Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Momenta Pharmaceuticals in Spotlight as Interest in Biotech Copycats Rises


The recently signed deal with Baxter International emphasizes the growing business of generic biological drugs.

Momenta Pharmaceuticals (MNTA) inked a deal with drug and medical products maker Baxter International (BAX) just before Christmas that marks the latest push among companies to develop cheaper, copycat versions of expensive brand-name biotech medicines.

Dubbed biosimilars, the Baxter wager on the business is initially $33 million -- the upfront payment to Momenta to help the company develop as many as six biotech drug replicas. The companies didn't say what drugs they're targeting. As partnerships with big companies go, there is potentially more than $400 million in additional milestone payments for Momenta.

Whether Momenta earns those future payments remains to be seen. But the deal is a much-needed positive for the company, which watched its stock go on a roller coaster ride this year.

Momenta traded to almost $21 a share in July but sank to below $11 in September on news of a potential competitor winning US approval for a version of Sanofi's (SNY) blood-thinning drug Lovenox. Momenta and Novartis (NVS) sell M-Enoxaparin, a generic version of Lovenox, but appeared to face its own competition from closely held Amphastar Pharmaceuticals and generic drug maker Watson Pharmaceuticals (WPI) last September. In October, Momenta and Novartis succeeded in holding up the sale of the rival Amphastar drug by winning a preliminary injunction tied to a patent dispute. Momenta shares rebounded a bit from the September slump.

It's clearly a new and risky area of drug development, but biosimilar products are likely to be on more investors' radars in 2012. The US Food and Drug Administration is readying its procedures to approve the cheaper biotech drugs, which also are being encouraged as a health care cost-saving measure under Obamacare. According to at least one estimate, the market for these drugs may reach almost $5 billion in the next few years.

"Momenta's business model has been validated with the approval of (the company's) lead product candidate" M-Enoxaparin last year, says Leerink Swann analyst Joseph Schwartz. He rates the stock a buy and has a $21 price target.

Momenta shares fell 1% to $17.26 in early afternoon trading Wednesday. The stock is up 15% on the year.

Other companies are showing a keen interest in biotech generics.

The Momenta-Baxter deal followed another recently announced collaboration between biotech giant Amgen (AMGN) and Watson to develop copies of branded biological cancer treatments. Earlier this month, Biogen Idec (BIIB) and Samsung said they are investing $300 million to form a joint venture that focuses on biosimilars.

While all three recently announced partnerships may prove to be important for each individual company, Momenta is highly dependent on success of these new biosimilar drugs. Most of the company's $253.6 million in revenue (through nine months this year) comes from sales of the Lovenox copy. Momenta and Novartis also are developing a version of Teva Pharmaceutical Industries' (TEVA) multiple sclerosis drug Copaxone. That drug also has been the subject of a court battle. Schwartz gives the chances of that drug winning approval at about 50%.

Twitter: @brettchase

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos