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Monday, July 28, 2008 1:14:09 PM
Edited Transcript from MNTA 2Q08 Conference Call
[I’ve highlighted the most consequential passages,
corrected transcription errors, inserted annotations
and hyperlinks, and removed perfunctory remarks
for the sake of brevity. The CC took place on 24-July-2008.]
PARTICIPANTS
Craig Wheeler
Momenta Pharmaceuticals CEO
Rick Shea
Momenta Pharmaceuticals CFO
Jim Roach
Momenta Pharmaceuticals CMO
Eric Schmidt
Cowen and Company
Sapna Srivastava
Morgan Stanley
Bret Holley
Oppenheimer & Co.
Biren Amin
Stanford Group
Greg Gilbert
Merrill Lynch
PREPARED REMARKS
Craig Wheeler - Momenta Pharmaceuticals CEO
This morning, I will provide an update on recent corporate developments at Momenta, starting with M356, and then Rick will give an overview of this quarter's financials.
M356 is our generic version of Teva's Copaxone, which we are developing in collaboration with Sandoz. As we previously announced on July 11th, the FDA has accepted, for review, the ANDA filed by Sandoz on December 27th, 2007, for Glatiramer Acetate injection, the generic name for Copaxone. [Sandoz, MNTA’s partner, is the generic-drug division of Novartis.]
The filing of this ANDA and its acceptance for review represents significant technical and regulatory accomplishments for Momenta and we are very pleased that the FDA has decided to accept this ANDA for review. Additionally, this past Tuesday, FDA updated its Paragraph IV database, indicating that the first ANDA submitted for Glatiramer Acetate injection was filed on December 27th, 2007, our filing date. [In other words, Sandoz/MNTA have first-to-file status on generic Copaxone, which will entitle them to 180 days of marketing exclusivity if the ANDA is approved (#msg-30938608).]
We now have two ANDAs for complex generic products currently under active FDA review, for generic Lovenox and now for generic Copaxone. We believe this further demonstrates our commitment to our complex generics business and sets the stage as we extend this technology platform to follow on biologic product opportunities.
Following our announcement that FDA has accepted our M356 ANDA for review, several news articles and publications have been issued. And the information presented in those materials suggested to us that it would be helpful to clear up some misconceptions [bravo!] regarding the composition of the Copaxone product, its manufacturing process and the regulatory path for this ANDA.
First, several reports state that our ANDA will require follow on biologics legislation to be enacted prior to receiving FDA approval. Actually, Copaxone was originally approved as a drug pursuant to the NDA regulations and not under the BLA regulations, which are typically used to approve biologically derived therapeutics.
The FDA already has an established legal pathway under its 505J regulations to approve an ANDA for a generic version of Copaxone. Therefore, the FDA is not required to wait for passage of follow on biologics legislation to act on the M356 ANDA. Rather, it can act on the ANDA using the regulatory authority it already possesses. The FDA's acceptance of the M356 ANDA for review indicates that the FDA has made a determination that the ANDA is sufficiently complete to permit a substantive review and that the FDA has agreed to review the application under the 505J pathway.
Second, Copaxone is not produced by cell culture or fermentation, which are typical manufacturing processes for bio-therapeutics. Consequently, impurities that are typically monitored in such manufacturing, such as DNA, lipids and proteins, are not present in the Copaxone process or product.
Rather, Copaxone is manufactured by chemical synthesis, starting with a mixture of four amino acids to yield the final product, that there's a complex mixture of polypeptide chains of varying length, varying amino acid compositions and varying amino acid sequences. The key to manufacturing an equivalent version of Copaxone is the ability to thoroughly characterize the complex mixture resulting from these reactions so, a manufacturing process can be developed and effectively controlled [#msg-30647865].
Third, there have been a lot of comments on the challenges of demonstrating bio-equivalents to the innovative product, due to the drug's rapid metabolism and its uncertain [mechanism] of action. For competitive reasons, we are not commenting on our clinical and non-clinical strategies. However, these challenges further emphasize the requirement that a generic version must demonstrate chemical equivalence to the innovative product through thorough characterization.
With that said, the tools available today to understand the presence and behavioral drug are quite sophisticated and certainly can be applied to help understand the behavior of Copaxone or any other of today's drugs.
Finally, there are many reports commenting on the strength of the Copaxone patent estate. There are seven Orange Book patents expiring in 2014 and all must be overcome [#msg-30960930]. Again, we are not disclosing our litigation strategy but some facts may help you to do your own research in this area. First, all seven patents are from the same patent family and therefore are related. We are also dealing with a drug with a long history. There's a lot to consider in this patent estate and you can trust that we and our partner, Sandoz, did our homework before we chose the Paragraph IV route.
The complexity that's associated with the developing a generic version of Copaxone [is one of the] the major reasons why we chose to pursue this product candidate. We believe that our technology and experience provide us with a competitive advantage in the program. We expect that the FDA will conduct a rigorous regulatory review of this ANDA. We also expect a vigorous defense from Teva. However, we believe that the quality of the Sandoz momentous admission and our experience, to date, with M-Enoxaparin will help us to successfully navigate the regulatory and legal processes and, ultimately, to obtain FDA approval, to prevail in litigation, and to launch M356 as a competing generic version of Copaxone.
I will now turn to M-Enoxaparin. We previously reported that in April, the FDA provided written guidance regarding our proposed response to their questions about the potential for immunogenicity of M-Enoxaparin. The FDA's comments indicated general concurrence with our approach and the proposed data to be included in our ANDA amendment.
The FDA did request additional tests be performed but the FDA did not request and, to date, has not requested, data from clinical trials. We remain on track to submit our amendment addressing the FDA's questions on immunogenicity in the third quarter of this year.
