Replies to post #136728 on Biotech Values

[iwfal]

MNTA -

The recent launch of a competitive generic Lovenox triggered a change in the contract terms with our collaboration partner, Sandoz, from a hybrid profit share/royalty to a royalty.

The important point. I think the chance of settlement drops precipitously starting now because it is difficult to unscramble the egg (e.g. raise prices after market withdrawal - especially when the AG enters.) and WPI clearly is not playing with a full deck (or being pushed over the cliff by Amphastar).

[wallstarb]

I am shocked by how little revenue MNTA is getting now. Revenue dropped 50%

[DewDiligence]

MNTA will have >$400M of cash at the end of 1Q12, according to today’s CC. This amount includes the $33M up-front to be received from BAX when the FoB deal formally closes; it excludes the $17.5M of restricted cash MNTA is holding pursuant to the Court-ordered bond for the Lovenox patent-infringement lawsuit.

[DewDiligence]

Transcript of MNTA’s 4Q11 CC:

http://seekingalpha.com/article/355821-momenta-pharmaceuticals-ceo-discusses-q4-2011-results-earnings-call-transcript

[DewDiligence]

Re: MNTA’s future Lovenox royalty rate

From the 4Q11 CC (#msg-71929088):

In each contract year, which begins on July 1, for net sales up to a predesigned sales threshold, the royalty is payable at a 10% rate and for net sales above the sales threshold the royalty rate increases to 12%.

The above are gross rates excluding MNTA’s small royalty on sales payable to MIT. Since the threshold for the switch from a 10% gross royalty to a 12% gross royalty has not been disclosed, for modeling purposes it’s probably best to use a 10% figure as MNTA’s net royalty (after the small amount payable to MIT) as the average rate over a full launch year (which runs from Jul 1 to Jun 30).

[DewDiligence]

MNTA nugget from Bernstein report dated 3/16/12 (sorry, no link):

MNTA’s deal with Sandoz is not irreversible… We had initially thought that, no matter the [Lovenox patent-infringement] trial outcome, once WPI launched, MNTA could never recapture higher revenues from Lovenox. Speaking with management, we learned that this is not the case — an “entry and exit” [of a competing generic] was not an eventuality contemplated by the initial [2003] agreement. This issue has now been addressed by the two companies. MNTA was not willing to be specific, but for modeling purposes we assume it would be about half the value of the pre-WPI-launch hybrid structure.

If true, an un-launch of the Amphastar/WPI generic via a settlement or judgment could produce a material upside for MNTA apart from any monetary damages recovered from the infringing companies.

[DewDiligence]

MNTA Reports 1Q12 Results

[The most noteworthy news is that M402, MNTA’s heparin-based oncology drug, has finally started a phase-1/2 trial; it will be tested as an addend to Gemzar in pancreatic cancer.

Cash on hand at 3/31/12 was $382.2M unrestricted and $17.5M restricted, $400M in all. This includes the $33M up-front payment from BAX received in Jan 2012 for the FoB collaboration inked in Dec 2011; however, only $0.6M of this $33M was booked as revenue during 1Q12, which is the reason for the small GAAP loss of $0.10/share.]

http://ir.momentapharma.com/releasedetail.cfm?ReleaseID=670013

›3-May-2012 8:00am ET

Phase 1/2 Proof-of-Concept Trial for Novel Oncology Drug Candidate, M402, Initiated; Patient Screening Underway at Trial Sites in the U.S.

CAMBRIDGE, Mass., May 3, 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 March 31, 2012.

For the first quarter of 2012, the company reported a net loss of $5.0 million, or ($0.10) per share, compared to a net income of $57.0 million, or $1.13 per diluted share, for the same period in 2011. At March 31, 2012, the company had cash, cash equivalents, and marketable securities of $382.3 million, compared to $348.4 million at December 31, 2011.

"Thanks to the success of enoxaparin we have a strong balance sheet to support our business as we invest in our generic Copaxone® program, our new follow-on biologics collaboration with Baxter, and our emerging novel drug portfolio," said Craig A. Wheeler, President and Chief Executive Officer of Momenta Pharmaceuticals. "Although competition for generic enoxaparin has reduced the revenue we receive for the product, it continues to be an important source of cash flow for the company. Our innovative technology platform that we developed over the last decade provides a strong foundation for future advances that we believe will drive value for the company, cost savings for the healthcare system and significant benefit for our shareholders."

