MNTA
#Thank you, <UNK>.
I'll start today's call with a discussion of Sandoz' launch of Glatopa 40 milligram.
And then following that discussion, I'll provide highlights for our biosimilar and novel drug pipelines.
I'll then close with an update of our strategic review of the business that we initiated earlier this year.
<UNK> will follow me to discuss our first quarter financial results, including our Glatopa profit share, and provide guidance for 2018.
And we'll then open the call for questions.
Before I begin though, I'd like to note this morning, we issued an 8-K announcing that our CFO, <UNK> <UNK>, will be taking a planned temporary medical leave of absence effective May 9.
In <UNK>'s absence, I will be performing the functions of Principal Financial Officer and Principal Accounting Officer.
<UNK>, we wish you a speedy recovery and very much look forward to your return as soon as possible.
I'll start with Glatopa.
In February, the FDA approved Sandoz' ANDA for our Glatopa 40 milligram product and Sandoz initiated the launch process.
Sandoz is still in the early phases of the launch, is securing customer contracts and orders have been shipped.
Following the positive outcome from the FDA review of Pfizer's McPherson facility, Sandoz has had to work to build inventory of Glatopa 40 milligram for the U.S. launch.
As a result, Sandoz expects accelerated adoption by customers as the year progresses.
Customers have been enthusiastic about the introduction of Glatopa 40 milligram.
And we remain optimistic about Sandoz' ability to gain share.
And I look forward to updating you on our progress on our next earnings call.
<UNK> will discuss our Glatopa profit share for the first quarter.
But overall, we remain pleased with Glatopa 20 milligram's performance and Sandoz' ability to retain approximately 40% of the 20-milligram market in the face of generic competition.
We continue to expect the aggressive competition in both the 20 milligram and the 40 milligram markets and continued pressure on our Glatopa revenue streams in future quarters, particularly when new generics enter the market.
Turning to biosimilars.
I'll start with M923, our wholly owned biosimilar to HUMIR<UNK>
As we stated earlier in the year, the BLA submission is prepared for regulatory filing, but we are holding off on filing pending conclusion of our business development discussions.
M923 is part of our strategic review.
And we will update you at the conclusion of that process.
Now to 710, our proposed biosimilar to EYLEA being developed in collaboration with Mylan.
In January, we announced that the FDA had accepted the IND and Mylan is in the process preparing for the confirmatory Phase III study.
Commercial manufacturing scale has been achieved.
And our goal is to start up the pivotal clinical trial in patients in the first half of 2018.
The trial will be a randomized, double-blind, active control, multicenter study in patients with diabetic macular edema to compare the safety, efficacy and immunogenicity of M710 with EYLE<UNK>
We look forward to updating you on the progress as the program progresses.
Lastly, on biosimilars, I will focus on M834, our biosimilar ORENCIA candidate, also in collaboration with Mylan.
Our investigation into what caused the failure to achieve the primary endpoint in the M834 PK trial is ongoing.
We are in the process performing a comprehensive investigation into the potential reason for the PK results, which could be anything from assay variations to structural differences in our molecules.
Once we finalize the investigation, we will work with Mylan to determine next steps and provide an update as appropriate.
I'll now turn to our novel drug pipeline.
And I'll begin with our lead novel drug candidate, M281, a recombinant anti-FcRn program designed to be a novel best-in-class monoclonal antibody for the treatment of patients with immune-mediated disease.
In January, we released positive top line multi-dose data from our Phase I study of M281 in healthy volunteers in which the data demonstrated safety and tolerability and confirmed proof of mechanism for M281.
In the multiple-ascending dose portion of the study, M281 decreased circulating IgG levels up to 89% with a mean reduction of 84%.
In both, the SAD and MAD portions of the study, M281 was well tolerated at all dose levels with no serious adverse events or unexpected safety findings observed.
We designed the molecule to optimize its ability to reduce IgG levels while minimizing off-target effects and immune activation.
And we're very pleased to see this molecule is working as designed.
We believe M281 has the potential to be a best-in-class molecule for intermittent and chronic use in a broad number of rare immune-mediated disorders with high unmet patient need.
We are in discussions with regulatory authorities with regard to potential indications.
And we plan to finalize our development strategy and initiate 2 proof-of-concept studies in the second half of 2018.
We're looking at entering into multiple indications, one of which will be an indication where you have seen our competitors conduct trial, such as myasthenia gravis, ITP or pemphigus.
Our goal is to demonstrate the potential of our molecule in an area where the target has been validated and hopefully demonstrate that our higher potency and strong safety profile translates into best-in-class efficacy.
The second indication is more likely to be an indication where there is no currently approved treatment and where we believe we have the potential to differentiate from our competitors and possibly gain accelerated approval.
We're also committed to exploring the optimum dosing schedules with our Phase II trials.
