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$MNTA 2018-08-27 : Transcripts- Edited Transcript of MNTA earnings conference call

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Q2 2018 Momenta Pharmaceuticals Inc Earnings Call

CAMBRIDGE Aug 28, 2018 (Thomson StreetEvents) — Edited Transcript of Momenta Pharmaceuticals Inc earnings conference call or presentation Thursday, August 9, 2018 at 12:00:00pm GMT

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Pfizer, Teva and Actavis are potential consolidators, while Momenta, Coherus and Epirus lead the list of likely targets.

by Laura Cooper

Earlier this month Novartis AG's (NVS) Sandoz Biopharmaceuticals made history by winning Food and Drug Administration approval for Zarxio, the first biosimilar cleared in the United States. The decision was good news for Novartis, of course, but also for an array of smaller companies developing their own biosimilar drugs that now look like attractive acquisition targets.

Biosimilars are what they sound like: substances sort of like an approved biological product. Zarxio is similar to its reference product, Amgen Inc.'s (AMGN) Neupogen, which was licensed in 1991. It is mainly used to treat patients with myeloid leukemia and those undergoing bone marrow transplantation.

According to Hospira -- which has been distributing biosimilars in Europe for several years and which was acquired by Pfizer Inc. (PFE) in February for $17 billion -- the development of a biosimilar takes from eight to 10 years and costs between $100 million to $200 million. The development of a small-molecule generic drug takes three to five years and costs between $1 million and $5 million. Obviously, a drugmaker seeking to get into biosimilar production can do so more quickly and cheaply by simply acquiring a smaller producer already well along the development road.

Pfizer had its own biosimilar pipeline, like many of its peers in the space. But it purchased the injectable maker anyway to quickly bolster its biosimilar line. At the time of the deal, Pfizer noted that the market for biosimilars is estimated to be as much as $20 billion by 2020. Amgen and Sanofi (SNY) are also active in the space.

Sandoz received approval for Zarxio under the Biologics Price Competition and Innovation Act. The company is a market leader in biosimilars, with over 50% of the biosimilars approved in North America, Europe, Japan and Australia, according to the company. Outside of the U.S., it markets three biosimilars: somatropin, filgrastim and epoetin alfa.

Momenta Pharmaceuticals (MNTA), Coherus Biosciences Inc. (CHRS), Epirus Biopharmaceuticals (EPRS) and Russia-based Biocad are smaller companies with biosimilars in development, and all could find themselves in the crosshairs of big pharma companies.

Andrew McDonald, the CEO of LifeSci. Capital and co-portfolio manager of BioShares Funds, which invests in the sector including in biosimilars, said that a consolidation movement would being driven by the fact that there are going to be fewer generic products. Drug companies will need biologic capabilities. "Everyone knows biosimilars are the future," McDonald said in an interview. "Biologics are attractive to generic players overall. We think all of these guys will be looking for acquisitions.

McDonald noted that generic companies such as Teva Pharmaceuticals Industries Ltd. (TEVA) or Actavis plc are not considered serious contenders in the biosimilar space, but could be if they began acquiring biosimilar producers.

Barbara Ryan, a partner at healthcare consultancy Claremont Partners, said she also believes the sector could see active dealmaking. "I would argue that it might drive consolidation," Ryan said, referring to the Hospira deal. She noted that some smaller companies may have portfolios and pipelines of biosimilars but limited means to commercialize them -- a situation tailor-made for larger companies may step in and consolidate.

Ryan added that while there are a number of different factors affecting biosimilars -- including FDA regulatory issues, approval and guidelines -- the pharmaceutical market nonetheless has moved from being dominated by small molecules to biologics.

Though biosimilars are similar versions of drugs, they're not to be confused with generics. Ryan cautioned that the industry is a long way from  interchangeability between the two. Biosimilars still must be marketed as separate products and make a push into the marketplace.

"Certainly biosimilars would offer an attractive product to patients, that could have lower prices," Ryan explained. "The key issue is going to be interchangeability. Biosimilars have a different connotation than generic small molecules."