Regarding the Lovenox patent litigation between Sanofi-Aventis and Teva/Amphastar, a written decision was entered by the court of appeals in May, which upheld the district court's decision rendering the Lovenox Orange Book patents unenforceable due to inequitable conduct.
On June 27th, as expected, Sanofi-Aventis filed a petition for an en banc rehearing asking the full court, all nine judges, to reconsider the appellate decision.
Earlier in July, Teva and Amphastar were granted an extension until August 21st to file a response to the Sanofi-Aventis petition for rehearing. Furthermore, several parties, including Pharma and Bio, have filed amicus briefs in support of the petition for a rehearing. All of these actions are extending the period of time it will take for the court of appeals to consider the petition. Historic data suggests courts typically rule on a rehearing request within one to two months after the briefs are submitted. But there is no required timeline on the court. If the court denies the petition for a rehearing, a final mandate would issue in the case, triggering the start of the 180-day exclusivity period.
Given the regulatory timeline I discussed and the timing of the patent litigation, we do not expect an M-Enoxaparin approval and launch in 2008. [NVS previously said this on their own 2Q08 CC (#msg-30763224).] It's always difficult to predict the timing of any FDA approval action but with our partner Sandoz, we are planning for a 2009 approval and product launch.
I will now turn to M118, our leading new drug candidate. We are continuing to enroll patients in our Phase IIA PCI trial. As we mentioned on a previous call, the enrollment in that trial is going more slowly that we had anticipated. We believe this is, in part, attributable to a decrease in the number of percutaneous coronary interventions being performed. As mentioned in our last earnings call, we have put measures into place, including amending the protocol and increasing the number of sites to facilitate enrollment.
Enrollment is now approaching our originally targeted number of patients per site per month and our updated estimate is that we will have top line data on the Phase IIA study late in the first quarter or in the second quarter of 2009 [#msg-30941510].
We are continuing discussions with potential partners for the program, but anticipate that a partnership would not be secure to close until after the results of the Phase IIA study are known.
In summary, we continue to be very enthusiastic about M118's product profile and its ability to address significant unmet needs in ACS. The current trial is teaching us a lot about developing this drug in a competitive clinical setting and has highlighted to us the benefits that could accrue from a safe, effective and easy to administer anticoagulant in an ACS setting. M118 is our first novel therapeutic and represents an exciting commercial opportunity for Momenta.
On our last call, I began to highlight for you our emerging plans to broaden our participation in the follow on biologics business. Our belief is that success in the follow on biologics will require global scale, cost effective manufacturing and, most importantly, the ability to create products that are differentiated from competitors' biosimilar products. This is Momenta's business model. I will comment briefly on how we are thinking of building the key aspects of this business.
First, global scale. We believe this is an important factor in generating an early return on investment. The regulatory pathways for follow on biologics are not likely to be harmonized. Having an early global presence not only helps diversify regulatory risk but allows us to get the Momenta technology in front of multiple regulatory agencies while the FOB standards are being developed.
Global partners like Sandoz are critically important in accessing the markets as they become available. We will look for partners with both regulatory and commercial capabilities to build this business.
Second, low-cost and high-quality manufacturing. We are looking to create long-term sustainable profits for all of our products. In biologics, this will require manufacturing partners who can reliably adhere to the most rigorous regulatory standards worldwide. But they must also have the ability to economically manufacture the products. [This is why I think INSM’s FoB program is suspect.]
We believe that contractors and partners for our biologic products must have access to low factor costs and a high quality workforce. We have already screened several potential candidates and we believe we will be able to find manufacturing partners that can meet our needs of the emerging FOB business.
Third, our ability to differentiate our products from follow-on biologics competitors. For two years, we have been investing in research to adapt our analytic tool set to the glycoprotein arena. Our progress to date has demonstrated the potential to measure even minor differences in glycoprotein molecules, moving toward our goal of thorough characterization.
Our work is also generating insights that will better define what pre-clinical and clinical work may be needed to assess the safety, efficacy and, ultimately, the approvability of a follow on biologic product.
Finally, and what I believe is most exciting in the long run, we are making very good progress towards our goal of applying our tools to reverse engineer the biologic production process, using our characterization tools to rapidly tune the manufacturing process to generate truly equivalent biologic products [i.e. biologics that are substitutable for—not merely similar to—their branded counterparts].
As I have said, in 2008 we are working to advance the strategy to build a leading competitive position in the follow-on biologics field. As you can tell by the time I'm spending on this topic, we believe this is a major area of opportunity for Momenta and for our investors. We will continue to update you as our strategy evolves.
Finally, on the corporate front, I have two updates. This morning, we announced the appointment of Bruce Leicher as our new Senior Vice President and General Counsel. Bruce joins us with a long and distinguished legal career in the life sciences. His career has included both startup organization and established public companies, providing them with experience in issues across the drug development continuum from R&D through regulatory and commercial phases.
We are very pleased to attract Bruce to Momenta. Bruce has worked with many of our executive team members over his nearly 20 years in biotech, including [legal] at Genetics Institute and Millennium Pharmaceuticals. More recently, Bruce was general counsel at Antigenics and at Altus Pharmaceuticals. I know Bruce is excited with the legal challenges here at Momenta as we build our complex generics, follow on biologics and novel therapeutics businesses.
Finally, we were pleased to announce in June the appointment of Jim Sulat to our Board of Directors. As a director, Jim will also be a member of our audit and our nominating and corporate governance committees. Jim is presently the Chief Financial Officer at Memory Pharmaceuticals and served as Memory's President and Chief Executive Officer from May 2005 to February 2008.
