Momenta Pharmaceuticals, Inc. (MNTA)

[GrthzGd]

"GrthzGd hypothesis."--Full Exposition

Would you post your hypotheses again? I missed it and cannot find it. -HattietheWitch

Sure (it's great that someone here is willing to ask open-ended questions BTW):

My theory is that Amphastar/Watson (AW) invited MNTA to sue them timely by giving advance notice in their press release that they will not be launching aenox until the 4th quarter. While there could well be other reasons for such a disclosure, it seems likely to me that AW did not wish to risk the potential damages that they might suffer from destroying MNTA's generic franchise without the applicability of MNTA's patents to their technology being either adjudicated or settled before launch. This may seem counter intuitive, and, frankly, being new to medical patent litigation, I don't have experience to base it on. However, my theory relies on the fact that patent damages can include all consequential damages, and that a deliberate violation can include treble damages and attorneys fees.

Total US Lovenox drug sales equal about $1b per year, of which AW would probably realize annual profits of about $75-150m, while creating potential damages for MNTA equal to 75% of its annual menox revenue, or $180m--$540m if trebled. Given a Watson 2010 EBITA of $641m (plus presumably negligible income for Amphastar), AW could potentially destroy most of their collective profit potential for the next 15 years with an ill-advised aenox launch. This is the well defined, and very high risk-reward ratio faced by AW.

As for the prospect of a negotiated license, the problem is that anything short of preventing a third generic from entering the market would hurt MNTA much more than it would help AW. Conversely, during the two, three or even six years that it takes for the dispute to be fully adjudicated, MNTA is being benefited much more than AW is being harmed. Therefore, I would think it to be in the best interests of MNTA NOT to settle and agree to a license. In the mean time, it should be worth MNTA's while to post a bond to obtain the injunction, liability under which will probably not exceed $100m/year. AW probably knows this, and I imagine they are girding themselves for a long battle. Also in this instance, we can be glad of the notoriously glacial speed of the Massachusetts federal district court--consistently rated slowest in the country. This case will almost certainly be consolidated with the MNTA-Teva lawsuit, which now has a trial date set for Feb. 2013 (See MNTA-Teva (C.A. No. 10-cv-12079 NMG) Pre-Trial Schedule, it seems quite possible that the court will allow some further slippage in order to enable AW to get caught up.

The only wrench in the works might be the entry of another generic. However, if FDA approves Teva, MNTA will already have the lawsuit in place, and can similarly proceed with its request for an injunction in that case as well. If they then have to post another, similarly priced bond, doing so would probably still make financial sense, although it will certainly increase the pressure on MNTA to settle with both parties before doing so.