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Saturday, February 16, 2008 4:18:49 AM
MNTA: 4th Q 2007 CC Transcript. I assume no liability for errors or omissions. (Just to be clear about prior commentary and future, MNTA's goal is to create biosimiliars that are actually duplicates, not "similiars.")
Craig A. Wheeler, President and Chief Executive Officer
Thanks Beverly and 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 will 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 or work on an application. The agency will continue to review the application once its questions have been addressed. At that time, the FDA also indicated that all applications for Enoxaparin products would be required to address the potential for immunogenicity.
Since receiving the letter, our scientific teams have been aggressively working to evaluate all potential immunogenicity concerns for Enoxaparin. That work is well underway. 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 our determination of the data that will be required to address the FDA’s immunogenicity question. Once we have, through consultation with the agency, reached a decision on our path forward, we’ll provide investors with an update.
At this time, we are not projecting how long it will take to reach this decision. Our work today makes us hopeful that we will not need to conduct human clinical trials to address the Agency’s 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 heparins such as Lovenox. Work with our novel
anticoagulant M118 program has built a strong understanding of the underlying biology of these products as well. With this scientific expertise, coupled with Sandoz’s experience in navigating complex generic regulatory issues, we feel we are well positioned to successfully address the agency’s concerns.
We believe that our M-Enox application will meet the Agency’s requirements for approvability under the 505(j) 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 a goal of obtaining approval for our product.
I will now provide 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 bypass disease patients, who present with stable angina or
symptoms of acute coronary syndrome, such as ACS. An agent that addresses these unmet needs is likely to establish itself as a new baseline therapy that can be 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 a predictable PK rate profile.
In addition, an important feature of M118 will be it’s flexibility to follow patients diagnosed with ACS in an emergency department into multiple treatment settings including angioplasty and CABG (coronary artery bypass) 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 -which can be used in medical management of ACS as well as in PCI and CABG.
Last year we 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 therapeutic window with no increased risk of bleeding events, compared with current therapy.
Reversibility and dose responsible 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 administered M118 and initiated the Phase 2a program evaluating the safety and feasibility of using M118 as 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 increases of 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 and 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 as 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 and 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 activity. 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 global scale, and an ability to differentiate ones 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 haracterization 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 developed with heparins and peptides. As in other areas, we are creating novel and proprietary methods and tools for glycoproteins. 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 the linkages between structural variation and process variation.
We expect to continue development and refinement in those technical areas during the course of 2008. This technology will be at the core of 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 is work is continuing. Beyond those two products, Momenta remains free to develop follow-on biologics on our own, or to seek other partners. We’ll be working to find a path to create a leading competitive position in the polymer biologics field over the course of 2008.
On the regulatory front, there are emerging guidelines for biosimilar products in the EMEA and Europe. In the U.S, the ongoing legislative 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 in
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, anti-metastatic and anti-prolifitive properties. Our goals for 2008 for the oncology program is to move this drug candidate into preclinical development.
In summary, Momenta made significant progress in 2007. Although that progress was overshadowed by the delay of M-Enoxaparin approval, we have 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 a possible. I am looking forward to reporting continued progress across all of our programs in 2008.
I’ll now turn the call over Rick Shea, our CFO, who will present the financial review.
Richard P. Shea, Chief Financial Officer
Thank you Craig. First, I will 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 and fully of Novartis under our 2003 and 2006 collaboration agreements.
Revenue increased compared to year ago period, due to the increased expenditures associated with preparing for the potential commercial launch of M-Enoxaparin in 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 fourth quarter ‘07, from 2.5 million for 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 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 for 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 was $58.2 million, which would have left us with 133 million in
cash. But the reclassification added 2.9 million, which brought 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 to 26 million. And our actual operating expenses, excluding stock compensation of $85.4 million, was within our original guidance of $83 to $93 million. So I’ll now turn to our financial guidance for 2008,
first our revenues. We’re projecting a decrease in reimbursable development expenditures in our M-Enoxaparin program as we transition the cost of commercial activities to Sandoz. So expect total revenues for 2008 to be approximately 60 to 75% of 2007 revenues; in other words, a reduction in 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 baseline stock compensation is also expected to be flat to down 15%. But that number will vary with
changes in our stock price. We expect that the resulting cash burn for the full year 2008 will be in the range of 50 to $55 million. This would leave us with an ending cash balance of about 81 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 to questions. Operator?
Operator: Thank you. [Operator Instructions]. And we will take our first question from Jennifer Chao at Deutsche Bank.
<Q – Jennifer Chao>: Thank you for taking the question. First Craig, wondering if you could just address on M-Enox, whether or not FDA’s immunogenicity concerns are specific enough that they could be addressed via in-vitro analysis. And importantly, whether or not you have been able to pinpoint the information or the standards that FDA is seeking?
