partners. We've been working to define a path to create a leading competitive position in the follow-on biologics field over the course 2008.

On the regulatory front, there are emerging guidelines for biosimilar products in the EMEA and Europe. In the US, the ongoing legislated debate concerning follow-on biologics remains active, with elements of the administration, the FDA and congress continuing to advocate for action.

However, election year politics makes any progress this year highly uncertain. Regardless of the timing of enabling legislation, we will continue our work on follow-on biologics, investing Momenta's glycoprotein technology with a goal in 2008 of moving towards a technology-enabled leadership position.

Finally, our novel discovery efforts are focused on the utility of glycan or sugar molecules as potential oncology therapeutics. We are advancing a promising heparin-based oncology drug candidate that captures the full potential of heparin's natural, antimetastatic and antiproliferative properties. Our goal for 2008 for the oncology program is to move this drug candidate into pre-clinical development.

In summary, Momenta made significant progress in 2007. Although that progress was overshadowed by the delay of the M-Enoxaparin approval, we've made strong scientific advances on all of our pipeline programs. I believe that we can use the immunogenicity dialogue with the FDA to further reinforce our differentiated approach to developing complex generics as we drive for approval as soon as possible. I am looking forward to report a continued progress across all of our programs in 2008.

I'll now turn the call over to Rick Shea, our CFO who will present the financial review.

Rick Shea

Thank you, Craig. First, I'll cover the key financial highlights for the fourth quarter and the full year 2007 then I'll present our guidance for 2008 revenue, expenses and cash burn as well as our projected year end cash position.

Let me begin by reviewing the quarter. Revenue for the fourth quarter of 2007 was $10.0 million compared with revenue of $4.0 million for the fourth quarter of 2006. Our revenue in both periods consisted of revenue earned from Sandoz, an affiliate of Novartis, under our 2003 and 2006 collaboration agreements. Revenue increased compared to the year ago period due to the increased expenditures associated with preparing for the potential commercial launch of M-Enoxaparin in the United States.

R&D expenses were $19.6 million for the fourth quarter of 2007 as compared with $13.3 million for the comparable quarter in 2006. The increase was due primarily to external manufacturing costs and research conducted by third parties for our development programs, particularly M-Enoxaparin, M118, and M356. Other increases included personnel expenses, lab expenses, and facility costs.

G&A expenses were $6.3 million for the fourth quarter of 2007 as compared to $9.2 million for the prior year's fourth quarter. This decrease was primarily due to a decrease in professional fees and other legal costs. Net interest income decreased to $1.6 million for the fourth quarter '07 from $2.5 million for the fourth quarter '06 due to lower average cash balances. The resulting net loss for the fourth quarter '07 was $14.3 million or a loss of $0.40 per share as compared to a net loss of $16.0 million or a loss of $0.45 per share for the fourth quarter of 2006.

We ended the year with $135.9 million in cash and marketable securities compared with $141.3 million at the end of the third quarter and $191.3 million as of the beginning of the year. So our cash burn for the fourth quarter was $8.3 million. This Q4 cash burn was impacted by the assignment of a sublease for space we built out but did not occupy. In that transaction, we received a cash payment of $4.4 million to reimburse us for the build out and rent we had paid. Excluding that transaction, our cash usage for the fourth quarter would have been $12.7 million.

In addition, in connection with the sublease assignment, we closed out a letter of credit for the security deposit on the space and so, we reclassified $2.9 million from restricted cash to unrestricted cash. Our full year 2007 cash burn $58.2 million, which would have left us with $133 million in cash but the reclassification added $2.9 million, which got us to our ending cash of $135.9 million.

In summary, for the full year 2007, our revenue of $21.6 million was within our guidance of $21 million to $26 million and our actual operating expenses excluding stock compensation of $85.4 million was within our original guidance of $83 million to $93 million.

So, I will now turn to our financial guidance for 2008, first our revenues. We are projecting a decrease in reimbursable development expenditures in our M-Enoxaparin program, as we transition the cost of commercial activities to Sandoz. So we expect total revenues for 2008 to be approximately 60% to 75% of 2007 revenues; in other words, reduction revenues of 25% to 40%. I want to point out that my financial guidance for 2008 revenues excludes any potential M-Enoxaparin commercial revenues for 2008 and also does not include any revenues from new collaborations.

