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MNTA – For archival purposes:
Boston Globe story on 2004 IPO.

http://www.boston.com/business/articles/2004/11/08/window_of_opportunity

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Window of Opportunity

By Robert Weisman
November 8, 2004

CAMBRIDGE -- Three-year-old Momenta Pharmaceuticals Inc. already has seen its share of milestones. Its scientists cloned the first Heparin sugar-degrading enzyme, a breakthrough in understanding the role of complex sugars as a conduit for viruses and diseases. Its executives recruited medical luminaries like M. Judah Folkman and Eugene Braunwald to the company's scientific advisory board.

Momenta's most difficult achievement, however, may have been doing what few other venture-backed start-ups have been able to do in recent years: mount an initial public offering of its shares.

''Two years before our IPO, we had five employees and we were just moving out of the labs at MIT," noted Alan L. Crane, chairman and chief executive of Momenta, which is developing drugs based on sugar-sequencing technology. ''One of our goals was to build one of the top 10 biotechnology companies. And to make that vision a reality, we needed access to more capital."

The market for IPOs, a popular growth strategy for technology companies in the 1990s, had been all but frozen since the dot-com meltdown. But when Momenta executives met with investment bankers last winter, there was a sense the deep freeze was about to thaw. ''We were making our decision in February or March," Crane recalled. ''The market appeared to be open, though not strongly open."

Going public in such a climate was risky. Some companies withdrew IPO registration statements this year, while others went forward only to ''break issue" as their after-market price sank below their IPO price. But it was a risk Momenta was willing to take. And on June 21, the biotechnology start-up raised $34.8 million in an IPO to fund its research. It sold 5.35 million shares to the public at $6.50 each and was listed on the Nasdaq exchange under the symbol MNTA.

Momenta, whose shares closed at $8.23 on Friday, may have been one of the last to climb through the window before it slammed shut. While the number of IPOs continues to climb nationally, there have been none in New England, or in life sciences, since the summer's end.

Its offering brings into sharp focus the new environment -- at once more open, more selective, and more risky -- for young companies seeking to sell shares to the public. Other than mergers and acquisitions, such IPOs have traditionally been the most common ''exit strategy" for the venture capital firms that initially bankroll technology start-ups.

''When a company senses there's an opening in the market, when their management is in place and their products are in the right stage of development, they have to jump on the opportunity," said Steve Singer, head of the life sciences group at the Wilmer Cutler Pickering Hale and Dorr law firm in Boston, which represented Momenta in its IPO.

Momenta is pursuing a unique technology and a novel regulatory path. Because about 80 percent of protein drugs contain sugars, its process for determining the structure of complex sugars could enable it to not only create new drugs but improve existing drugs and launch a family of generics. It also hopes to short-circuit the Federal Drug Administration's lengthy regimen of clinical trials, and accelerate the process of bringing its drugs to market, by demonstrating that its generics have the identical features of existing drugs.

An early test of Momenta's strategy will be its bid to gain approval for the blood thinner M-Enoxaparin, which Momenta has targeted as its first significant revenue stream. The planned drug is a generic form of Lovenox, an existing drug marketed by the French-based giant Aventis Pharmaceuticals Inc. In a move that would help it fend off competition from generics, Aventis applied last year for the reissuance of a Lovenox patent set to expire in 2012, and is continuing to push for the modified patent despite an initial rejection by the US Patent and Trade Office. In the meantime, Aventis has filed patent-infringement lawsuits against two companies, Teva Pharmaceuticals USA and Amphastar Pharmaceuticals Inc., which already have applied to the FDA to market generic versions of Lovenox. Momenta is scheduled to submit its own application next year, and it already has warned investors it may face patent litigation.

''Generic competition for Lovenox at this point is neither certain nor imminent," said Terri Pedone, a US spokeswoman for Aventis. ''And quite frankly, Momenta hasn't even filed" a drug application with the FDA. ''They're not perceived as a competitor until they file."

Momenta executives say they are confident their technology will enable [M-Enoxaparin] to emerge as the generic rival to Lovenox. Their technology, like that of many Boston-area biotechnology firms, had its roots in a university lab. MIT assistant professor Ram Sasisekharan, research associate Ganesh Venkataraman, and graduate students Zachary Shriver and Rahul Raman, working in MIT's biomedical engineering lab, became the first researchers to develop a process for determining the structure of complex sugars. Their breakthrough came late one night in April 1999 when the four, eating pizza in Sasisekharan's cramped office across from the lab, realized they had cracked the code by using computers to piece together diverse sugar measurements.

''That was the aha moment," Sasisekharan recalled.

Sasisekharan joined with his MIT mentor, Robert S. Langer, and Venkataraman to found Momenta on May 17, 2001. That summer they received their first seed round of funding from Polaris Venture Partners of Waltham, and the following spring Crane, a senior executive at Millennium Pharmaceuticals Inc., was tapped as Momenta's chief executive. The company recently moved into new offices near Kendall Square, and plans to have 75 employees by the end of the year.

Like its technology research, its venture backers, its management team, its lawyers, and its scientific advisory board, much of the initial investment in Momenta's IPO came from Boston area institutions -- somewhat to the surprise of its executive team.

''We traveled all over the world for our road show, but about 40 percent of the purchases of our stock happened to be in Boston," said Crane. ''We've got the highest concentration of biotechnology interest here in Boston, and that even extends to the public markets."
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