- Momenta Pharmaceuticals $MNTA reported 2q2011 earnings and held its conference call on August 4, 2011 - click here for press release.
- For more information and resources related to Momenta, visit my full MNTA research page.
- MNTA will make several upcoming analyst conference presentations - click here for complete calendar.
- My full notes from the webcast are below the jump:
- 2q2011 net income was $64m, or $1.26 per hsare
- $246m cash plus 85m accounts receivable at 6/30/11
- 7/23/11 was one year anniversary of generic lovenox being on the market and with sole generic status
- With Novartis/Sandoz, have captured roughly half the market
- m-enoxaparin is the #1 injectable generic in US, largerst launch in sandoz history, >30m syringes, >2m pts, >$1b in sales since launch, >$0.5b in healthcare system savings delivered
- as of 7/23, MNTA earned a $10m milestone for reaching one year as sole generic, of this they paid $6.7m milestone to Parvid LLC (math data analysis firm acquired in 2006 based on 1 yr milestone)
- The one year anniversary also triggered an increase in potential royalty rates under scenario with 3rd party generic on market (ie, Teva). These now would be low double digits, 20-25% higher than prev high single digit range.
- TEVA patent infringement suit - discovery underway. Markman hearing scheduled for Dec 2011, preliminary trial Feb 2013. MNTA would enforce their patents on anyone else if their generics progressed in the regulatory process
- SNY lawsuit - no new information to report. 8/2010 preliminary injunction denied. 4/2011 motions for summary judgement pending
- We recognize that the threat of competiton weighs on stock price
- paragrapg IV challenge patent litigation on copaxone - 7 Orange Book patents expire 2014, two others expire in 2014 and 2015. The court chose to advance start of trial to July for inequitable conduct charge only. Rest of trial starts 9/7/11. No ruling from first phase yet, and one may not be issued before the next phase starts
- Copaxone ANDA under active review, and we are doing everything possible to facilitate review. FDA is engaged and the nature of review suggests that they have deep understanding of our approach
- Follow-on biologics (FOB) - continue to advance progam while engaging w/ potential partners
- FDA is meeting w/ companies in the industry to define implementation of 351k pathway. Focus on user fees, review metrics, and structure of pathway. They have proposed a series of steps: review characterization data before determining scope of clinical trials. This would involve a case by case review based on thoroughness of characterizations. This direction pleases MNTA and allows them to achieve differentiation based on superior analytic technology.
- M402 (preclinical oncology novel drug candidate): hope to initiate phase 1 trial later this year [this timeline has slipped from prediction of IND filing around mid-year 2011]
- Company is also working to develop heparin-based drugs, and "biobetters"
- $87m revenue 2q2011, $84m profit share earned on generic Lovenox.
- $3.7m annual adjustment for program costs paid to NVS in 2q2011. 69% net profit on m-enoxaparin this quarter. We are working to maintain the product supply chian at 45-50% of market. We are currently operating at or near capacity.
- 2011 operating expenses estimated at $15-18m per quarter, and was $16.6m in 2q2011 vs $17.1m in 1q2011.
- Increase in R&D expense was due to higher headcount and higher M356 manufacturing cost
Question and Answer session:
Accounting treatment of 10m milestone? Is recorded as collaborative revenue, and the $6.7m payment is amortized over life of asset, will be recorded in 3rd quarter.after 1 yr,
Can the royalties change again? This was one time change in royalty rate (so no more increase for 2 year anniversary etc)
You say supply chain is at capacity, but you had significant quarter over quarter growth? Were there improvements made in supple chain? Yes, some efficiency, and some variabiltiy due to nature of marketing generic...customers that buy in bulk, mix issues. Our production capacity has not changed dramatically
Teva marker patents for Copaxone? EAE assay was developed long ago by Teva. Our belief is that there are multiple ways to look at activity of this compund.
What are your views on the recent NEJM article from FDA? Does it offer visibiltiy on issue on interchangability? We were very pleased. We have always advocated for a high bar for substituibility, and they seem to agree.
Your cash balance is building...what's next? The cash gives us more strategic freedom. We continue to think we'd like to find some partners [using the plural form is a change...goes against recent statements strongly preferring a single platform partnership], but now we have the ability to take programs along further before partnering to drive higher value. And we can co-invest to get higher revenue share on products.
When do you expect Markman hearing decision? Our feedback has been that we can start the trial with getting a decision. Or maybe this will be given by judge at start of trial.
Are you planning for additional enoxaparin capacity? Not at this time. Any big increase in supply would require physical investment in new tanks/steel ...not just tweeks...Not a significant intention to do major new investments, We are very happy with our current market share.
Are 3-party royalties still tiered? The increased royalty rates are still tiered, but all tiers are now in double digits.
Why have you and Sandoz only sued Teva so far? We won't divulge our strategy. We're well aware of our patent positions.
Is there any technology which you don't have that would help for FOB programs? We think about what partners can bring to the table vs what to invest in alone. We haven't previously invested in scale up capacity, currently we must do this with outsourcers or partners. We now have the flexibility, but could decide this is right way to develop. But maybe could invest to bring us up to pilot production scale. I don't see us going into large scale manufacturing. There is adequate biologics capacity coming online around the world. We don't see a 20000 L fermenter as a worthwhile investment. But scaling up some to begin to extend our process control in the vendors' plants. We bring our process scientists there.
What type of partnership are you looking for? There are multiple different flavors of partnerships out there. Platform vs molecule/product-focused. We are looking at both.
FDA seems to place a high value on "fingerprint" like characterization. How do you compare lovenox and copaxone vs FOB characteization vs each other? Fingerprint is exactly what we do...whether polypeptide, sugar, or glycoprotein. We break product down to molecules and meaningfully revese engineer them. Our variances in all metrics are controlled more tightly than the branded products - for both copaxone and lovenox
(not sure what question was)...SNY just reported a 25% sequeitial drop in lovenos revenues.
