Leerink:
MNTA – OP – Joseph P. Schwartz
Close: $19.92, Mkt Cap: $1,013M
· Bottom Line: We believe that so far the defendants haven't introduced sufficient evidence to establish a claim for IC, but it's still early.
· The essence of the defendants' IC argument is that two individuals representing TEVA intentionally deceived the U.S. patent office by submitting toxicity test results they knew misrepresented the toxicity profile.
· We continue to believe MNTA has a potential shot at circumventing the Copaxone patent estate or drive a settlement based on our conversations with patent specialists and what we learned at the Markman hearing last year.
· MNTA will not disclose its legal strategy in detail but confirmed that it may pursue indefiniteness, invalidity, and inequitable conduct arguments to overcome the Copaxone patents.
· Recall, the M-356 patent case has been consolidated with the generic Copaxone case from MYL, which had a claims construction hearing on 1/11.
· Meanwhile, the M-356 ANDA filing remains under active review at FDA which has now rejected 3 independent citizen petitions from TEVA. We believe the FDA’s responses signal a willingness by the agency to consider the M-356 ANDA and specifically which criteria it will use to determine whether the generic active ingredient is the "same as" that of the branded version where "same active ingredient" does not mean "complete chemical identity".
· Meanwhile, the generic Lovenox monopoly continues for MNTA and we expect M-Enox revs to continue to grow in 2011 driven by strong demand, capped only by mfg capacity at 45-50% market share.
· Sales Estimates: We estimate MNTA will receive a M-Enox net profit share of $193M in 2011 and a net profit share of $159M for Copaxone (60% p/w) in 2013.
· Next up: Phase 1 (inequitable conduct) could last up to 3 weeks: Judge will hear testimony July 11-13, week of July 18th and week of July 25th. On Sept 7, phase 2 starts and will focus on the other issues. FDA guidance regarding a path to market for follow-on biologics expected later this year may positively impact MNTA. We believe even incremental clarity surrounding the issue would be a positive, since the agency has been quiet on the topic so far.
· P&A Potential: MNTA expects to partner in a broad follow-on biologics collaboration, which it prefers over several product-by-product partnerships. M118 partnering negotiations were revived in 1Q11 but are tough given the necessary investment in a large Phase III program including multiple trials.
· Stock Impact: A win in court or settlement would further validate MNTA’s strategy and drive the stock. |