Jim and I overlapped for two years at Chiron, where he served as the Chief Financial Officer of Chiron Corporation from 1998 to 2003, so I know first hand Jim's extensive expertise in strategy, finance and general management. His work in managing both large and small biotechnology companies, as well as his board experience as a director of several biotech companies will be invaluable as we grow our organization.
I'll now turn the call over to Rick Shea to provide a financial update.
Rick Shea - Momenta Pharmaceuticals CFO
The net loss for the second quarter of 2008 was $15 million, or a loss of $0.42 per share, as compared to a net loss of $18.8 million, or a loss of $0.53 per share for the second quarter of 2007. The decrease in the net loss was the result of decreased R&D expenses, due to a lower level of contracted manufacturing activity, as well as lower G&A expenses, offset by lower interest income.
We ended the second quarter with $109.4 million in cash and marketable securities, compared with $123.6 million at the end of the first quarter, and $135.9 million at the beginning of the year. Our cash burn for the second quarter was $14.2 million, and for the first half of 2008, the cash burn was $26.5 million. We continue to anticipate a cash burn for the full year 2008 of between $50 million and $55 million.
QUESTION AND ANSWER
Eric Schmidt - Cowen and Company
A couple of questions on M356 [generic Copaxone]. Congrats on being the first to have the FDA accept it, that obviously gives you a little bit of negotiating power. I guess I'm interested in whether you have any thoughts on whether you would use that via some sort of settlement discussions [with Teva], or whether that's completely off the table from your view. And whether or not being first to file provides you with any additional leverage.
Craig Wheeler
It's early days yet and we really haven't made any decisions and therefore we really wouldn't be talking about any kind of settlement discussions or anything that we'd be thinking about there.
Eric Schmidt - Cowen and Company
And just one more on M356: with M-Enoxaparin of course you've kind of laid out in pretty significant detail your strategy for circumventing the ‘618 patent. You seem to be taking a different tack with investors in terms of disclosure on M356. Is there a reason for that? Why are you not being as clear with us on your strategy?
Craig Wheeler
We actually weren't in the lawsuit in the lead position on Enoxaparin [the Lovenox (enoxaparin) suit was between Sanofi and Teva/Amphastar], so we're really not going to disclose what our patent strategy is here [on Copaxone, where MNTA/Sandoz is a party to the patent lawsuit], because of the legal situation that we're going to be in, as well as the fact that we have competitors that are going to be looking at the same sets of issues.
Eric Schmidt - Cowen and Company
Okay, fair enough. And last question is on the protein side of things, the glycoprotein side; you've been talking a fair bit about this more recently. When will we see some Momenta data to talk to some of the points you mentioned, characterization, reverse engineering, etc.?
Craig Wheeler
The programs that we are publicly working on now are two [undisclosed] programs that are partnered with Sandoz, and those programs are proprietary, so we really won't be showing data from those programs. I think in the future, as we build out our portfolio, you will get more visibility into what we're thinking about as the product. Of course we'll continue to be I think somewhat cautious in terms of making full transparency about all the details of our technology, again for competitive reasons. But I think as our portfolio builds we should have more opportunity to talk about things.
Eric Schmidt - Cowen and Company
Are there [other] programs in the work at Momenta? Wholly owned programs that you're working on now, but just haven't disclosed?
Craig Wheeler
The only things that we are constrained on, in the glycoprotein arena, are the two programs that are partnered with Sandoz. The rest of the stuff that we're working on in our laboratories is proprietary. We have no announced programs, but we have significant research efforts ongoing in the area.
Eric Schmidt - Cowen and Company
Can you give us a sense of how many programs you're working on?
Craig Wheeler
No, I can't [LOL].
Sapna Srivastava - Morgan Stanley
Hi, it's actually Dave calling in for Sapna. Just a question on the legal situation with M-Enoxaparin. I know it's not your active case, but can you provide any insight into whether these sort of re-appeals for appeal [i.e. en banc rehearings] are usually granted, or is this a very low likelihood of happening for Sanofi?
Craig Wheeler
Obviously it's not our case, so I can't comment on the specifics of what's going on at the court, but I can give you some information on how en banc is usually treated. There are actually a lot of requests for en banc rehearings every year, and there are very, very few that are granted. The number that are granted on an annual basis range from one to five I think, if we look back over the past few years. So it is unusual that they are granted.
And as we look at this case, and our own expert advisor to us, the view is that this case actually is a very strong case, and has actually been to the appellate court twice, as well as twice at the district court level. So the merit of this case would probably mean the probability is lower, but we really can't project that, not knowing the details of the case.
Sapna Srivastava - Morgan Stanley
And just one quick clarification, I know you guys laid out some timelines of one to two months for a decision on this re-request. Could you just clarify, did you say that the final sort of final-final decision comes at the same time that they decide on this re-request? Or is there another interval of time that we would have to wait to trigger the 180 days?
Craig Wheeler
Once they have made a final ruling, there is some procedural time, because they actually have to technically file the final mandate. That is, I think, 14 days or less, something in that kind of timeframe.
Sapna Srivastava - Morgan Stanley
So is their decision to not reconsider the case considered the decision? Or do they then have to come out and say something more final than just "No, we're not going to reevaluate it"?
Craig Wheeler
They already have ruled a final decision, so if they do not agree to take it to the full en banc court, then the decision not to do that is final.
Bret Holley - Oppenheimer & Co.
I had a question about the complexity of Copaxone. Given that it's chemically synthesized, can you just speak to how complex a mixture it is, how difficult it was to really, in your mind, get precise sameness? It appears, at face value, based on the chemical synthesis, that it wouldn't be all that complex. Can you speak to that issue?
