Momenta Pharmaceuticals, Inc. (MNTA)

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Momenta Pharmaceuticals, Inc. (MNTA)

Q3 2012 Earnings Conference Call

November 7, 2012 10:00 AM ET

Executives

Craig A. Wheeler - President and Chief Executive Officer

Richard P. Shea - Chief Financial Officer

Lora Pike - Senior Director of Investor Relations and Corporate Communications

Analysts

Ronny Gal - Sanford Bernstein

Ritu Baral – Canaccord

Joseph Schwartz - Leerink Swann

Imran Babar - Cowen & Co

Presentation

Operator

Good day, ladies and gentlemen, and thank you for your patience. You've joined the Momenta Pharmaceuticals Third Quarter 2012 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instruction) As a reminder, this conference may be recorded.

I would now like to turn the call over to your host, the Senior Director of Investor Relations and Corporate Communications, Ms. Lora Pike. Ma'am, you may begin.

Lora Pike

Thank you and good morning everyone. We thank you for joining us today for Momenta's conference call to discuss financial results for the second quarter of 2012. Today's call is being webcast and you can view the slides that we will be presenting in the investor section of our website at momentapharma.com. Joining me on the call with prepared remarks are Craig Wheeler, President and Chief Executive Officer, who will provide an update on our major program; followed by Rick Shea, Chief Financial Officer, who will review our third quarter results and provide financial guidance.

Before we begin, I'd like to mention that our call today will contain forward looking statements about management's future expectations, beliefs, plans, and prospects. These forward looking statements include comments about our enoxaparin sodium injection commercial prospects and revenues as well as future operating expenses, cash position and total operating expense for 2012. Our generic Copaxone program, ANDA review and patent litigation expectations, and our other product development plans and expectations, including expectations of timing for clinical data results and our future development, partnering, and commercialization potential for our development programs.

Such forward looking statements involve known and unknown risks, uncertainties, and other factors referred to in the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2012, which is filed with the Securities and Exchange Commission under the section Risk Factors, as well as other documents that may be filed by Momenta from time to time with the SEC.

As a result of such risks, the Company's actual results may differ materially from those we will be discussing. We're providing the information on this conference call as of today's date and we assume no obligation to update these comments.

With that, I will now turn the call over to Craig.

Craig Wheeler

Thank you, Lora, and welcome everybody. I know a lot has happened over the past two months. So, in this call I’d like to give you a clear understanding of where things stand at the company. As always, I’ll start with our complex generics business, covering recent events for both enoxaparin and Copaxone program and then I’ll provide highlights on our Follow-on Biologics and new drug programs.

So, starting with enoxaparin, in the third quarter we reported $2.6 million in royalty revenue for enoxaparin based on Sandoz’ reported net sales of $34 million. This is a dramatic decrease from the net sales reported by Sandoz in the first two quarters of this year. Since the lifting of the preliminary injunction in January, it has taken some time for the market to reach equilibrium as the players adapt to a more competitive dynamic.

In the third quarter, three factors contributed to the enoxaparin sales decline. First, our competition moved more aggressively in an attempt to increase their market share. Second, customers have adjusted their ordering pattern to take advantage of the multiple player market and third, Sandoz made significant adjustments to reserve accruals to reflect these more competitive pricing dynamics. We do anticipate that barring any new market entrants or further pricing reduction, our fourth quarter enoxaparin product revenues will recover somewhat since the pricing effect and the inventory adjustments should have worked mostly through the system this past quarter. And Sandoz continues to retain a strong market share. However, we acknowledge this remains a very competitive generic market and the degree to which our royalty revenue recovers depends on if and when pricing and share stabilize in the market place.

I’ll now turn to the enoxaparin litigation with Amphastar and Watson. In August, the Court of Appeals issued a three-judge panel opinion explaining its decision to stay the preliminary injunction that have prevented Amphastar and Watson from launching their generic lovenox.

The appellate court based on what we believe is an improper interpretation of the safe harbor provision traded under the Hatch-Waxman Act ruled that Amphastar’s use of our patented method was protected by the Safe Harbor from patent infringement. As a result, the appellate court remanded the case to the District Court recommending that a summary judgment of non-infringement might be appropriate based on the appellate court ruling, which means that the District Court judge could decide against us without the need for a trial.

The decision by the appellate court dramatically expands the scope of Hatch-Waxman to Safe Harbor Protection to include the use of patented methods for primarily commercial activity. We believe this is contrary to the language and the intent of Hatch-Waxman which was created to enable the pharmaceutical industry to have products ready-to-launch upon the expiration of the relevant patents, but was in no way intended to undermine the patent system which rewards innovation.

Read the rest of this transcript for free on seekingalpha.com