First Quarter Highlights and Recent Progress

Complex Generics Program:
Enoxaparin sodium injection program update

• Last week, Momenta's collaborator, Sandoz, launched enoxaparin sodium injection, USP 3mL vials. Launch of this vial formulation completes Sandoz's full generic Lovenox® product line. [The vial formulation comprises only a tiny fraction of the US Lovenox market, however.]

• In January, an at-risk launch of a competitor's generic Lovenox triggered a change in the revenue Momenta receives from its collaborator, Sandoz, from a hybrid profit share/royalty to a tiered royalty.

Follow-on Biologics Program:
Baxter collaboration effective

• In February, Momenta's follow-on biologics collaboration with Baxter became effective following expiration of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

• In the first quarter, Momenta received a $33 million upfront cash payment under the Baxter agreement. The company will recognize the upfront payment as collaborative research and development revenue over the term of the development period [see details below].

• Momenta continues to invest in building out its biologic infrastructure to ensure the company has the resources required to advance up to six biosimilars to be developed under the Baxter agreement.

Novel Drug Program:
Productivity in research and development programs

• Momenta today announced that patient screening is underway in Part A of a two-part Phase 1/2 proof-of-concept trial for M402 in people with advanced metastatic pancreatic cancer. The primary objectives of Part A are to evaluate safety and tolerability of M402 in combination with gemcitabine and to establish the dose of M402 to take forward into Part B, which is a larger, randomized controlled study to evaluate the antitumor activity of M402 in combination with gemcitabine versus gemcitabine alone in patients with metastatic pancreatic cancer. Data from Part A are expected in the first half of 2013. M402 is a novel oncology drug candidate that has been shown in non-clinical studies to affect tumor progression and metastasis through disruption of multiple pathways.

• In the first quarter, Momenta began a research effort to apply recently acquired sialic switch technology for the development of a sialylated intravenous immunoglobulin (IVIG) drug candidate.

First Quarter 2012 Financial Results

Total revenue for the first quarter of 2012 was $24.2 million (including product revenue of $22.0 million), compared to $78.2 million (including product revenue of $75.8 million) for the same period in 2011. The decrease in revenue was principally driven by a decrease in enoxaparin product revenues following the September 2011 approval and January 2012 launch of a competitor's generic Lovenox. As a result, in January 2012 [when the Appellate Court stayed the preliminary injunction against Amphastar/WPI], the company's product revenues earned on net sales of enoxaparin by Sandoz transitioned to a tiered royalty from a hybrid profit share/royalty agreement. Sandoz reported first quarter enoxaparin net sales of $176 million, which was down from $247 million for the first quarter 2011 due to loss of enoxaparin exclusivity. First quarter 2012 revenues also include $0.6 million in amortization of the $33 million payment received from the Baxter collaboration [i.e. the remaining $32.4M will be taken onto MNTA’s balance sheet in the “deferred revenue” line].

Research and development expenses for the first quarter of 2012 were $18.6 million, compared to $12.9 million for the same period in 2011. The increase was primarily due to increased headcount, laboratory and facility expenses to advance the company's development pipeline of complex generics, follow-on biologics, and novel drug candidates.

General and administrative expenses for the quarter ended March 31, 2012 were $11.0 million, compared with $8.3 million for the same period in 2011. The increase is primarily due to an increase of $1.3 million in legal expenses related to enoxaparin litigation, an increase of $1.0 million in stock-based compensation expense, as well as an increase of $1.0 million of personnel and facilities-related expenses, offset by a decrease of $0.8 million in enoxaparin related royalty expense.

At March 31, 2012, Momenta had $382.3 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.

Financial Guidance

Momenta is today reiterating its guidance provided on February 9, 2012 for total operating expenses, excluding stock compensation and royalties payable to the Massachusetts Institute of Technology, and net of collaborative revenues, of approximately $22 to $28 million per quarter for 2012.

Conference Call Information

Management will host a conference call today, May 3, 2012 at 10:00 am EDT to discuss these results and provide an update on the company. To access the call, please dial [phone] (domestic) or [phone] (international) prior to the scheduled conference call time and provide the access code 72247825. A replay of the call will be available approximately two hours after the conclusion of the call and will be accessible through May 9, 2012. To access the replay, please dial [phone] (domestic) or [phone] (international) and provide the access code 72247825.‹