Craig Wheeler
Well, the reaction kinetics are really what drives complexity. And remember what we're doing here, you're starting with a mixture of amino acids and them you're polymerizing them and then actually depolymerizing them, and there is, because of the nature of the reaction, a lot of complexity that can be introduced into it. But that complexity is driven by the reaction kinetics. In other words, the kinetics by which the different molecules actually bind to each other. And so once you can actually read what that complex mixture is, you can go back then and design the manufacturing process to enable you to make Copaxone[#msg-30647865]. So it is a very complex mixture, which made it a very good challenge to put our tools to. But once you resolve that mixture then you can go back and you can engineer the manufacturing process based upon reaction parameters.
Bret Holley - Oppenheimer & Co.
With M-Enoxaparin obviously there is fairly good lot-to- lot consistency in the product, have you also done those kinds of tests with Copaxone, and how well characterized is this mixture in your mind?
Craig Wheeler
I think that you should think about the way we're doing this as very analogous to the way that we did in Enoxaparin, so our process is first characterize and then set the manufacturing specs, and then go make manufacturing, so it's very analogous. So you do need to have a very comprehensive characterization to be able to go back and do the comparisons and then go back into the design and manufacturing process.
Bret Holley - Oppenheimer & Co.
But there is that lot-to-lot consistency, even though it's a complex mixture?
Craig Wheeler
Yes, I think what we said back on Enoxaparin, is Enoxaparin does not have full lot-to-lot consistency either. When you're making any kind of mixture product you always have a variability and it's the ability to measure that and therefore be able to manufacture within that [tolerance] that gives you the ability to make the product consistently.
Biren Amin - Stanford Group
Craig I believe there were amicus briefs filed by seven different parties with regard to Lovenox, and most of those were requesting a re-hearing. So could you maybe provide your thoughts regarding the correlation between the number of briefs filed by third parties and the likelihood of an en banc hearing being granted?
Craig Wheeler
I'm not sure I have the data to be able to give you any indication on it, but I can maybe shed a little light on some of the briefs that are being filed, just to kind of put it in perspective. As I talked about when the first decision came down, there was one judge who had actually looked at challenging, he had been in the minority, but actually had challenged the case on the use of inequitable conduct. And this has been an ongoing debate in jurist circles about how is inequitable conduct applied to patent cases. So you'll see, and I think if you go back and look at those briefs, you'll see that many of them are really commenting on trying to look at the inequitable conduct aspect as opposed to the specifics of this case.
Pharma and bio have for some time actually been looking at inequitable conduct issues. So they're making the case that they've been making all along. So it really comes back to how do you think about this case as a kind of precedent case for going after inequitable conduct. And our own thinking on that, and again this isn't our case, is that the case is such a strong case that we are not sure that this is the right kind of precedent case. But I think that's the activity that you're seeing there, is looking at the principal rather than the specifics of the case.
Biren Amin - Stanford Group
On M118, what was the protocol change with EMINENCE trial?
Craig Wheeler
I'm going to turn it over to Jim, our Chief Medical Officer.
Jim Roach - Momenta Pharmaceuticals CMO
Very generally, we opened up the protocol to more patients to make it less restrictive, and we're very comfortable that the changes we put into place would not compromise the integrity of the trial. But we're not disclosing the specifics of the protocol changes.
Greg Gilbert - Merrill Lynch
I believe on the last call you said you have a scalable manufacturing process for generic Copaxone. So what remains to be learned there? Can you shed any more light on what you know versus what you don't know there?
Craig Wheeler
We don't specifically talk about our manufacturing strategy, but like any generic product, after the [ANDA] application it really is around now beginning to get to the manufacturing scale and begin to manufacture product for market and further validate the manufacturing processes. But beyond that we're really not talking specifics of it. But there is, like always when you begin to build toward a market supply, a fair amount of manufacturing work to be done.
Greg Gilbert - Merrill Lynch
Okay, fair enough. Can you talk about whether you had been, or are, working on other [dosing] strengths of the product? And how difficult that would be relative to what you've already done?
Craig Wheeler
What we're doing with this product is: we're going after an exact copy of what the innovator has, so we're not working on alternative strengths of the product at this point in time. From a manufacturing perspective I would speculate that that's probably not a difficult thing to do, but that's not something we're doing outside of what the manufacturer already has.
Greg Gilbert - Merrill Lynch
On Lovenox, what are your thoughts on whether you will be the only product to be approved, and would you be surprised if there are other approvals, and would that cast any doubt on what you believe FDA's view is on these complex products?
Craig Wheeler
I think that the issue you're hitting there has always been the key point of debate in the stock, in terms of where is the bar going to be set. That was the debate around the stock before we got the immunogenicity lever. I always have thought that complete characterization is something that's going to be necessary here to be able to get approval in a generic setting. And so now I kind of take it from where we were last fall and I fast-forward it to now, and my own view is that the bias has probably increased, and that's probably increased because of the heparin crisis that we have had, where the heparin contaminants were not able to be detected by many of the innovative products that were in the marketplace. And our technology was able to both identify and characterize those impurities very quickly [#msg-28748329].
So I think that underscores the need to have full and complete characterization in the product. So I do think that increases the bias, because I think I do believe that we have capabilities in the characterization field, particularly with these complex molecules, that give us an advantage here. So I think that does increase the bias. But it really is up to the Agency, and we'll see where they end up.
Greg Gilbert - Merrill Lynch
Did you consider a 505(b)(2) route for either product [Lovenox and Copaxone] and could you maybe outline sort of the differences in timeline and cost of that route versus the route you chose?
Craig Wheeler
Our strategy with these products has always been the 505(j) full-equivalent substitutable product route, and it's through full and thorough characterization to be able to identify that we have the exact same product. I think the 505(b)(2) route is a different route that allows you to depend upon some innovator information, but also is an uncertain pathway in terms of requirements, and uncertain in terms of the ability to get toward substitutability. So our goal and our strategy has been the 505(j) route for these products.‹
Let’s talk biotech!