<A – Craig Wheeler>: Sure Jen. Thanks very much for the question. We have spent a lot of time looking at the potential for immunogenicity for Enoxaparin. And there are basically two places that you could look for immunogenicity. Heparins [inaudible] in of itself a 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 is well characterized has been understood and then the labels of drugs like Lovenox and in heparin, which is heparin-induced thrombocytopenia which is caused by aggregation of platelet factor 4 caused by heparin. And so, you can look at both of those in quite a bit of detail through preclinical
and [inaudible] types of assays. And that’s the kind of work that we have been doing. It is really to try to understand all of the different ways that you can measure and look for immunogenicity.
And of course we have 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 though they’ll have to look at the body of data that we submit. But we are working closely to make sure that we understand what the appropriate things here are on what the biologic has to do for our product.
<Q – Jennifer Chao>: I suppose really where I’m going Craig is that you do seem encouraged that full-on in vivo and 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 are 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?
<A – Craig Wheeler>: Yes, Jen we are not going to provide details of the conversations with the Agency. But I will say that we are --and the nature and the characteristic of those discussions are really at the technical level. They are engaged, 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 are asking. And the nature of the sciences that we are 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 can 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 heparins. And so, thinking that you’ll be able to – a simple clinical trial will be able to clearly understand them, we don’t think is an appropriate way to go. And when we -when we look at this stuff of course we always fall back on our characterization data, which says that we --and it’s firmly established, that we have the identical and equivalent product to the innovator product. And so of course all that helps us build our support and case in confidence. And what we have and what we are building to be able to submit to the Agency.
<Q – Jennifer Chao>: 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 this period of time? Or were they quite specific from the beginning and consistent throughout?
<A – Craig Wheeler>: Yeah. I think it is fair to say that the discussions get more specific once we actually get beyond the letter and get into the dialogue, because these are scientific discussions with the Agency. So, as we and they have gotten further into the discussion certainly we have more specifics in the discussion. So, I think it’s fair to say they have evolved over the time.
<Q – Jennifer Chao>: Okay, great. I’ll get back in the queue. Thank you.
<A – Craig Wheeler>: Thanks Jen.
Operator: And we’ll go next to Mike King, Rodman & Renshaw.
<Q – Michael King>: Thank you for taking my question. Sort of following on from Jen. Craig about -regarding immunogenicity, I mean are there --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.
<A – Craig Wheeler>: Yeah. Is that your question, is--are there assays?
<Q – Michael King>: Is there anything out there? Yeah.
<A – Craig Wheeler>: Well there certainly are immunologic assays that can be done to look at this. I mean, I am not the person to ask in terms of the sensitivity of those assays. But there certainly are assays that can be done.
<Q – Michael King>: Okay. And then.
<A – Craig Wheeler>: I think your question was one around sensitivity if I am not mistaken. Correct?
<Q – Michael King>: I beg your pardon?
<A – Craig Wheeler>: I think your question was around sensitivity, correct?
<Q – Michael King>: Right. Its --we know that heparins are --tend to be very poorly immunogenic. So that would mean a pretty low level of antibody formation. Therefore is there anything out there that could detect it. That was the question.
<A – Craig Wheeler>: Okay, thanks. Again 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.
<Q – Michael King>: Okay. And then with regard to the recent heparin recall. I guess there is from Baxter, I guess there is more news today that this may have been part of feedstock from an overseas plant. And I am just wondering two things; A, given that the FDA is probably in a pretty aggressive mode to figure out what’s happening here. Does that have the potential to slow anything down as far as your --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?
<A – Craig Wheeler>: Sure. So I think I’ll answer your question in three parts. But first I would say their timing could have been better.
<Q – Michael King>: Right.
<A – 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 things that they would be looking for in, I would imagine them looking for impurities. We --in November we started work first. All the way back when we started working in our product because we characterized, fully characterized all the heparin sources coming into our product, to make sure that we are actually bringing the right feedstock in to able to
make equivalent Lovenox.
I think the second point is the work that we actually are doing now and are continuing to do [inaudible] we suspect and we hope [inaudible] would be picked up by word of what we’re doing now. So it certainly will be telling if they go through analysis.But I would expect based upon the comprehensiveness of the work that we would have the systems and tools in place to be able pick up any impurities like that.
The third thing I will say is we do have multiple heparin sources as far as we do not talk about our specific supply chain. But because of the work we do we make sure how we qualify and characterize, we are working hard to make sure that we understand exactly what goes into our products. We are 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 are feel pretty confident about what we have in terms of the sources of heparin that we bring in. But I think it will, it will certainly give the agency pause as they look through and understand what’s going on with the [inaudible] to heparin.
