Momenta Pharmaceuticals, Inc. (MNTA) – [Outperform] – $446.2M Mkt. Cap – (Joseph Schwartz)
Positive Section 505(q) Read-Through: M-356 Safe for Continued FDA Review
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• Bottom Line: The FDA rejected Teva's Citizen's Petition (CP) against MNTA's M-356 application. According to the new section 505(q), the FDA is required to respond to a CP within 180 days of submission and will deny an ANDA only if the agency believes the generic could harm the public safety. Therefore we view it as an incremental positive for MNTA that the FDA believes M-356 safe enough for continued review. Reiterate Outperform rating and $16 fair value in 12 months.
• Teva likely submitted the CP seeking to stall M-356 in its regulatory pathway leveraging section 505(q). Under the new guidelines governing "q" petitions, TEVA was probably hoping for its petition to have been "affirmed" and for MNTA's ANDA to have been "unaccepted."
• Now that the FDA has rejected Teva's CP, we anticipate it will file another CP as M-356 gets closer to its approval date. MNTA filed an ANDA with paragraph IV in Dec. 2007; the application was accepted for review by the FDA in Jul. 2008. Teva quickly filed a lawsuit against MNTA to protect its breadwinner Copaxone from generic competition.
• The purpose of section 505(q) is to identify generics unsafe for the public early in regulatory review. The 505(q) allows the company producing the branded product to protect its franchise while the FDA can save valuable time that would be spent reviewing an ultimately non-approvable generic application. The FDA's time constraints have caused a progressive backlog of CP since 2003 (see table on pg 3), for which the 180-day turnaround time is designed to address.
• MEDACorp consultants identified potential loopholes around the 7 Copaxone patents that may support the M-356 Paragraph IV ANDA. The first 5 patents are process patents and could simply be avoided by using a non-infringement claim if MNTA can synthesize copolymer-1, or the active ingredient in Copaxone, through a unique mechanism.
• The 2 composition-of-matter patents, '539 and '098, could be tackled either through a non-infringement or inequitable conduct claim. MNTA could base its paragraph IV on non-infringement since the Copaxone label includes copolymer-1 mixtures with average weights of 4-11 KDa, whereas the composition of matter patents only cover 4-9 KDa. Inequitable conduct also seems to apply since copolymer-1 had been thought useful in MS for decades prior to TEVA.