“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”
[I’ve highlighted the most consequential passages,
corrected transcription errors, inserted annotations
and hyperlinks, and removed perfunctory remarks
for the sake of brevity. The CC took place on 24-July-2008.]
PARTICIPANTS
Craig Wheeler
Momenta Pharmaceuticals CEO
Rick Shea
Momenta Pharmaceuticals CFO
Jim Roach
Momenta Pharmaceuticals CMO
Eric Schmidt
Cowen and Company
Sapna Srivastava
Morgan Stanley
Bret Holley
Oppenheimer & Co.
Biren Amin
Stanford Group
Greg Gilbert
Merrill Lynch
PREPARED REMARKS
Craig Wheeler - Momenta Pharmaceuticals CEO
This morning, I will provide an update on recent corporate developments at Momenta, starting with M356, and then Rick will give an overview of this quarter's financials.
M356 is our generic version of Teva's Copaxone, which we are developing in collaboration with Sandoz. As we previously announced on July 11th, the FDA has accepted, for review, the ANDA filed by Sandoz on December 27th, 2007, for Glatiramer Acetate injection, the generic name for Copaxone. [Sandoz, MNTA’s partner, is the generic-drug division of Novartis.]
The filing of this ANDA and its acceptance for review represents significant technical and regulatory accomplishments for Momenta and we are very pleased that the FDA has decided to accept this ANDA for review. Additionally, this past Tuesday, FDA updated its Paragraph IV database, indicating that the first ANDA submitted for Glatiramer Acetate injection was filed on December 27th, 2007, our filing date. [In other words, Sandoz/MNTA have first-to-file status on generic Copaxone, which will entitle them to 180 days of marketing exclusivity if the ANDA is approved (#msg-30938608).]
We now have two ANDAs for complex generic products currently under active FDA review, for generic Lovenox and now for generic Copaxone. We believe this further demonstrates our commitment to our complex generics business and sets the stage as we extend this technology platform to follow on biologic product opportunities.
Following our announcement that FDA has accepted our M356 ANDA for review, several news articles and publications have been issued. And the information presented in those materials suggested to us that it would be helpful to clear up some misconceptions [bravo!] regarding the composition of the Copaxone product, its manufacturing process and the regulatory path for this ANDA.
First, several reports state that our ANDA will require follow on biologics legislation to be enacted prior to receiving FDA approval. Actually, Copaxone was originally approved as a drug pursuant to the NDA regulations and not under the BLA regulations, which are typically used to approve biologically derived therapeutics.
The FDA already has an established legal pathway under its 505J regulations to approve an ANDA for a generic version of Copaxone. Therefore, the FDA is not required to wait for passage of follow on biologics legislation to act on the M356 ANDA. Rather, it can act on the ANDA using the regulatory authority it already possesses. The FDA's acceptance of the M356 ANDA for review indicates that the FDA has made a determination that the ANDA is sufficiently complete to permit a substantive review and that the FDA has agreed to review the application under the 505J pathway.
Second, Copaxone is not produced by cell culture or fermentation, which are typical manufacturing processes for bio-therapeutics. Consequently, impurities that are typically monitored in such manufacturing, such as DNA, lipids and proteins, are not present in the Copaxone process or product.
Rather, Copaxone is manufactured by chemical synthesis, starting with a mixture of four amino acids to yield the final product, that there's a complex mixture of polypeptide chains of varying length, varying amino acid compositions and varying amino acid sequences. The key to manufacturing an equivalent version of Copaxone is the ability to thoroughly characterize the complex mixture resulting from these reactions so, a manufacturing process can be developed and effectively controlled [#msg-30647865].
Third, there have been a lot of comments on the challenges of demonstrating bio-equivalents to the innovative product, due to the drug's rapid metabolism and its uncertain [mechanism] of action. For competitive reasons, we are not commenting on our clinical and non-clinical strategies. However, these challenges further emphasize the requirement that a generic version must demonstrate chemical equivalence to the innovative product through thorough characterization.
With that said, the tools available today to understand the presence and behavioral drug are quite sophisticated and certainly can be applied to help understand the behavior of Copaxone or any other of today's drugs.
Finally, there are many reports commenting on the strength of the Copaxone patent estate. There are seven Orange Book patents expiring in 2014 and all must be overcome [#msg-30960930]. Again, we are not disclosing our litigation strategy but some facts may help you to do your own research in this area. First, all seven patents are from the same patent family and therefore are related. We are also dealing with a drug with a long history. There's a lot to consider in this patent estate and you can trust that we and our partner, Sandoz, did our homework before we chose the Paragraph IV route.
The complexity that's associated with the developing a generic version of Copaxone [is one of the] the major reasons why we chose to pursue this product candidate. We believe that our technology and experience provide us with a competitive advantage in the program. We expect that the FDA will conduct a rigorous regulatory review of this ANDA. We also expect a vigorous defense from Teva. However, we believe that the quality of the Sandoz momentous admission and our experience, to date, with M-Enoxaparin will help us to successfully navigate the regulatory and legal processes and, ultimately, to obtain FDA approval, to prevail in litigation, and to launch M356 as a competing generic version of Copaxone.
I will now turn to M-Enoxaparin. We previously reported that in April, the FDA provided written guidance regarding our proposed response to their questions about the potential for immunogenicity of M-Enoxaparin. The FDA's comments indicated general concurrence with our approach and the proposed data to be included in our ANDA amendment.
The FDA did request additional tests be performed but the FDA did not request and, to date, has not requested, data from clinical trials. We remain on track to submit our amendment addressing the FDA's questions on immunogenicity in the third quarter of this year.