<Q – Michael King>: Okay. And then final question is regarding the 180-day clock. That presupposes that Amphastar was first to be declared, first to file. But how do you view --I know
there has been some discussion about who’s 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 really any upside to that post the Appeals Court decision.
<A – Craig Wheeler>: Yeah, there is always the 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 from the legal side is that even you had a different multiple patents out there that both of those patents will be covered in whatever decision is coming down on the legal side. So we think the starting of the clock would be a very good thing for us; any of those alternative outcomes could be even better for us.
<Q – Michael King>: Well I would imagine the FDA would have to make that decision at that time, wouldn’t they, as to who would --who is actually the first to file?
<A – Craig Wheeler>: Let me ask Rod Riedel, our Vice President of Regulatory to shed some light on that.
<A – Gerard Riedel>: Yes, this is Rod Riedel. The FDA will make a determination about first to file whether it’s a sole company or 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 comes 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 then it gives us a strong incentive to resolve these issues as quickly as possible, so that we are --we will be ready as early as we
possibly can.
<Q – Michael King>: Okay, great. Thanks guys.
<A – Craig Wheeler>: Thanks, Mike.
Operator: And we will go next to Bret Holley at Oppenheimer.
<Q – Bret Holley>: Yeah, hi guys, thanks. I just had a couple of questions. Just to follow-up on -potentially if you were required to do clinical work, I understand obviously that the immunogenicity frequency would be very low, and so the trial could potentially be very large, could you just kind of 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?
<A – Craig Wheeler>: Yes. So, we have not done specific trial design to look at that, but you can do the math yourself in looking at an incident rate of 1% or less in a population of the number of patients that would be necessarily to do statistical non-inferiority of that kind of low effect. And so, I think it would be if they came back and wanted a statistical trial to look at that would be a very very difficult trial to do, and that’s kind of how we are viewing it. There are, have been [inaudible] small trials that sort of look at anything, but 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 look very carefully at a small trial design, because without statistical significance you are prone to be vulnerable to spurious results. And so that’s how we’re viewing the trial environment as we just don’t see how we can answer these questions and they 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 do have the same drug for the characterization technology. That’s the approach we have taken, when we think about the trial side.
<Q – Bret Holley>: Okay. And then has there been any discussion of potential demonstration of any kind of numerical difference with Lovenox, because I appreciate the statistical --statistically, a well powered study would be I think very, very large. We call all agree, but I am just wondering if you have small trial, you could at least get an idea of a numerical comparison with Lovenox.
<A – Craig Wheeler>: I am going to ask Ian Fier, our Vice President of Clinical, just to give a couple of comments on that.
<A – Ian Fier>: 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 doubt --little added value as Craig referenced before in running a small study that’s not appropriately powered and being subject to potentially some spurious results. There is really no conclusion that can be made from an under power trial.
<Q – Bret Holley>: Okay. And then last question, Craig, I was just wondering on the M118 partnership, what kind of terms optimally would you be looking for there.
<A – Craig Wheeler>: Well. What kind of terms. The large upfront..... (Insert laughter here...)
<Q – Bret Holley>: Besides the $1 billion upfront.
<A – Craig Wheeler>: It relates to us as we are looking to try to find the right partner. Obviously we are 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 in the company and contingency. But the real goal in finding 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 base line 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 infrastructure and that kind of drive to really create the focus for this compound, and that’s what we are looking for.
<Q – Bret Holley>: Okay, fair enough. Thanks a lot.
<A – Craig Wheeler>: Sure.
Operator: And we’ll go next to Ziad Bakri at Cowen.
<Q – Ziad Bakri>: 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 at the end of the first, it 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 included in that
statement, you had any particular issues that you thought might be additional issues that might arise.
<A – Craig Wheeler>: No, what we are 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 is additional questions beyond immunogenicity that we would need to be addressing at this point.
<Q – Ziad Bakri>: Okay, thanks. And I guess also in terms of kind of timelines from your discussions with the FDA, do you have a sense from which --by which when you’ll get some kind of
firm statement on exactly what the FDA are looking for, and then from when you provide some kind of response or resubmit immunogenicity data to the FDA? What would the timelines then be for approval, would that then progress at a six-month clock or how would that work?
<A – Craig Wheeler>: So let me answer that first that we are still attempting. As I said, 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 about the agency that we are dealing here. We are dealing with OGD. And in OGD, you don’t have specific types of meetings, you don’t have timelines, there is no PDUFA clocks. And so that’s why we are always cautious in terms of saying what we think will
actually come, but you don’t get any --you don’t get any of those clocks or timelines or expectations set.
<Q – Ziad Bakri>: Sure.