In R&D, we also expect a modest decrease in expenses due to the significant decrease in M-Enoxaparin expenses going through our P&L. including R&D and G&A expenses we expect total operating expenses excluding non-cash stock comp to be approximately 85% to 100% of 2007 operating expenses. In other words, operating expenses are projected to be flat to down 15%. Let me add that baselines stock compensation is also expected to be flat to down 15%, but that number will vary with changes in stock price.

We expect that the resulting cash burn for the full year 2008 will be in the range of $50 million to $55 million. This would leave us with an ending cash balance of about $81 million to $86 million. However, our objective is to end the year with at least two years of cash. This could be accomplished through the approval and launch of M-Enoxaparin or with one or more additional collaborations. So, maintaining our financial flexibility is an important financial objective for 2008.

With that, I'll now open the call for questions. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]. And we will take our first question from Jennifer Chao with Deutsche Bank.

Jennifer Chao - Deutsche Bank

Thank you for taking the question. First, Craig, I was wondering if you could just address on M-Enox, whether or not FDA's immunogenicity concerns are specific enough that they could be addressed in detail analysis and importantly, whether or not you have been able to pinpoint the information or the standards that FDA is seeking.

Craig Wheeler

Sure, Jen, thanks very much for the question. We have spent a lot of time looking at the potential for immunogenicity for M-Enoxaparin and there are basically two places that you could look for immunogenicity. Heparins, in and of itself have very low immunogenicity, but there are two places you could potentially look. One is, looking at impurities that may come in through the feed materials, through heparins; and the other is to look at, what immunogenic reaction this will character as and understood in the labels of the drugs like Lovenox and in heparin, which is heparin-induced thrombocytopenia, which is caused by aggregation of platelet factor 4, caused by heparins.

And so, you can look at both of those in quite a bit of detail through preclinical and ex vivo types of assays, and that's the kind of work that we've been doing, is really to try to understand all of the different ways you can measure and look for immunogenicity. And of course, we've been doing that all along in conjunction with dialogues through the agency. I don't think we can expect that we'll get any clear and specific yes or nos from the agency on that. They will have to look at the body of data that we submit, but we are working closely to make sure that we understand what are the appropriate things here on the biologic side to do for our product.

Jennifer Chao - Deutsche Bank

I suppose really, where I'm going, Craig, is that you do seem encouraged that full-on in vivo immunogenicity trials will not be required. I'm trying to get an understanding of what supports that encouragement at this point, if you could maybe just share a few data points as to the kind of dialogue that you're having with the Agency? And then perhaps also, just share a little bit, at least on the in vitro work that Momenta has initiated and again, what's been shared with the agency?

Craig Wheeler

Yeah. So, Jen, we're not going to provide the details of the conversations with the agency, but I will say that we are in the nature and the characteristics of those discussions are really at the technical level. They are engaged, and I guess in a broad and a deep way, is the way I would characterize it, and we certainly sense that they understand the nature of the questions that they're asking, and the nature of the sciences that we're talking about to be able to approach it.

We have, internal to the company, taken quite a broad-based approach at really trying to understand all of the different possible ways which you measure that either PF4 or impurities, and then trying to understand the best tests that are used, and we will choose those and submit those based upon being able to provide the best data. On the clinical side, if you look at something like a PF4 binding a heparin-induced thrombocytopenia, these are well understood, characterized, and very low incidence types of side effects that you see in use of heparin.

And so, thinking that you will be able to do a simple clinical trial to be able to clearly understand them, we don't think is an appropriate way to go. And when we look at this stuff, of course we always fall back on our characterization data which says that we -- and is firmly established, that we have the identical and equivalent product to the innovative product. And so, of course, all of that helps us build our support and case and confidence in what we have, and what we're building to be able submit to the agency.

Jennifer Chao - Deutsche Bank

And so, can you just share Craig, from the point at which you first received the letter to present, have the concerns raised by the agency become more specific? Have they evolved over the period of time, or were they quite specific from the beginning and consistent throughout?

Craig Wheeler

Yeah. I think it is fair to say that the discussions get more specific once you actually get beyond the letter and get into the dialog because these are scientific discussions with the agency. So, as we and they have gotten further into the discussions, certainly we have more specifics into discussion. So, I think it's fair to say, they have evolved over the time.