Regarding the Lovenox patent litigation between Sanofi-Aventis and Teva/Amphastar, a written decision was entered by the court of appeals in May, which upheld the district court's decision rendering the Lovenox Orange Book patents unenforceable due to inequitable conduct.
On June 27th, as expected, Sanofi-Aventis filed a petition for an en banc rehearing asking the full court, all nine judges, to reconsider the appellate decision.
Earlier in July, Teva and Amphastar were granted an extension until August 21st to file a response to the Sanofi-Aventis petition for rehearing. Furthermore, several parties, including Pharma and Bio, have filed amicus briefs in support of the petition for a rehearing. All of these actions are extending the period of time it will take for the court of appeals to consider the petition. Historic data suggests courts typically rule on a rehearing request within one to two months after the briefs are submitted. But there is no required timeline on the court. If the court denies the petition for a rehearing, a final mandate would issue in the case, triggering the start of the 180-day exclusivity period.
Given the regulatory timeline I discussed and the timing of the patent litigation, we do not expect an M-Enoxaparin approval and launch in 2008. [NVS previously said this on their own 2Q08 CC (#msg-30763224).] It's always difficult to predict the timing of any FDA approval action but with our partner Sandoz, we are planning for a 2009 approval and product launch.
I will now turn to M118, our leading new drug candidate. We are continuing to enroll patients in our Phase IIA PCI trial. As we mentioned on a previous call, the enrollment in that trial is going more slowly that we had anticipated. We believe this is, in part, attributable to a decrease in the number of percutaneous coronary interventions being performed. As mentioned in our last earnings call, we have put measures into place, including amending the protocol and increasing the number of sites to facilitate enrollment.
Enrollment is now approaching our originally targeted number of patients per site per month and our updated estimate is that we will have top line data on the Phase IIA study late in the first quarter or in the second quarter of 2009 [#msg-30941510].
We are continuing discussions with potential partners for the program, but anticipate that a partnership would not be secure to close until after the results of the Phase IIA study are known.
In summary, we continue to be very enthusiastic about M118's product profile and its ability to address significant unmet needs in ACS. The current trial is teaching us a lot about developing this drug in a competitive clinical setting and has highlighted to us the benefits that could accrue from a safe, effective and easy to administer anticoagulant in an ACS setting. M118 is our first novel therapeutic and represents an exciting commercial opportunity for Momenta.
On our last call, I began to highlight for you our emerging plans to broaden our participation in the follow on biologics business. Our belief is that success in the follow on biologics will require global scale, cost effective manufacturing and, most importantly, the ability to create products that are differentiated from competitors' biosimilar products. This is Momenta's business model. I will comment briefly on how we are thinking of building the key aspects of this business.
First, global scale. We believe this is an important factor in generating an early return on investment. The regulatory pathways for follow on biologics are not likely to be harmonized. Having an early global presence not only helps diversify regulatory risk but allows us to get the Momenta technology in front of multiple regulatory agencies while the FOB standards are being developed.
Global partners like Sandoz are critically important in accessing the markets as they become available. We will look for partners with both regulatory and commercial capabilities to build this business.
Second, low-cost and high-quality manufacturing. We are looking to create long-term sustainable profits for all of our products. In biologics, this will require manufacturing partners who can reliably adhere to the most rigorous regulatory standards worldwide. But they must also have the ability to economically manufacture the products. [This is why I think INSM’s FoB program is suspect.]
We believe that contractors and partners for our biologic products must have access to low factor costs and a high quality workforce. We have already screened several potential candidates and we believe we will be able to find manufacturing partners that can meet our needs of the emerging FOB business.
Third, our ability to differentiate our products from follow-on biologics competitors. For two years, we have been investing in research to adapt our analytic tool set to the glycoprotein arena. Our progress to date has demonstrated the potential to measure even minor differences in glycoprotein molecules, moving toward our goal of thorough characterization.
Our work is also generating insights that will better define what pre-clinical and clinical work may be needed to assess the safety, efficacy and, ultimately, the approvability of a follow on biologic product.
Finally, and what I believe is most exciting in the long run, we are making very good progress towards our goal of applying our tools to reverse engineer the biologic production process, using our characterization tools to rapidly tune the manufacturing process to generate truly equivalent biologic products [i.e. biologics that are substitutable for—not merely similar to—their branded counterparts].
As I have said, in 2008 we are working to advance the strategy to build a leading competitive position in the follow-on biologics field. As you can tell by the time I'm spending on this topic, we believe this is a major area of opportunity for Momenta and for our investors. We will continue to update you as our strategy evolves.
Finally, on the corporate front, I have two updates. This morning, we announced the appointment of Bruce Leicher as our new Senior Vice President and General Counsel. Bruce joins us with a long and distinguished legal career in the life sciences. His career has included both startup organization and established public companies, providing them with experience in issues across the drug development continuum from R&D through regulatory and commercial phases.
We are very pleased to attract Bruce to Momenta. Bruce has worked with many of our executive team members over his nearly 20 years in biotech, including [legal] at Genetics Institute and Millennium Pharmaceuticals. More recently, Bruce was general counsel at Antigenics and at Altus Pharmaceuticals. I know Bruce is excited with the legal challenges here at Momenta as we build our complex generics, follow on biologics and novel therapeutics businesses.
Finally, we were pleased to announce in June the appointment of Jim Sulat to our Board of Directors. As a director, Jim will also be a member of our audit and our nominating and corporate governance committees. Jim is presently the Chief Financial Officer at Memory Pharmaceuticals and served as Memory's President and Chief Executive Officer from May 2005 to February 2008.
Jim and I overlapped for two years at Chiron, where he served as the Chief Financial Officer of Chiron Corporation from 1998 to 2003, so I know first hand Jim's extensive expertise in strategy, finance and general management. His work in managing both large and small biotechnology companies, as well as his board experience as a director of several biotech companies will be invaluable as we grow our organization.