EU plans?- We haven't declared our strategy. But the US pathway is much more tuned to our technology. But that doesn't mean that there couldn't be instances where we go to EU first.
Limitations of Cabilly patent on FOB program? You certainly could see antibody molecules in US before 2018.
US complex generic experience - could this trigger changes to EU path to approval? Still trying to figure out path. Price of lovenox is extremly low in EU, so would be hard to make a meaningful profit. Haven't definitely written it off. It would be strategically good to have product there but not economically.
(not sure of exact question)...Two step FOB application pathways - think FDA iwll be flexible. Company could just do IND type stage and then choose to do clinical trials and not try to achieve full substitutability.
Cost of pilot scale facility? It would be significantly less than $50m
M118 update? We are currently in some discussions, and seeing some renewed interest. Looking at this as upside, think it's still possible, but not thinking it's high probability. The issue is not the drug itself. But trials are very expensive in this "dirty" population with "concomitant issues"...trial may not show inherent capabilites of molecule. If we end up w/ equivlance not superiority, then we would face off w/ 3 generics.
Why did you do the secondary stock offering last year? At the time, Teva was speaking very confidently and positively about their approval by end of the year 2010. We looked at our cash levels and were taking a conservative perspective on copaxone (by assuming that we would not invalidate patents, so looking at 2014 launch), so needed to have cash available to bridge 4 years of research and development spending.
Accounting treatment of 10m milestone? Is recorded as collaborative revenue, and the $6.7m payment is amortized over life of asset, will be recorded in 3rd quarter.after 1 yr,
Can the royalties change again? This was one time change in royalty rate (so no more increase for 2 year anniversary etc)
You say supply chain is at capacity, but you had significant quarter over quarter growth? Were there improvements made in supple chain? Yes, some efficiency, and some variabiltiy due to nature of marketing generic...customers that buy in bulk, mix issues. Our production capacity has not changed dramatically
Teva marker patents for Copaxone? EAE assay was developed long ago by Teva. Our belief is that there are multiple ways to look at activity of this compund.
What are your views on the recent NEJM article from FDA? Does it offer visibiltiy on issue on interchangability? We were very pleased. We have always advocated for a high bar for substituibility, and they seem to agree.
Your cash balance is building...what's next? The cash gives us more strategic freedom. We continue to think we'd like to find some partners [using the plural form is a change...goes against recent statements strongly preferring a single platform partnership], but now we have the ability to take programs along further before partnering to drive higher value. And we can co-invest to get higher revenue share on products.
When do you expect Markman hearing decision? Our feedback has been that we can start the trial with getting a decision. Or maybe this will be given by judge at start of trial.
Are you planning for additional enoxaparin capacity? Not at this time. Any big increase in supply would require physical investment in new tanks/steel ...not just tweeks...Not a significant intention to do major new investments, We are very happy with our current market share.
Are 3-party royalties still tiered? The increased royalty rates are still tiered, but all tiers are now in double digits.
Why have you and Sandoz only sued Teva so far? We won't divulge our strategy. We're well aware of our patent positions.
Is there any technology which you don't have that would help for FOB programs? We think about what partners can bring to the table vs what to invest in alone. We haven't previously invested in scale up capacity, currently we must do this with outsourcers or partners. We now have the flexibility, but could decide this is right way to develop. But maybe could invest to bring us up to pilot production scale. I don't see us going into large scale manufacturing. There is adequate biologics capacity coming online around the world. We don't see a 20000 L fermenter as a worthwhile investment. But scaling up some to begin to extend our process control in the vendors' plants. We bring our process scientists there.
What type of partnership are you looking for? There are multiple different flavors of partnerships out there. Platform vs molecule/product-focused. We are looking at both.
FDA seems to place a high value on "fingerprint" like characterization. How do you compare lovenox and copaxone vs FOB characteization vs each other? Fingerprint is exactly what we do...whether polypeptide, sugar, or glycoprotein. We break product down to molecules and meaningfully revese engineer them. Our variances in all metrics are controlled more tightly than the branded products - for both copaxone and lovenox
(not sure what question was)...SNY just reported a 25% sequeitial drop in lovenos revenues.
EU plans?- We haven't declared our strategy. But the US pathway is much more tuned to our technology. But that doesn't mean that there couldn't be instances where we go to EU first.
Limitations of Cabilly patent on FOB program? You certainly could see antibody molecules in US before 2018.
US complex generic experience - could this trigger changes to EU path to approval? Still trying to figure out path. Price of lovenox is extremly low in EU, so would be hard to make a meaningful profit. Haven't definitely written it off. It would be strategically good to have product there but not economically.
(not sure of exact question)...Two step FOB application pathways - think FDA iwll be flexible. Company could just do IND type stage and then choose to do clinical trials and not try to achieve full substitutability.
Cost of pilot scale facility? It would be significantly less than $50m
M118 update? We are currently in some discussions, and seeing some renewed interest. Looking at this as upside, think it's still possible, but not thinking it's high probability. The issue is not the drug itself. But trials are very expensive in this "dirty" population with "concomitant issues"...trial may not show inherent capabilites of molecule. If we end up w/ equivlance not superiority, then we would face off w/ 3 generics.
Why did you do the secondary stock offering last year? At the time, Teva was speaking very confidently and positively about their approval by end of the year 2010. We looked at our cash levels and were taking a conservative perspective on copaxone (by assuming that we would not invalidate patents, so looking at 2014 launch), so needed to have cash available to bridge 4 years of research and development spending.
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