<A – Craig Wheeler>: And also what I expect to happen here is we will, because this is a back and forth process with the agency. I mean it’s just the --this is a technical discussion. We will have to make the determination at some point based on the discussions what we are going to submit. I do not think it’s going to result in something like that like an SPA that you might get on the new drug side, which I said 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 are going to submit. And Rod, do you want to add anything to that?
<A – Gerard Riedel>: No, I think that your point Craig is appropriate. This is an ongoing discussion with the agency. It involves not only OGD, but the group from the biologics section of the agency.
And as a result, the conversations are technically detailed and quite complex from a technical prospective. 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.
<Q – Ziad Bakri>: Okay, great. Thanks very much.
<A – Craig Wheeler>: Sure, thanks.
Operator: [Operator Instructions]. We’ll go next to Biren Amin with Stanford Group.
<Q – Biren Amin>: Hey, thank you for 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.
<A – Craig Wheeler>: Yeah. 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 are creating here. But I don’t think I would expect too much on the existing portfolio programs and partnership with Sandoz because those are their programs and they are confidential, so we really can’t talk about those.
<Q – Biren Amin>: All right. Thanks.
<A – Craig Wheeler>: Sure, thanks.
Operator: And we’ll return to Jennifer Chao at Deutsche Bank.
<Q – Jennifer Chao>: Hey 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, 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 and process. Thanks.
<A – Craig Wheeler>: Sure. Thanks, Jen. So let me take a couple of parts of that question, and I’ll turn it over 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 awhile. So we might be getting towards the window, where we are hoping to try to get to a filing, but the important thing to think about here is --and what the reason we are actually starting to put more in, is we view our ability to move into the peptid 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 then Copaxone was chosen, because it actually brings a complex mixture which is not a sugar based mixture. And so the progress that we are seeing and our confidence in talking little bit more about the differences in applying the technology feeds directly into 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. They were applied all along on the sugar fields and that directionally extends also into glycoprotein discussions that we are having. And I will turn it over to Rick to comment on the finances.
<A – Richard Shea>: Yeah, Jen. Yeah, I think if you are trying look at our pattern of expenditures and tend to tease out what’s happening in the M356 program, unfortunately it’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 worked is that Novartis put a $75 million investment into the
company, equity investment, but we are running the development costs 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 transparent seeking 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 these specifics relating to the M356 timeline confidential for competitive reasons.
<Q – Jennifer Chao>: And then just a quick follow-up. At what point in the process do you engage FDA in order to try to anticipate any of these down stream review issues and maybe how are you thinking about M356 differently than M-Enox on a regulatory task? And then who is the lead for filing?
<A – Craig Wheeler>: So, let me answer those questions first. This is – Sandoz is filing this application. So they are --they will be the lead for that. Just like our other programs that are partnered with Sandoz, that’s part of the deals that we struck with them. Secondly, I am sorry -remind me the second part of the question, I am sorry Jen.
<Q – Jennifer Chao>: It was just --how do you go about engaging the FDA? What’s the right juncture to do that?
<A – Craig Wheeler>: Okay, yeah.
<Q – Jennifer Chao>: And is the process maybe going to be a little bit different than M-Enox?
<A – Craig Wheeler>: Well. So our view, our view I think is clearly colored by this is --an NDA just like Enoxaparin, the compound is an NDA compound, so therefore the --ANDA pathways are available to us. And so we are thinking about it very similarly to how we thought about it there -characterizations, same molecules, same go form, same strength and that’s how we think about programs doing the characterizations. I don’t think there is any specifics that I would say will be different about the process. I can say certainly that we have learned in going through the process about how to talk about complex applications into the offered generic drugs, but I don’t have any specifics I can give you into just what might be different here.
<Q – Jennifer Chao>: Okay. Thank you.
<A – Craig Wheeler>: Sure, thanks.
Operator: And we will return to Mike King with Rodman and Renshaw.
<Q – Michael King>: 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 have that additional cash?
<A – Richard Shea>: Yes, well, we did talk about the M118 program and the potential for partnering that program. And then we have also talked about follow-on biologics as an area that other than the two products that we are partnering with Sandoz, we have opportunities on that field too.
<Q – Michael King>: And remind me what you said in your formal remarks if you will have the IIb -when will have the IIb results from M118?
<A – Richard Shea>: The IIa --IIa study is in process right now. We are looking to have data from that study by the end of the year.
<Q – Michael King>: So that would be the basis of your partnering as opposed to the IIb?
<A – Richard Shea>: Correct.
<A>: Yes.
<Q – Michael King>: Okay. Thanks very much.
<A>: Yup, sure.
Operator: And we are standing-by with no further questions at this time. I’d like to turn the conference back for any closing or additional comments you’d like to make.
