Biotech Values

[DewDiligence]

MNTA Reports 3Q12 Results

[The main interest in this earnings report and conference call was the financial guidance for 2013, which is $20-24M per quarter of cash burn (~$90M for the full year). This forecast excludes any contribution from BAX milestones and license fees, which are expected to begin in 2014 (#msg-70258421). Quarterly Lovenox revenues are expected to increase somewhat from the very low level of 3Q12, which included one-time adjustments made by NVS (#msg-80939021).

MNTA did not issue formal guidance for the burn rate in 2014 and 2015; however, milestone payments and license fees from BAX will likely offset the presumably higher R&D expenses in 2014-2015 relative to 2013. The first FoB compound in the BAX collaboration is expected to begin clinical trials in early 2014, which will generate both a “scale-up” milestone and an “IND” milestone for this compound (which I’ve posited is Humira).

Inasmuch as MNTA had $382M of cash (including $20M of restricted cash) as of 9/30/12, the anticipated burn rate during 2013-2015 leaves plenty of liquidity to operate the company until late 2015, when the last of Teva’s Copaxone patents expire and MNTA could launch generic Copaxone assuming FDA approval. Thus, MNTA would likely seek additional funding between now and 2015 only to expand one or more of its R&D programs rather than to develop the programs as currently envisioned, according to what Craig Wheeler said on today’s CC.]

http://ir.momentapharma.com/releasedetail.cfm?ReleaseID=719312

›7-Nov-2012 8:04 a.m ET

CAMBRIDGE, Mass., Nov. 7, 2012 (GLOBE NEWSWIRE) -- Momenta Pharmaceuticals, Inc. (Nasdaq:MNTA), a biotechnology company specializing in the characterization and engineering of complex drugs, today reported its financial results for the quarter ended September 30, 2012.

For the third quarter of 2012, the company reported a net loss of $25.8 million, or ($0.51) per diluted share, compared to a net income of $60.3 million, or $1.18 per diluted share, for the same period in 2011. At September 30, 2012, the company had cash, cash equivalents, and marketable securities of $361.8 million.

"Royalty revenues from enoxaparin sodium injection in the third quarter were disappointing and reflected the market realities of a more competitive multi-player dynamic," said Craig Wheeler, President and Chief Executive Officer of Momenta Pharmaceuticals. "We continue to invest in our promising development pipeline of complex generics, biosimilars and novel drugs.

"Today, I am pleased to announce that Momenta has made significant progress in demonstrating that sialylation of Fc enhances anti-inflammatory effects in a preclinical model. This work is consistent with the findings previously published by Jeffrey Ravetch, M.D., Ph.D., of The Rockefeller University. This is an exciting example of how we are applying the tools and methods used to develop generics and biosimilars to novel drug development. We look forward to optimizing a drug candidate that we can take into the clinic," Mr. Wheeler concluded.

Third Quarter Events

Complex Generics Program:
Enoxaparin sodium injection

In September, Momenta filed a petition to the U.S. Court of Appeals for the Federal Circuit for rehearing en banc (all active Federal Circuit judges) to reconsider its decision in Momenta Pharmaceuticals vs. Amphastar Pharmaceuticals, Inc., which issued its opinion in August that Amphastar's use of Momenta's patented method for processing enoxaparin sodium injection was protected by the "safe harbor" provision from patent infringement under 35 U.S.C. sec. 271(e)(1). The Court of Appeals is considering whether to hear the case en banc and their decision could come at any time.

M356, generic version of Copaxone® (glatiramer acetate injection)

In July, Momenta appealed the District Court's decision in the patent infringement lawsuit filed by Teva against Momenta and Sandoz. We expect that an appellate decision could be issued in the second half of 2013.

Follow-on Biologics Program:
Baxter collaboration

Baxter selected the third of up to six biosimilar products to be developed under the collaboration. The three biosimilar products include M923 and M834, which are targeted for the treatment of autoimmune and other inflammatory indications, and M511, a monoclonal antibody for oncology indications. [I’ve posited that these compounds are Humira, Orencia, and Erbitux, respectively.] Momenta expects to submit the first IND (Investigational New Drug) application in 2014 for its lead biosimilar, M923. [This will generate two milestone payments from BAX—see the annotations in the prologue of this post.]