Jennifer Chao - Deutsche Bank

Okay, great. I will get back in the queue. Thank you.

Craig Wheeler

Thanks Jen.

Operator

And we will go next to Michael King at Rodman & Renshaw

Michael King - Rodman & Renshaw

Thank you for taking my question. Sort of following on from Jen, Craig, regarding immunogenicity, I don't know if there are any even any assays that are sensitive enough to pick up even low levels of antibodies to heparin or low-molecular-weight heparins in either humans or animals?

Craig Wheeler

Yeah, so is that your question, are there assays --

Michael King - Rodman & Renshaw

Is there anything out there? Yeah.

Craig Wheeler

Well, there certainly are immunological assays that can be done to look at this. I mean not the person to ask in terms of the sensitivity of those assays, but there certainly are assays that can be done.

Mike King - Rodman & Renshaw

Okay. And then --

Craig Wheeler

I think your question is one around sensitivity, if I am not mistaken, correct?

Mike King - Rodman & Renshaw

Beg pardon.

Craig Wheeler

I think your question was around sensitivity, correct?

Mike King - Rodman & Renshaw

Right. We know that heparins are tend to be very poorly immunogenic so that would mean pretty low level of antibody formation. Therefore, is there anything out there that can detect it, and that was the question?

Craig Wheeler

Yeah. Okay, thanks. I don't know the specifics. I don't know the specific sensitivity to the assay, but I would say that if you were seeing a strong immunogenic reaction, you would be able to pick it up.

Mike King - Rodman & Renshaw

Okay. And then with regard to the recent heparin recall, I guess that it was from Baxter, I guess there was more news today that this may have been part of feedstock from an overseas plan. And I am just wondering, two things; A, given that the FDA is probably pretty aggressive mode to figure out what's happening here does that have the potential to slow anything down as far as the review of your application; and second, do we think that there could be anything learned from that as far as what might be the causes of these reactions.

Craig Wheeler

Sure. So, I think I will answer your question in three parts. But first, I would say, their timing could have been better.

Mike King - Rodman & Renshaw

Right.

Craig Wheeler

As I am sure it will raise the sensitivity of the agency. Now the good thing about it is two-fold. One is the kind of the things that they would be looking for in -- I would imagine they are looking for impurities. In November, we started work, first, all the way back when we started working on our product because we characterize, fully characterize all of the heparins sources coming into our product to make sure that we are actually brining the right feedstock in to be able to make equivalent Lovenox.

I think the second point is the work that we actually are doing now, and are continuing to do on the immunogenicity question, we suspect and we hope, the way to go through it with our stuff would be picked up by what we're doing now. And so, certainly, it will be telling if they go through analysis. But I would suspect, based upon the comprehensiveness of the work that we would have the systems and tools in place to be able to pick up any impurities like that.

The third thing, I will say, is we do have multiple heparin sources and suppliers. We've not talked about our specific supply chain. But because of the work we do to make sure how we qualify and characterize, we are working hard to make sure that we understand exactly what goes into our products. We're very, very selective, because as you know, as we talked about before, what comes out at the end of our product is dependent upon, specifically, the heparins that go into the product. And so, if we have to further strengthen that, we will. But we feel pretty confident about what we have in terms of the sources of heparin we bring in. But I think it will certainly give the agency a pause, as they look through and understand what's going on with the [Baxter] heparin.

Mike King - Rodman & Renshaw

Okay. And then, final question is regarding the 180-day clock. That presupposes that Amphastar will be declared first to file. But how do you view, I know there has been some discussion about who is really considered first to file, as the FDA may not view the Amphastar or the Teva application as complete. So I am just wondering if there is any upside to that post the Appeals Court decision.

Craig Wheeler

Yeah. So, there is always a possibility there. But I think we have not put a firm stake in the ground on who is first. We know there are multiple players out there, and we know that it could be a little messy. But our anticipation on the legal side is that, even because there are multiple patents out there, that both those patents will be covered in whatever decision comes down on the legal side.

So, we think that starting of the clock would be a very good thing for us. Any of those alternative outcomes could be even better for us.

Mike King - Rodman & Renshaw

Well, I would imagine the FDA would have to make that decision at that time, as to who is actually the first-to-file?

Craig Wheeler

Yeah, let me ask Rod Riedel, our Vice President of Regulatory Affairs to shed some light on that.