Craig A. Wheeler, President and Chief Executive Officer
Okay, thanks very much now. I’d 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.
Craig A. Wheeler, President and Chief Executive Officer
Thanks Beverly and 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 will 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 or work on an application. The agency will continue to review the application once its questions have been addressed. At that time, the FDA also indicated that all applications for Enoxaparin products would be required to address the potential for immunogenicity.
Since receiving the letter, our scientific teams have been aggressively working to evaluate all potential immunogenicity concerns for Enoxaparin. That work is well underway. 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 our determination of the data that will be required to address the FDA’s immunogenicity question. Once we have, through consultation with the agency, reached a decision on our path forward, we’ll provide investors with an update.
At this time, we are not projecting how long it will take to reach this decision. Our work today makes us hopeful that we will not need to conduct human clinical trials to address the Agency’s 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 heparins such as Lovenox. Work with our novel
anticoagulant M118 program has built a strong understanding of the underlying biology of these products as well. With this scientific expertise, coupled with Sandoz’s experience in navigating complex generic regulatory issues, we feel we are well positioned to successfully address the agency’s concerns.
We believe that our M-Enox application will meet the Agency’s requirements for approvability under the 505(j) 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 a goal of obtaining approval for our product.
I will now provide 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 bypass disease patients, who present with stable angina or
symptoms of acute coronary syndrome, such as ACS. An agent that addresses these unmet needs is likely to establish itself as a new baseline therapy that can be 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 a predictable PK rate profile.
In addition, an important feature of M118 will be it’s flexibility to follow patients diagnosed with ACS in an emergency department into multiple treatment settings including angioplasty and CABG (coronary artery bypass) 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 -which can be used in medical management of ACS as well as in PCI and CABG.
Last year we 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 therapeutic window with no increased risk of bleeding events, compared with current therapy.
Reversibility and dose responsible 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 administered M118 and initiated the Phase 2a program evaluating the safety and feasibility of using M118 as 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 increases of 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 and 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 as 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 and 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 activity. 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 global scale, and an ability to differentiate ones 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 haracterization 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 developed with heparins and peptides. As in other areas, we are creating novel and proprietary methods and tools for glycoproteins. 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 the linkages between structural variation and process variation.
We expect to continue development and refinement in those technical areas during the course of 2008. This technology will be at the core of 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 is work is continuing. Beyond those two products, Momenta remains free to develop follow-on biologics on our own, or to seek other partners. We’ll be working to find a path to create a leading competitive position in the polymer biologics field over the course of 2008.
On the regulatory front, there are emerging guidelines for biosimilar products in the EMEA and Europe. In the U.S, the ongoing legislative 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 in
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, anti-metastatic and anti-prolifitive properties. Our goals for 2008 for the oncology program is to move this drug candidate into preclinical development.
In summary, Momenta made significant progress in 2007. Although that progress was overshadowed by the delay of M-Enoxaparin approval, we have 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 a possible. I am looking forward to reporting continued progress across all of our programs in 2008.
I’ll now turn the call over Rick Shea, our CFO, who will present the financial review.
Richard P. Shea, Chief Financial Officer
Thank you Craig. First, I will 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 and fully of Novartis under our 2003 and 2006 collaboration agreements.
Revenue increased compared to year ago period, due to the increased expenditures associated with preparing for the potential commercial launch of M-Enoxaparin in 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 fourth quarter ‘07, from 2.5 million for 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 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 for 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 was $58.2 million, which would have left us with 133 million in
cash. But the reclassification added 2.9 million, which brought 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 to 26 million. And our actual operating expenses, excluding stock compensation of $85.4 million, was within our original guidance of $83 to $93 million. So I’ll now turn to our financial guidance for 2008,
first our revenues. We’re projecting a decrease in reimbursable development expenditures in our M-Enoxaparin program as we transition the cost of commercial activities to Sandoz. So expect total revenues for 2008 to be approximately 60 to 75% of 2007 revenues; in other words, a reduction in 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 baseline stock compensation is also expected to be flat to down 15%. But that number will vary with
changes in our stock price. We expect that the resulting cash burn for the full year 2008 will be in the range of 50 to $55 million. This would leave us with an ending cash balance of about 81 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 to questions. Operator?
Operator: Thank you. [Operator Instructions]. And we will take our first question from Jennifer Chao at Deutsche Bank.
<Q – Jennifer Chao>: Thank you for taking the question. First Craig, wondering if you could just address on M-Enox, whether or not FDA’s immunogenicity concerns are specific enough that they could be addressed via in-vitro analysis. And importantly, whether or not you have been able to pinpoint the information or the standards that FDA is seeking?