I'll now turn the call over to Rick Shea to provide a financial update.
Rick Shea - Momenta Pharmaceuticals CFO
The net loss for the second quarter of 2008 was $15 million, or a loss of $0.42 per share, as compared to a net loss of $18.8 million, or a loss of $0.53 per share for the second quarter of 2007. The decrease in the net loss was the result of decreased R&D expenses, due to a lower level of contracted manufacturing activity, as well as lower G&A expenses, offset by lower interest income.
We ended the second quarter with $109.4 million in cash and marketable securities, compared with $123.6 million at the end of the first quarter, and $135.9 million at the beginning of the year. Our cash burn for the second quarter was $14.2 million, and for the first half of 2008, the cash burn was $26.5 million. We continue to anticipate a cash burn for the full year 2008 of between $50 million and $55 million.
QUESTION AND ANSWER
Eric Schmidt - Cowen and Company
A couple of questions on M356 [generic Copaxone]. Congrats on being the first to have the FDA accept it, that obviously gives you a little bit of negotiating power. I guess I'm interested in whether you have any thoughts on whether you would use that via some sort of settlement discussions [with Teva], or whether that's completely off the table from your view. And whether or not being first to file provides you with any additional leverage.
Craig Wheeler
It's early days yet and we really haven't made any decisions and therefore we really wouldn't be talking about any kind of settlement discussions or anything that we'd be thinking about there.
Eric Schmidt - Cowen and Company
And just one more on M356: with M-Enoxaparin of course you've kind of laid out in pretty significant detail your strategy for circumventing the ‘618 patent. You seem to be taking a different tack with investors in terms of disclosure on M356. Is there a reason for that? Why are you not being as clear with us on your strategy?
Craig Wheeler
We actually weren't in the lawsuit in the lead position on Enoxaparin [the Lovenox (enoxaparin) suit was between Sanofi and Teva/Amphastar], so we're really not going to disclose what our patent strategy is here [on Copaxone, where MNTA/Sandoz is a party to the patent lawsuit], because of the legal situation that we're going to be in, as well as the fact that we have competitors that are going to be looking at the same sets of issues.
Eric Schmidt - Cowen and Company
Okay, fair enough. And last question is on the protein side of things, the glycoprotein side; you've been talking a fair bit about this more recently. When will we see some Momenta data to talk to some of the points you mentioned, characterization, reverse engineering, etc.?
Craig Wheeler
The programs that we are publicly working on now are two [undisclosed] programs that are partnered with Sandoz, and those programs are proprietary, so we really won't be showing data from those programs. I think in the future, as we build out our portfolio, you will get more visibility into what we're thinking about as the product. Of course we'll continue to be I think somewhat cautious in terms of making full transparency about all the details of our technology, again for competitive reasons. But I think as our portfolio builds we should have more opportunity to talk about things.
Eric Schmidt - Cowen and Company
Are there [other] programs in the work at Momenta? Wholly owned programs that you're working on now, but just haven't disclosed?
Craig Wheeler
The only things that we are constrained on, in the glycoprotein arena, are the two programs that are partnered with Sandoz. The rest of the stuff that we're working on in our laboratories is proprietary. We have no announced programs, but we have significant research efforts ongoing in the area.
Eric Schmidt - Cowen and Company
Can you give us a sense of how many programs you're working on?
Craig Wheeler
No, I can't [LOL].
Sapna Srivastava - Morgan Stanley
Hi, it's actually Dave calling in for Sapna. Just a question on the legal situation with M-Enoxaparin. I know it's not your active case, but can you provide any insight into whether these sort of re-appeals for appeal [i.e. en banc rehearings] are usually granted, or is this a very low likelihood of happening for Sanofi?
Craig Wheeler
Obviously it's not our case, so I can't comment on the specifics of what's going on at the court, but I can give you some information on how en banc is usually treated. There are actually a lot of requests for en banc rehearings every year, and there are very, very few that are granted. The number that are granted on an annual basis range from one to five I think, if we look back over the past few years. So it is unusual that they are granted.
And as we look at this case, and our own expert advisor to us, the view is that this case actually is a very strong case, and has actually been to the appellate court twice, as well as twice at the district court level. So the merit of this case would probably mean the probability is lower, but we really can't project that, not knowing the details of the case.
Sapna Srivastava - Morgan Stanley
And just one quick clarification, I know you guys laid out some timelines of one to two months for a decision on this re-request. Could you just clarify, did you say that the final sort of final-final decision comes at the same time that they decide on this re-request? Or is there another interval of time that we would have to wait to trigger the 180 days?
Craig Wheeler
Once they have made a final ruling, there is some procedural time, because they actually have to technically file the final mandate. That is, I think, 14 days or less, something in that kind of timeframe.
Sapna Srivastava - Morgan Stanley
So is their decision to not reconsider the case considered the decision? Or do they then have to come out and say something more final than just "No, we're not going to reevaluate it"?
Craig Wheeler
They already have ruled a final decision, so if they do not agree to take it to the full en banc court, then the decision not to do that is final.
Bret Holley - Oppenheimer & Co.
I had a question about the complexity of Copaxone. Given that it's chemically synthesized, can you just speak to how complex a mixture it is, how difficult it was to really, in your mind, get precise sameness? It appears, at face value, based on the chemical synthesis, that it wouldn't be all that complex. Can you speak to that issue?