Mike King - Rodman & Renshaw

Sure.

Rod Riedel

Yes. This is Rod Riedel. The FDA will make a determination about first-to-file whether it's sole company or if it's shared on the basis of the time that that particular application is ready for final approval. I think you have raised a very interesting potential scenario which is if the court decision come down and starts the 180-day exclusivity clock, what happens if the first-to-file applicant is not ready for approval? And from our perspective, it starts the clock. The clock starts with the district court decision, because this application was filed before the MMA changes to the 180-day exclusivity. So, it’s a very interesting position and it gives us a strong incentive to resolve these issues as quickly as possible so that we will be ready as early as possibly can.

Mike King - Rodman & Renshaw

Okay, great. Thanks guys.

Craig Wheeler

Thanks Mike.

Operator

And we will go next to Bret Holley at Oppenheimer.

Bret Holley - Oppenheimer

Yeah. Hi guys. Thanks. I just have a couple of questions. Just to follow–up, potentially if you will require to do clinical work, I understand obviously that the immunogenicity frequency would be very low, and so the trail potentially would be very, very large. Can you give me your thoughts on the viability, should the FDA come back and just say, look, we just can't do this without clinical data, what you may or may not have to do on that front?

Craig Wheeler

Yeah, we have not done specific trial design to look at that. But you can do the math yourself from looking at an incident rate of 1% or less in a population of the number of patients that would be necessary to do statistical noninferiority of that kind of low effect. And so, if they came back and wanted the statistical trial, you're looking at a very, very difficult trial to do, and that's how we are kind of viewing it.

There are in heparin, precedents, for small trials to try to look at anything but the -- this is not like a protein where we are looking for acute immunogenicity kinds of issues. And so, we actually are concerned, and would have to look very carefully at a small trial design because without the statistical significance you're prone to be vulnerable to spurious results. And so, that's how we're viewing the trial environment, is we just don't see how you can answer these questions. And there are actually much more effectively answered by able to demonstrate that you don't have any immunogenic compounds in your mixture, and also, so you have the same drug to the characterization technologies. That's the approach we have taken thinking about the trial side.

Bret Holley - Oppenheimer

Okay. And then has there been any discussion of potential demonstration of any kind of numerical difference with Lovenox? Because I appreciate a statistically well powered study would be I think very, very large, we can all agree. But I am just wondering if a small trial you could at least get an idea of the numerical comparison with Lovenox.

Craig Wheeler

I am going to ask Ian Fier, our Vice President of Clinical just to give a couple of comments on that.

Ian Fier

Yeah, I think you really have to ask the question if it's not statistically powered what conclusions can you make from the data. So, our perspective would be that there is really little added value, as Craig referenced before, and running a small study that's not appropriately powered and being subject to potentially some spurious results. There's really no conclusion that can be made from an underpowered trial.

Bret Holley - Oppenheimer

Okay. And then a last question, Craig I was just wondering on the M118 partnership, what kind of terms, optimally, would you be looking for there?

Craig Wheeler

Well, [we're going to try to]

Bret Holley - Oppenheimer

[You guys are billion dollars upfront.]

Craig Wheeler

I think, it really, to us is, we're looking to try to find the right partner. Obviously, we're going to negotiate for the best terms, both to help us fund the future, and also make sure we have cash to continue to invest for the company in contingency. But the real goal in signing a partnership there is finding the right partner to do the right thing for this compound. We are, and continue to be, every time we look at data, more and more enthusiastic about the potential for this compound, but we are not naive in the fact that to be able to create a true, new baseline therapy, we need to be able to do the large trials, to be able to show across different populations that we are a safe, easy to use anticoagulant. And so, we need somebody who has that kind of infrastructure and that kind of drive to really create the full potential of this compound, and that's what we're looking for.

Bret Holley - Oppenheimer

Okay. Fair enough. Thanks a lot.

Craig Wheeler

Sure.

Operator

And we'll go next to at Ziad Bakri at Cowen.

Ziad Bakri - Cowen

Hi. I just wanted to ask, I was just reading the press release, one of the things you said in your corporate goals for 2008, the end of the first bullet, was to look at the immunogenicity issues for M-Enoxaparin, but also to identify additional information that is necessary to obtain approval of the ANDA. And I just wondered whether, and including that statement, you had any particular issues that you thought might be additional issues that might arrive?