<A – Craig Wheeler>: Sure Jen. Thanks very much for the question. We have spent a lot of time looking at the potential for immunogenicity for Enoxaparin. And there are basically two places that you could look for immunogenicity. Heparins [inaudible] in of itself a 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 is well characterized has been understood and then the labels of drugs like Lovenox and in heparin, which is heparin-induced thrombocytopenia which is caused by aggregation of platelet factor 4 caused by heparin. And so, you can look at both of those in quite a bit of detail through preclinical
and [inaudible] types of assays. And that’s the kind of work that we have been doing. It is really to try to understand all of the different ways that you can measure and look for immunogenicity.
And of course we have 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 though they’ll have to look at the body of data that we submit. But we are working closely to make sure that we understand what the appropriate things here are on what the biologic has to do for our product.
<Q – Jennifer Chao>: I suppose really where I’m going Craig is that you do seem encouraged that full-on in vivo and 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 are 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?
<A – Craig Wheeler>: Yes, Jen we are not going to provide details of the conversations with the Agency. But I will say that we are --and the nature and the characteristic of those discussions are really at the technical level. They are engaged, 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 are asking. And the nature of the sciences that we are 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 can 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 heparins. And so, thinking that you’ll be able to – a simple clinical trial will be able to clearly understand them, we don’t think is an appropriate way to go. And when we -when we look at this stuff of course we always fall back on our characterization data, which says that we --and it’s firmly established, that we have the identical and equivalent product to the innovator product. And so of course all that helps us build our support and case in confidence. And what we have and what we are building to be able to submit to the Agency.
<Q – Jennifer Chao>: 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 this period of time? Or were they quite specific from the beginning and consistent throughout?
<A – Craig Wheeler>: Yeah. I think it is fair to say that the discussions get more specific once we actually get beyond the letter and get into the dialogue, because these are scientific discussions with the Agency. So, as we and they have gotten further into the discussion certainly we have more specifics in the discussion. So, I think it’s fair to say they have evolved over the time.
<Q – Jennifer Chao>: Okay, great. I’ll get back in the queue. Thank you.
<A – Craig Wheeler>: Thanks Jen.
Operator: And we’ll go next to Mike King, Rodman & Renshaw.
<Q – Michael King>: Thank you for taking my question. Sort of following on from Jen. Craig about -regarding immunogenicity, I mean are there --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.
<A – Craig Wheeler>: Yeah. Is that your question, is--are there assays?
<Q – Michael King>: Is there anything out there? Yeah.
<A – Craig Wheeler>: Well there certainly are immunologic assays that can be done to look at this. I mean, I am not the person to ask in terms of the sensitivity of those assays. But there certainly are assays that can be done.
<Q – Michael King>: Okay. And then.
<A – Craig Wheeler>: I think your question was one around sensitivity if I am not mistaken. Correct?
<Q – Michael King>: I beg your pardon?
<A – Craig Wheeler>: I think your question was around sensitivity, correct?
<Q – Michael King>: Right. Its --we know that heparins are --tend to be very poorly immunogenic. So that would mean a pretty low level of antibody formation. Therefore is there anything out there that could detect it. That was the question.
<A – Craig Wheeler>: Okay, thanks. Again 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.
<Q – Michael King>: Okay. And then with regard to the recent heparin recall. I guess there is from Baxter, I guess there is more news today that this may have been part of feedstock from an overseas plant. And I am just wondering two things; A, given that the FDA is probably in a pretty aggressive mode to figure out what’s happening here. Does that have the potential to slow anything down as far as your --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?
<A – Craig Wheeler>: Sure. So I think I’ll answer your question in three parts. But first I would say their timing could have been better.
<Q – Michael King>: Right.
<A – 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 things that they would be looking for in, I would imagine them looking for impurities. We --in November we started work first. All the way back when we started working in our product because we characterized, fully characterized all the heparin sources coming into our product, to make sure that we are actually bringing the right feedstock in to able to
make equivalent Lovenox.
I think the second point is the work that we actually are doing now and are continuing to do [inaudible] we suspect and we hope [inaudible] would be picked up by word of what we’re doing now. So it certainly will be telling if they go through analysis.But I would expect based upon the comprehensiveness of the work that we would have the systems and tools in place to be able pick up any impurities like that.
The third thing I will say is we do have multiple heparin sources as far as we do not talk about our specific supply chain. But because of the work we do we make sure how we qualify and characterize, we are working hard to make sure that we understand exactly what goes into our products. We are 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 are feel pretty confident about what we have in terms of the sources of heparin that we bring in. But I think it will, it will certainly give the agency pause as they look through and understand what’s going on with the [inaudible] to heparin.
