Biotech Values

[DewDiligence]

(MNTA TEVA) The Lovenox plot may have thickened!

what do you make of [Bill Marth’s] comments that teva has had discussions already about labeling?

It’s a surprising comment insofar as a labeling discussion is not normally part of the FDA review process for a generic drug. Since a US generic drug is automatically substitutable for the corresponding branded drug, the FDA label of the generic drug is identical to the label of the corresponding branded drug. Hence, there is ordinarily no need for a labeling discussion between the sponsor of a generic drug and the FDA.

If Bill Marth’s comments are taken at face value, one might infer that the FDA is considering approving Teva’s generic as a non-substitutable “branded” product—as though Teva’s application had been reviewed by the FDA under the 505b2 NDA pathway rather than the 505j ANDA pathway.

The above scenario raises the possibility of an asymmetric outcome that would be highly bullish for MNTA: NVS/MNTA’s ANDA is approved as a full-fledged substitutable generic while Teva’s ANDA is approved as a non-substitutable “branded” generic. Under this scenario, I’m pretty sure the contractual terms of the NVS-MNTA partnership would treat Teva’s product as not being a second generic Lovenox, and hence MNTA would enjoy the favorable economic terms of the single-generic case.

Moreover, under this asymmetric scenario, Teva’s product would have a distinct brand name and it would have to be actively marketed to achieve any sales (because it is non-substitutable), so it’s reasonable to assume that its potential market share would be relatively small. In other words, the asymmetric scenario discussed here would be almost as good for MNTA shareholders as the best-case scenario in which NVS/MNTA’s ANDA is approved and Teva’s ANDA is rejected.

Of course, I may be reading too much into Bill Marth’s saying that Teva and the FDA are in “labeling discussions.” Nevertheless, the asymmetric outcome described above does make a certain amount of sense, IMO. It gives the FDA an “out” so the FDA does not have to either:

• approve Teva to sell a substitutable generic that has not been fully characterized and may not be identical to branded Lovenox;

OR

• reject Teva’s ANDA and bear the wrath of Congress for taking an action that gives the appearance of being pro-monopoly and anti-generic.

The Lovenox plot may just have thickened!