And in parallel, we have begun working on a potential subcu version of the product for introduction into future trials.
We look forward to updating you on these indications at/or before the Analyst and Investor Day we plan to host in the second half of the year.
M230, our novel program in collaboration with CSL is a recombinant Fc multimer that works by antagonizing the activating Fc gamma receptor system and blocking immune complex-mediated tissue damage.
The clinical development of this program will focus on immune-mediated disorders with high unmet medical need.
We are very excited about this program and believe that M230 has the potential to be a first-in-class recombinant Fc multimer providing an improved treatment option to patients with autoimmune disease.
In late January, CSL began dosing subjects in a Phase I study designed to evaluate the safety and tolerability of M230 in healthy volunteers.
CSL anticipates that the study will be completed in 2019.
And I look forward to keeping you updated as we move forward.
Lastly, I'll end with M254, our hyper-sialylated IVIg program designed as a potential high-potency version of IVIg.
This program hasn't received as much attention.
And as we approach the clinic in the second half of this year, I plan to feature it more prominently in our pipeline discussion.
We're on track to complete the IND-enabling toxicology study later this year and are targeting the initiation of a proof-of-concept study in the Phase I study in the second half of 2018.
Even though it's not yet in the clinic, M254 has the potential to be our first novel autoimmune program to reach proof of concept.
Our main goal in the initial trial is to demonstrate the enhanced potency of the molecule versus IVIg in human.
In animal models, we can reproducibly demonstrate up to 10 times the potency of IVIg.
If we can do this in humans, it will be a game-changer for the IVIg marketplace, which today is a global supply-constrained market with over $4 billion in sales in autoimmune indications.
IVIg in autoimmune indications is a very difficult therapy for patients often requiring infusions over 1 or more days with challenging side effects.
A drug with a fraction of the volume and infusion time and with the potential to dose higher for better efficacy could create meaningful value for patients and our investors.
We believe a single trial with a dose-ranging in normal volunteers progressing directly to patients in a population such as ITP, where IVIg is approved, could be conceded quickly, allowing us to show the benefit of this innovative compound within 2 years and providing another catalyst for our stocks from our promising autoimmune portfolio.
As I'm sure you can tell, we're very excited about our novel drug pipeline.
And we'll plan to share more information at an Analyst and Investor R&D Day, which we plan to hold in the second half of the year in New York City.
Turning now to an update on the strategic review.
Earlier this year, we initiated this process with the goal of reducing spending on our biosimilar portfolio, which will free up additional capital to fully fund what has become a very attractive novel autoimmune portfolio.
This review was precipitated by the delays in the launch of our Glatopa 40 milligram products and the subsequent deterioration of the market with Mylan's entry ahead of us.
Without the revenue stream we had planned for from Glatopa, we did not feel we had the runway to develop a broad portfolio Momenta had created without excessive dilution for our investors.
As I stated earlier, we are exploring a number of options.
And we will update you when we make a decision.
Our goal is to complete this strategic review by the end of the second quarter of this year.
Before I wrap up, I'll provide an update on the goals and milestones for the rest of 2018.
First, with the launch of Glatopa 40 milligram, we look forward to gaining further clarity on how the market will evolve with 2 generic 40 milligram products in the market and gain better insights into the future revenue potential from Glatopa 40 milligram.
In biosimilars, as part of the Mylan collaboration, we expect to start up the pivotal patient trial for M710 in the first half of 2018 and complete the investigation and determine next steps for an 834, our biosimilar ORENCIA candidate.
For our novel drug portfolio, we plan to initiate 2 Phase II proof-of-concept studies of M281 in 2 different indications and to progress M254 into the clinic in the second half of 2018.
And CSL has initiated a Phase I healthy volunteer study for M230.
And we look forward to the advancement of that program as well as our research collaboration with CSL.
And lastly, we expect to finalize our strategic review by the end of the second quarter of 2018.
With that, I'll turn the call over to <UNK> to review Q1 financials.
Thanks, <UNK>.
Good morning, everyone.
We reported a net loss for the first quarter of $48 million compared to a net loss of $32 million for the same quarter last year.
Revenues for the first quarter totaled $5 million compared with $27 million for the same period in 2017.
First quarter 2018 revenue included $3 million in product revenue, which was profit share earned from Sandoz sales of Glatopa 20 and 40 mg after a deduction of approximately $10 million for our 50% share of Glatopa 40 mg inventory reserves.
Excluding these inventory reserves, profit share was approximately $13 million, in line with the preceding quarter.
In Q1 2017, we reported product revenue of $23 million.
The year-over-year decrease in product revenues for the first quarter was primarily due to lower net sales relating to Mylan's entry into the COPAXONE market and the Glatopa 40 mg inventory reserves.