<Q – Michael King>: Okay. And then final question is regarding the 180-day clock. That presupposes that Amphastar was first to be declared, first to file. But how do you view --I know
there has been some discussion about who’s 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 really any upside to that post the Appeals Court decision.
<A – Craig Wheeler>: Yeah, there is always the 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 from the legal side is that even you had a different multiple patents out there that both of those patents will be covered in whatever decision is coming down on the legal side. So we think the starting of the clock would be a very good thing for us; any of those alternative outcomes could be even better for us.
<Q – Michael King>: Well I would imagine the FDA would have to make that decision at that time, wouldn’t they, as to who would --who is actually the first to file?
<A – Craig Wheeler>: Let me ask Rod Riedel, our Vice President of Regulatory to shed some light on that.
<A – Gerard Riedel>: Yes, this is Rod Riedel. The FDA will make a determination about first to file whether it’s a sole company or 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 comes 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 then it gives us a strong incentive to resolve these issues as quickly as possible, so that we are --we will be ready as early as we
possibly can.
<Q – Michael King>: Okay, great. Thanks guys.
<A – Craig Wheeler>: Thanks, Mike.
Operator: And we will go next to Bret Holley at Oppenheimer.
<Q – Bret Holley>: Yeah, hi guys, thanks. I just had a couple of questions. Just to follow-up on -potentially if you were required to do clinical work, I understand obviously that the immunogenicity frequency would be very low, and so the trial could potentially be very large, could you just kind of 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?
<A – Craig Wheeler>: Yes. So, we have not done specific trial design to look at that, but you can do the math yourself in looking at an incident rate of 1% or less in a population of the number of patients that would be necessarily to do statistical non-inferiority of that kind of low effect. And so, I think it would be if they came back and wanted a statistical trial to look at that would be a very very difficult trial to do, and that’s kind of how we are viewing it. There are, have been [inaudible] small trials that sort of look at anything, but 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 look very carefully at a small trial design, because without statistical significance you are prone to be vulnerable to spurious results. And so that’s how we’re viewing the trial environment as we just don’t see how we can answer these questions and they 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 do have the same drug for the characterization technology. That’s the approach we have taken, when we think about the trial side.
<Q – Bret Holley>: Okay. And then has there been any discussion of potential demonstration of any kind of numerical difference with Lovenox, because I appreciate the statistical --statistically, a well powered study would be I think very, very large. We call all agree, but I am just wondering if you have small trial, you could at least get an idea of a numerical comparison with Lovenox.
<A – Craig Wheeler>: I am going to ask Ian Fier, our Vice President of Clinical, just to give a couple of comments on that.
<A – Ian Fier>: 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 doubt --little added value as Craig referenced before in running a small study that’s not appropriately powered and being subject to potentially some spurious results. There is really no conclusion that can be made from an under power trial.
<Q – Bret Holley>: Okay. And then last question, Craig, I was just wondering on the M118 partnership, what kind of terms optimally would you be looking for there.
<A – Craig Wheeler>: Well. What kind of terms. The large upfront..... (Insert laughter here...)
<Q – Bret Holley>: Besides the $1 billion upfront.
<A – Craig Wheeler>: It relates to us as we are looking to try to find the right partner. Obviously we are 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 in the company and contingency. But the real goal in finding 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 base line 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 infrastructure and that kind of drive to really create the focus for this compound, and that’s what we are looking for.
<Q – Bret Holley>: Okay, fair enough. Thanks a lot.
<A – Craig Wheeler>: Sure.
Operator: And we’ll go next to Ziad Bakri at Cowen.
<Q – Ziad Bakri>: 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 at the end of the first, it 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 included in that
statement, you had any particular issues that you thought might be additional issues that might arise.
<A – Craig Wheeler>: No, what we are 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 is additional questions beyond immunogenicity that we would need to be addressing at this point.
<Q – Ziad Bakri>: Okay, thanks. And I guess also in terms of kind of timelines from your discussions with the FDA, do you have a sense from which --by which when you’ll get some kind of
firm statement on exactly what the FDA are looking for, and then from when you provide some kind of response or resubmit immunogenicity data to the FDA? What would the timelines then be for approval, would that then progress at a six-month clock or how would that work?
<A – Craig Wheeler>: So let me answer that first that we are still attempting. As I said, 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 about the agency that we are dealing here. We are dealing with OGD. And in OGD, you don’t have specific types of meetings, you don’t have timelines, there is no PDUFA clocks. And so that’s why we are always cautious in terms of saying what we think will
actually come, but you don’t get any --you don’t get any of those clocks or timelines or expectations set.
<Q – Ziad Bakri>: Sure.