Craig Wheeler
Well, the reaction kinetics are really what drives complexity. And remember what we're doing here, you're starting with a mixture of amino acids and them you're polymerizing them and then actually depolymerizing them, and there is, because of the nature of the reaction, a lot of complexity that can be introduced into it. But that complexity is driven by the reaction kinetics. In other words, the kinetics by which the different molecules actually bind to each other. And so once you can actually read what that complex mixture is, you can go back then and design the manufacturing process to enable you to make Copaxone[#msg-30647865]. So it is a very complex mixture, which made it a very good challenge to put our tools to. But once you resolve that mixture then you can go back and you can engineer the manufacturing process based upon reaction parameters.
Bret Holley - Oppenheimer & Co.
With M-Enoxaparin obviously there is fairly good lot-to- lot consistency in the product, have you also done those kinds of tests with Copaxone, and how well characterized is this mixture in your mind?
Craig Wheeler
I think that you should think about the way we're doing this as very analogous to the way that we did in Enoxaparin, so our process is first characterize and then set the manufacturing specs, and then go make manufacturing, so it's very analogous. So you do need to have a very comprehensive characterization to be able to go back and do the comparisons and then go back into the design and manufacturing process.
Bret Holley - Oppenheimer & Co.
But there is that lot-to-lot consistency, even though it's a complex mixture?
Craig Wheeler
Yes, I think what we said back on Enoxaparin, is Enoxaparin does not have full lot-to-lot consistency either. When you're making any kind of mixture product you always have a variability and it's the ability to measure that and therefore be able to manufacture within that [tolerance] that gives you the ability to make the product consistently.
Biren Amin - Stanford Group
Craig I believe there were amicus briefs filed by seven different parties with regard to Lovenox, and most of those were requesting a re-hearing. So could you maybe provide your thoughts regarding the correlation between the number of briefs filed by third parties and the likelihood of an en banc hearing being granted?
Craig Wheeler
I'm not sure I have the data to be able to give you any indication on it, but I can maybe shed a little light on some of the briefs that are being filed, just to kind of put it in perspective. As I talked about when the first decision came down, there was one judge who had actually looked at challenging, he had been in the minority, but actually had challenged the case on the use of inequitable conduct. And this has been an ongoing debate in jurist circles about how is inequitable conduct applied to patent cases. So you'll see, and I think if you go back and look at those briefs, you'll see that many of them are really commenting on trying to look at the inequitable conduct aspect as opposed to the specifics of this case.
Pharma and bio have for some time actually been looking at inequitable conduct issues. So they're making the case that they've been making all along. So it really comes back to how do you think about this case as a kind of precedent case for going after inequitable conduct. And our own thinking on that, and again this isn't our case, is that the case is such a strong case that we are not sure that this is the right kind of precedent case. But I think that's the activity that you're seeing there, is looking at the principal rather than the specifics of the case.
Biren Amin - Stanford Group
On M118, what was the protocol change with EMINENCE trial?
Craig Wheeler
I'm going to turn it over to Jim, our Chief Medical Officer.
Jim Roach - Momenta Pharmaceuticals CMO
Very generally, we opened up the protocol to more patients to make it less restrictive, and we're very comfortable that the changes we put into place would not compromise the integrity of the trial. But we're not disclosing the specifics of the protocol changes.
Greg Gilbert - Merrill Lynch
I believe on the last call you said you have a scalable manufacturing process for generic Copaxone. So what remains to be learned there? Can you shed any more light on what you know versus what you don't know there?
Craig Wheeler
We don't specifically talk about our manufacturing strategy, but like any generic product, after the [ANDA] application it really is around now beginning to get to the manufacturing scale and begin to manufacture product for market and further validate the manufacturing processes. But beyond that we're really not talking specifics of it. But there is, like always when you begin to build toward a market supply, a fair amount of manufacturing work to be done.
Greg Gilbert - Merrill Lynch
Okay, fair enough. Can you talk about whether you had been, or are, working on other [dosing] strengths of the product? And how difficult that would be relative to what you've already done?
Craig Wheeler
What we're doing with this product is: we're going after an exact copy of what the innovator has, so we're not working on alternative strengths of the product at this point in time. From a manufacturing perspective I would speculate that that's probably not a difficult thing to do, but that's not something we're doing outside of what the manufacturer already has.
Greg Gilbert - Merrill Lynch
On Lovenox, what are your thoughts on whether you will be the only product to be approved, and would you be surprised if there are other approvals, and would that cast any doubt on what you believe FDA's view is on these complex products?
Craig Wheeler
I think that the issue you're hitting there has always been the key point of debate in the stock, in terms of where is the bar going to be set. That was the debate around the stock before we got the immunogenicity lever. I always have thought that complete characterization is something that's going to be necessary here to be able to get approval in a generic setting. And so now I kind of take it from where we were last fall and I fast-forward it to now, and my own view is that the bias has probably increased, and that's probably increased because of the heparin crisis that we have had, where the heparin contaminants were not able to be detected by many of the innovative products that were in the marketplace. And our technology was able to both identify and characterize those impurities very quickly [#msg-28748329].
So I think that underscores the need to have full and complete characterization in the product. So I do think that increases the bias, because I think I do believe that we have capabilities in the characterization field, particularly with these complex molecules, that give us an advantage here. So I think that does increase the bias. But it really is up to the Agency, and we'll see where they end up.
Greg Gilbert - Merrill Lynch
Did you consider a 505(b)(2) route for either product [Lovenox and Copaxone] and could you maybe outline sort of the differences in timeline and cost of that route versus the route you chose?
Craig Wheeler
Our strategy with these products has always been the 505(j) full-equivalent substitutable product route, and it's through full and thorough characterization to be able to identify that we have the exact same product. I think the 505(b)(2) route is a different route that allows you to depend upon some innovator information, but also is an uncertain pathway in terms of requirements, and uncertain in terms of the ability to get toward substitutability. So our goal and our strategy has been the 505(j) route for these products.‹
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