Craig Wheeler

No. What we were referring to in that goal was that once we understood the immunogenicity issues, we would determine the additional information necessary to demonstrate that the immunogenicity issues were appropriately covered. We have no sense that there are additional questions beyond immunogenicity that we would need to be addressing at this point.

Ziad Bakri - Cowen

Okay, thanks.

Craig Wheeler

Sure.

Ziad Bakri - Cowen

And I guess also in terms of kind of timelines, from your discussions with the FDA, do you have a sense by which when you will get some kind of firm statement on exactly what the FDA are looking for? And then, from when you provide some kind of response, so resubmit immunogenicity data to FDA, what would the timelines then be for approval? Would that then trigger sort of a six-month clock, or how would that look?

Craig Wheeler

Yeah. So, let me answer that first that we are still attempting, as I said that it is our goal to try to get this resolved and approved by the end of the year. But it's important to step back on the question you asked and think that it's about the agency that we are dealing here, we are dealing OGD. And in OGD, you don't have specific types of meetings, you don't have timelines, there's no PDUFA clocks. And so, that's why we are always cautious in terms of saying what we think will actually come that you don't get any of those clocks, your timelines, your expectation is set.

Ziad Bakri - Cowen

Sure.

Craig Wheeler

And also, what I expect to happen here is we will, because this is a back and forth process for the agency, I mean this is a technical discussion, we will have to make the determination at some point, based on that discussions what we are going to submit, I do not think it's going to result in something like an SPA that you might get on the new drug side, which says, this is what you submit, and this will be acceptable. I think it's really going to be much more about, working through and then us making the call, that okay, we are now comfortable that this is what we're going to submit. And Rod, do you want anything to that? Is there…

Rod Riedel

No. I think that your point, Craig, is appropriate. This is an ongoing discussions with the agency. It involves not only OGD but the groups from the biologics section of the agency. And as a result, the conversations are technically detailed and quite complex from a technical perspective. As a consequence, it requires some investigations on our part, reconfirmation with the agency and then final consultation before we go forward. All of that is intended to increase the probability of success that when we submit our response that it will successfully close out this issue.

Ziad Bakri - Cowen

Okay, great. Thanks very much.

Craig Wheeler

Sure. Thanks.

Operator

[Operator Instructions]. We'll go next to Biren Amin with Stanford Group.

Biren Amin - Stanford Group

Hey. Thanks for taking my questions. So far the company has revealed very little regarding the glycoprotein program. I was just wondering when investors could hope to learn more about this program.

Craig Wheeler

Yes. Biren, thanks. I think the reason we really don't talk much about the glycoprotein program is because of the portfolio programs are confidential programs that we are working on with Sandoz. However, it is our intent to as we continue to build to give more insight into the kinds of technologies that we are using. And so, I would hope over the course of this year we'll start to be a little bit more transparent, at least about the competitive advantage we think we're creating here. But I don't think I would expect too much on the existing portfolio of programs and partnership with Sandoz because those are their programs and they are confidential, so we really can't talk about those.

Biren Amin - Stanford Group

All right. Good. Thanks.

Craig Wheeler

Sure. Thanks.

Operator

And we'll return to Jennifer Chao at Deutsche Bank.

Jennifer Chao - Deutsche Bank

Great. Thanks for the follow-up. Just moving to M356, I was actually just going to remark that Craig, you made more comments about 356 in this call than you have in the past, and I am wondering if you and/or Rick could just comment on how the spend and development timelines of M356 compare with M-Enox? In addition and you also have talked about more complex characterization and technologies that are going to be required to breakdown M356 and perhaps you could also just discuss whether or not the team has made any significant technology discoveries into the world of glycoprotein characterization? Thanks.

Craig Wheeler

Sure. Thanks Jen. So let me take a couple of parts of that question and then I'll turn it to Rick for the financial part. First, the timelines we are not talking about specifically, as I said before, I have characterized in past calls, the way to think about this is, this is a more Enox kind of timeline than it is a new drug kind of timeline, so you should think about the fact that we've been talking about this a while. And so, we might be getting towards a window where we're hoping to try to get to a filing.