<A – Craig Wheeler>: And also what I expect to happen here is we will, because this is a back and forth process with the agency. I mean it’s just the --this is a technical discussion. We will have to make the determination at some point based on the discussions what we are going to submit. I do not think it’s going to result in something like that like an SPA that you might get on the new drug side, which I said 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 are going to submit. And Rod, do you want to add anything to that?
<A – Gerard Riedel>: No, I think that your point Craig is appropriate. This is an ongoing discussion with the agency. It involves not only OGD, but the group from the biologics section of the agency.
And as a result, the conversations are technically detailed and quite complex from a technical prospective. 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.
<Q – Ziad Bakri>: Okay, great. Thanks very much.
<A – Craig Wheeler>: Sure, thanks.
Operator: [Operator Instructions]. We’ll go next to Biren Amin with Stanford Group.
<Q – Biren Amin>: Hey, thank you for 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.
<A – Craig Wheeler>: Yeah. 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 are creating here. But I don’t think I would expect too much on the existing portfolio programs and partnership with Sandoz because those are their programs and they are confidential, so we really can’t talk about those.
<Q – Biren Amin>: All right. Thanks.
<A – Craig Wheeler>: Sure, thanks.
Operator: And we’ll return to Jennifer Chao at Deutsche Bank.
<Q – Jennifer Chao>: Hey 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, 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 and process. Thanks.
<A – Craig Wheeler>: Sure. Thanks, Jen. So let me take a couple of parts of that question, and I’ll turn it over 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 awhile. So we might be getting towards the window, where we are hoping to try to get to a filing, but the important thing to think about here is --and what the reason we are actually starting to put more in, is we view our ability to move into the peptid 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 then Copaxone was chosen, because it actually brings a complex mixture which is not a sugar based mixture. And so the progress that we are seeing and our confidence in talking little bit more about the differences in applying the technology feeds directly into 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. They were applied all along on the sugar fields and that directionally extends also into glycoprotein discussions that we are having. And I will turn it over to Rick to comment on the finances.
<A – Richard Shea>: Yeah, Jen. Yeah, I think if you are trying look at our pattern of expenditures and tend to tease out what’s happening in the M356 program, unfortunately it’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 worked is that Novartis put a $75 million investment into the
company, equity investment, but we are running the development costs 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 transparent seeking 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 these specifics relating to the M356 timeline confidential for competitive reasons.
<Q – Jennifer Chao>: And then just a quick follow-up. At what point in the process do you engage FDA in order to try to anticipate any of these down stream review issues and maybe how are you thinking about M356 differently than M-Enox on a regulatory task? And then who is the lead for filing?
<A – Craig Wheeler>: So, let me answer those questions first. This is – Sandoz is filing this application. So they are --they will be the lead for that. Just like our other programs that are partnered with Sandoz, that’s part of the deals that we struck with them. Secondly, I am sorry -remind me the second part of the question, I am sorry Jen.
<Q – Jennifer Chao>: It was just --how do you go about engaging the FDA? What’s the right juncture to do that?
<A – Craig Wheeler>: Okay, yeah.
<Q – Jennifer Chao>: And is the process maybe going to be a little bit different than M-Enox?
<A – Craig Wheeler>: Well. So our view, our view I think is clearly colored by this is --an NDA just like Enoxaparin, the compound is an NDA compound, so therefore the --ANDA pathways are available to us. And so we are thinking about it very similarly to how we thought about it there -characterizations, same molecules, same go form, same strength and that’s how we think about programs doing the characterizations. I don’t think there is any specifics that I would say will be different about the process. I can say certainly that we have learned in going through the process about how to talk about complex applications into the offered generic drugs, but I don’t have any specifics I can give you into just what might be different here.
<Q – Jennifer Chao>: Okay. Thank you.
<A – Craig Wheeler>: Sure, thanks.
Operator: And we will return to Mike King with Rodman and Renshaw.
<Q – Michael King>: 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 have that additional cash?
<A – Richard Shea>: Yes, well, we did talk about the M118 program and the potential for partnering that program. And then we have also talked about follow-on biologics as an area that other than the two products that we are partnering with Sandoz, we have opportunities on that field too.
<Q – Michael King>: And remind me what you said in your formal remarks if you will have the IIb -when will have the IIb results from M118?
<A – Richard Shea>: The IIa --IIa study is in process right now. We are looking to have data from that study by the end of the year.
<Q – Michael King>: So that would be the basis of your partnering as opposed to the IIb?
<A – Richard Shea>: Correct.
<A>: Yes.
<Q – Michael King>: Okay. Thanks very much.
<A>: Yup, sure.
Operator: And we are standing-by with no further questions at this time. I’d like to turn the conference back for any closing or additional comments you’d like to make.
Craig A. Wheeler, President and Chief Executive Officer
Okay, thanks very much now. I’d 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.
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