Novel Drug Program:
M402, novel oncology candidate

Momenta is conducting a Phase 1/2 proof-of-concept trial for M402 in people with advanced metastatic pancreatic cancer. Data from Part A of the two-part study are expected in 2013. M402 is a novel oncology candidate designed to inhibit tumor angiogenesis, progression, and metastasis.
Sialylation research program

Momenta has made significant progress in demonstrating that sialylation of Fc enhances anti-inflammatory effects in a preclinical model. Momenta is using its proprietary sialylation technology to develop IVIG and IgG-based drugs that address autoimmune and inflammatory diseases.

Third Quarter 2012 Financial Results

Total collaboration revenue for the third quarter of 2012 was $5.1 million (including enoxaparin product revenue of $2.6 million), compared to $87.9 million (including enoxaparin product revenue of $84.7 million) for the same period in 2011. Sandoz reported third quarter 2012 enoxaparin net sales of $34 million, compared with $259 million for the third quarter 2011. The significant decrease in enoxaparin product revenue reflects competitive market pressure experienced during the third quarter and includes the impact of resulting pricing adjustments recorded by Sandoz.

Collaborative research and development revenue for the third quarter of 2012 was $2.5 million, which included $1.2 million expense reimbursement from Sandoz under the enoxaparin and generic Copaxone collaborations, $0.5 million amortization of the equity premium received from the 2006 Sandoz collaboration, and $0.8 million amortization of the $33 million payment paid by Baxter.

Research and development expenses for the third quarter of 2012 were $20.2 million, compared to $16.3 million for the same period in 2011. The increase of $3.9 million was primarily due to increases of $3.0 million in personnel and facilities-related expenses, $0.5 million in laboratory expenses, and $0.4 million in M402 clinical development costs.

General and administrative expenses for the quarter ended September 30, 2012 were $11.0 million, compared with $11.5 million for the same period in 2011. Excluding the royalty payable to MIT on enoxaparin product revenues which decreased by $2.9 million, all other general and administrative expenses increased by $2.4 million. The increase was primarily due to an increase of $1.1 million in legal expenses, largely related to enoxaparin patent litigation, an increase of $0.9 million in personnel and facilities-related expenses and an increase in stock-based compensation expense of $0.2 million.

At September 30, 2012, Momenta had $361.8 million in cash, cash equivalents and marketable securities. This cash position excludes restricted cash of $17.5 million, which serves as collateral for a security bond related to enoxaparin legal proceedings, and $2.5 million of cash that is restricted in connection with a facility lease letter of credit. [I.e. MNTA had $382M in restricted + unrestricted cash at 9/30/12.]

Financial Guidance

Momenta confirmed its guidance provided on February 9, 2012 for total operating expenses, excluding stock-based compensation and net of related collaborative revenues, of approximately $22 to $28 million per quarter for 2012. For the third quarter of 2012, operating expenses ($31.2 million) less stock compensation ($3.5 million) less collaborative expense reimbursements ($1.2 million) totaled $26.5 million.

Today, Momenta provided guidance for 2013 total operating expenses, excluding stock-based compensation and net of collaborative revenues, of approximately $30 million per quarter. For 2013, Momenta is projecting that its net cash usage will average approximately $20 to $24 million per quarter for a total operating cash usage of approximately $90 million. [See comments in prologue about liquidity during 2014-2015.]

Conference Call Information

Management will host a conference call and webcast today, November 7, 2012 at 10:00 am ET to discuss these results and provide an update on the company. A live webcast of the conference call may be accessed on the "Investors" section of the company's website, www.momentapharma.com. Please go to the site at least 15 minutes prior to the call in order to register, download, and install any necessary software. An archived version of the webcast will be posted on the Momenta website approximately two hours after the call and will be available through November 21, 2012.‹