Research and development revenues decreased to $1 million from $3 million in the first quarter of 2017.
The decrease was primarily due to lower revenue recognized from the Mylan upfront payment and lower reimbursable expenses for our complex generic programs with Sandoz.
First quarter R&D expense decreased to $33 million when compared to $36 million in the same period in 2017.
The decrease was primarily due to reduced external R&D expenses for M923, offset by increases in spending for M710 and M281.
First quarter G&A expense decreased to $21 million from $23 million in the same period in 2017.
The decrease was due to lower legal expenses in the quarter.
The company previously gave operating expense guidance that it expected non-GAAP operating expenses for the first quarter of 2018 to be approximately $45 million to $55 million.
Our non-GAAP operating expenses defined as total operating expenses less stock-based compensation and less collaborative reimbursement revenues.
For the first quarter of 2018, our non-GAAP operating expense was $48 million, within our guidance range.
Finally, we ended the first quarter with $346 million in cash, cash equivalents and marketable securities compared to $380 million at the start of the quarter.
Now turning to guidance.
For 2018, we continue to expect non-GAAP operating expenses to be approximately $180 million to $220 million for the full year.
Specifically for Q2, we expect non-GAAP operating expenses to be $45 million to $55 million.
Year-over-year, we expect to decrease spending on biosimilars and increase spending on our novel programs.
Please note that full year 2018 guidance is subject to potential changes based on the outcome of the strategic review process of the business that we initiated earlier this year.
Lastly, as mentioned earlier in the call, now that we have announced our first quarter results, I will be taking some time for a planned temporary medical leave.
In preparation for this leave, <UNK> and I have worked out an interim plan.
And I'm confident that we have the right people and oversight in place to fully support Momenta's ongoing operations and the strategic review process.
I'll look forward to catching up with you all after I'm back in the office.
We'll now open the call to questions.
Operator.
Sure, thanks.
Well, I think I would say it's still early days in the marketplace.
But so far, it's been a positive reception from what we're hearing from the sales force from the customers.
And so I don't see any issues.
And I see as much interest as we saw certainly in 20 milligram product when we first went into the marketplace.
I will say that it's a competitive marketplace.
And so as we have anticipated, it's you know pricing pressure on the product.
But that's what you'd anticipate in today's generic market with the kind of bios we have.
I'm sorry, I don't have that data.
The challenge on this one is that this really is Sandoz' product that they're marketing.
And so you're really down to the detailed level in terms of call patterns and stuffs which just I don't have.
Yes.
So what I tried to give is a general picture of it in my comments, is that we believe we can go first into healthy normals and then progress directly into an ITP-like indication where IVIg is approved.
But we don't have the specific design ready to discuss.
We will discuss the details of that in our fall R&D Day, where we'll give you the full design of the trial and how we plan to proceed with that molecule.
Sure.
Well, our hope would be to gain breakthrough designation.
When you're going into a disease that has a high unmet need and no current therapies, that's really where the opportunity does present itself.
I think it's a little premature because that's always based upon the datasets that you have.
But one of the things that we're trying to do is ---+ and the reason we haven't talked about the specific different indications and thinking about it, we're talking about exactly those issues with the FD<UNK>
What's the trial design.
How do we think about the number of patients.
One of the things that we're trying to balance in these indications, some of these vary indications also have very long enrollment times with very few patients.
And so we want to make sure we get someplace where we not only have that opportunity for breakthrough, but we have a reasonable chance of enrolling it in a reasonable time.
And so those are the discussions that are ongoing now.
Sure.
Well, it's hard for us to comment on our competitors' programs.
I mean, obviously that's something they're going to have to deal with because they did have that imbalance in their trial.
But it's really hard for us to interpret that because it's not our program, so we don't have all the details on it.
I can tell you that our design of our Phase II trial, our proof-of-concept trial, is actually going to be a significantly more robust design in terms of number of patients and dosing.
Our goal in that trial is to really understand dosing schedules, really understand what dosing level that we have to have and to be able to demonstrate that the higher potency that we have with our molecule can potentially deliver better efficacy.
So we're actually going ---+ when you see the design, they'll be actually ---+ it will be quite a robust design that's really designed to let us get into Phase III with a great deal of confidence of our dosing schedule, great deal of confidence with the dose that we're taking forward.
And so that's what we're working on right now.
And we'll again give you that ---+ we may give you that before we get to our R&D Day, too, because we'll maybe able to start the trial earlier.
But we are ---+ because we are viewing this molecule as the proof of concept has already been achieved with the argenx data, our goal now is to make sure that we have the best evidence and the best way to take our molecule forward with a Phase II.
Sure, thanks a lot.
And I appreciate everybody on the call.
I realized there was a very big deal announced this morning and I know where everybody is.
But I appreciate those of you who were able to be on the call.
Thank you very much.