The parties in the remand of the Teva v Sandoz Copaxone patent case filed their briefs with the Court of Appeals Tuesday. Here is Teva's brief and here is the generics' brief. 

As one would expect, Teva argues the new deference standard declared by the Supreme Court earlier this year in its decision reversing the Court of Appeals' previous decision in the case in favor of the generics requires the Court of Appeals now to affirm the original District Court decision in Teva's favor. The generics argue that even under the new deference standard the Court of Appeals should still overturn the original District Court decision and rule Teva's patent invalid.

To review, the District Court originally ruled for Teva that the subject patent was not invalid. The Court of Appeals gave the District Court no deference on the issue, disagreed, and ruled for the generics that the patent was invalid. The Supreme Court then, at Teva's request, reversed the Court of Appeals decision solely on the basis of the level of deference to be given to the District Court. The Supreme Court did not opine on whether the subject patent was or was not valid. All the Supreme Court said was that the Court of Appeals should have given the District Court's factual findings more deference. 

The question now is whether the Court of Appeals will still overturn the District Court's decision despite giving it more deference, or if instead the Court of Appeals will affirm the District Court's decision in light of the fact that the Supreme Court has ordered the Court of Appeals to give the District Court more deference. For patent lawyers, this is very exciting stuff. For the rest, I'm impressed if you're still awake.

At this point, it's not clear whether the Court of Appeals will schedule an oral argument in the case or proceed to render a decision.

Photo from.

Copaxone Patent Case Re-Appeal Expedited by Court

Earlier today I noted that Teva, Sandoz, Mylan, and Momenta jointly proposed a schedule to the Court of Appeals for handling the Copaxone patent case on remand from the Supreme Court. Late this afternoon the Court of Appeals rejected the parties' proposed schedule and instead issued an order saying:

The parties are directed to simultaneously file letter briefs explaining how the above appeals should be resolved in light of the Supreme Court’s remand. The letter briefs shall be limited to 15 double-spaced pages, due within 10 days of this order.

This is a faster schedule than what the parties had proposed, which would have had briefing last until March 20. Now the briefing will be done by March 2. It's not clear whether the Court of Appeals will schedule an oral argument after receiving the letter briefs from the parties, although I suspect they will.

The next chapter of the great Copaxone patent saga has begun. The parties this morning proposed a schedule to the Court of Appeals for handling the case on remand from the Supreme Court, which earlier this year reversed the Court of Appeals’ July 2013 decision in the case. 

For all intents and purposes, the case is back at square two, with the Court of Appeals now reviewing the district court’s original ruling in favor of Teva (TEVA). The Court of Appeals previously issued a split decision, which was considered a victory for the generics, but the Supreme Court said in its January decision that the Court of Appeals exerted too much discretion in reviewing the original district court decision. Now the Court of Appeals has to reconsider the case giving more deference to the underlying district court’s decision. Whether that will result in a different outcome or not is left to be seen, as the Court of Appeals could give the district court more deference but still overturn the same part of its decision that the Court of Appeals overturned before. Or, the Court of Appeals could give the district court’s decision more deference and, as a result, affirm the decision in Teva’s favor on all issues.

In accordance with the proposed schedule, the generic defendants, Sandoz (NVS), Mylan (MYL), and Momenta (MNTA), filed their opening remand brief this morning as well. Teva will file a response in 3 weeks (Mar 13) and then the defendants will file a reply a week later (Mar 20). Oral argument will then be scheduled by the Court of Appeals, something the parties hope is done “as soon as practicable.” The aim is to have a decision from the Court of Appeals before Teva’s patent at issue in the case expires on September 1.

The schedule seems reasonable, but I’m not sure it’s doable as far as the Court of Appeals is concerned, because two of the original judges on the case aren’t there any more, so two new ones will have to be added and get caught up to speed. Then, add in traditional July/August vacation schedules, and I wouldn’t be so sure there will be a decision by September 1.

I’ll also remind folks that this case deals with the 20mg once-a-day version of Copaxone. Teva has been moving the market to its new 40mg three-times-a-week version of Copaxone. Teva has two new patents on the latter that last until 2030.