But the important thing to think about here is, and the reason we're actually starting to put more in, is we view our ability to move into the peptide space as an important cornerstone to get us to the glycoprotein side of the business. So sugars is where we really started off with the technology, and that was the foundation of the company. And Copaxone was chosen because it actually brings a complex mixture in which is not a sugar-based mixture. And so, the progress that we are seeing, and our confidence in talking a little bit more about the differences in applying the technology, leads directly to our ability to start thinking about advances in glycoprotein.

So, you are correct in that you are hearing us indicate more confidence in our ability to use our tools and apply them beyond the sugar field, and that directionally extends also into glycoprotein discussions that we're having. And I will turn it over to Rick to comment on the finances.

Rick Shea

Yeah, Jen, I think if you are trying to look at our pattern of expenditures, and to tease out what's happening in the M356 program, unfortunately that's going to be difficult for you. With M-Enoxaparin, because it was our sole product that was being reimbursed by Sandoz, it was transparent in our revenue line how much we were spending on a period by period basis, but with M356, the way that agreement work is, Novartis put a $75 million investment into the company, equity investments, but we are running the development class through our P&L.

And broadly speaking, you wouldn't expect the M356 spending at comparable periods compared to M-Enoxaparin to be much different. But as you can probably see, you are not going to get that transparency in our P&L, because you are only going to be seeing the expense side of it and it's going to be mingled with our other program expenses. So again, we just want to repeat that it's very important to us and to Sandoz to keep the specifics relating to the M356 timeline confidential for competitive reasons.

Jennifer Chao - Deutsche Bank

And then just a quick follow-up, what point in the process do you engage FDA in order try to anticipate any of these downstream review issues, and may be how are you thinking M356 differently than M-Enox on a regulatory path? And then, who is the lead for filing?

Craig Wheeler

So, let me answer those questions first. This is Sandoz's filing application. So, they will a lead for that, just like our other programs that are partnered with Sandoz, that's part of the deal that we've struck with them. Secondly, I'm sorry, remind the second part of the question, I’m sorry, Jen.

Jennifer Chao - Deutsche Bank

It was just, how do you go about engaging the FDA? What's the right juncture to do that, and is the process may be going to be a little bit different than M-Enox?

Craig Wheeler

Well, so our view, I think, is clearly colored by, this is an NDA just like M-Enoxaparin and it's an NDA compound, and the pathways are available to us, and so we are thinking about it very similarly to how we thought about there; characterization, same molecules and same dose form, same strength, and that's how we think about programs doing the characterization.

I don't there is any specifics that I would say would be different about the process. I can say certainly that we've learned in going through the process about how to talk about complex applications into The Office of Generic Drugs. But I don't have any specifics I can give you on just what might be different here.

Jennifer Chao - Deutsche Bank

Okay. Thank you.

Craig Wheeler

Sure. Thanks.

Operator

And we'll return to Mike King with Rodman & Renshaw.

Mike King - Rodman & Renshaw

Thanks for taking the follow-up. I wanted to know, Rick, you talked about financial guidance for the end of '08, and I am just wondering if in absence of FDA approval of M-Enoxaparin what assets Momenta may have to offer for partnership that would fulfill your desire to that the additional cash?

Rick Shea

Yes. Well, we did talk about the M118 program and the potential for partnering that program. And then, we've also talked about follow-on biologics as an area that, other than the two products that we're partnering with Sandoz, we have opportunities on that field too.

Mike King - Rodman & Renshaw

And remind me what you said in your formal remarks, when will you have the 2b results from M118?

Rick Shea

The 2a study is in process right now. We're looking to have data from that study by the end of the year.

Mike King - Rodman & Renshaw

So that would be the basis of you partnering as apposed to the 2b?

Rick Shea

Correct.

Craig Wheeler

Yes. Yes.

Mike King - Rodman & Renshaw

Okay. Thanks very much.

Craig Wheeler

Yeah. Sure.

Operator

And we are standing by with no further questions at this time. I would like to turn the conference back for any closing or additional comments you would like to make.

Craig Wheeler

Okay. Thanks very much now. I would just like to close by saying, thanks, everybody, for joining us on our call, and we look forward to updating you on our progress in the coming months. So thanks a lot and good bye.

Operator

This does conclude today's conference. We thank you for your participation. You may disconnect at this time.

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Source: Momenta Pharmaceuticals Q4 2007 Earnings Call Transcript
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