Item 1. BUSINESS
The Company
We are a biotechnology company operating in three product areas: Complex Generics, Biosimilars and Novel Drugs. Our approach is built
around a complex systems analysis platform that we use to obtain a detailed understanding of complex chemical and biologic systems, design product candidates based on this knowledge, analyze sets of
biological data to evaluate the biological function of our products, and develop manufacturing processes that enable our products to be reliably produced. Our first product, developed in collaboration
with Sandoz, Enoxaparin Sodium Injection, a generic version of Lovenox®, was approved in July of 2010, validating the commercial value of our platform. In the period from commercial launch
through September 2011, we capitalized on the advantage of having the only generic version of Lovenox in the marketplace and recognized over $340 million in revenue from this product.
Our Approach
The core objective of our complex systems analysis platform is to resolve the complexity of molecular structures and related biologic
systems. For the complex systems we seek to understand, we first map the key measurements needed to provide comprehensive data on the system. We then develop a set of analytic tools and methods that
include a combination of standard analytics, modified analytic approaches and custom developed analytics and methods. The modified and custom analytics may be protected by trade secrets or patents.
The analytic set we use for a development program is designed to provide comprehensive data on the complex molecular mixture and target biology, including providing multiple related and complementary,
or orthogonal, measures of
the system. We also may use computer software to mine and synthesize the data to yield insights that advance our development programs across all three product areas. As we expand our infrastructure,
intellectual property and knowledge of complex biologies, we accrue advantages as well. For example, the process development and manufacturing expertise developed from our complex generic and
biosimilars efforts can be directly
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used
to advance our novel drug candidates. The investments in biocharacterization made for our biosimilars program provide a core of models and biologic data sets that can form the basis of inquiries
in our novel drug research. And the analytic tools and methods and biologic models we develop help build a substantial toolset that can be used across our programs.
Complex Generics
In our Complex Generics product area, we develop generic versions of complex drugs that were approved by the United States Food and
Drug Administration, or FDA, under New Drug Applications, or NDAs. Most drugs approved as NDAs are simple small molecules that are easy to duplicate. However, products such as Lovenox and
Copaxone®, the generic version of which is our second complex generic product candidate, are complex molecular mixtures that are difficult to analyze and therefore difficult to reproduce
as generics.
We
use our complex systems analysis platform to define the detailed structures present in these complex drugs. Once the precise structures are identified, or characterized, this
structural characterization of the brand product is used to guide the development of a precise manufacturing process to produce a generic version. Finally, to demonstrate that the biological function
of our generic replicates that of the brand, we utilize our complex systems analysis platform to evaluate and compare multiple orthogonal sets of biologic data from in-vitro, in-vivo and ex-vivo
models.
Biosimilars
In our Biosimilars product area, we are seeking to develop biosimilar versions of biologic medicines that were approved by the FDA
under Biologics License Applications, or BLAs. Biologics are also complex mixtures, and we unlock their structural subtleties using an approach
that is similar to the one we use in the development of our complex generics. A key difference, however, is that biologic drugs are manufactured in living cells, which dramatically increases the
complexity of their manufacturing process.
For
Biosimilars, we apply our complex systems analysis platform in two ways. First, we seek to better understand the complex systems within cells that are involved in the assembly of
proteins. This knowledge enables us to select the appropriate cell line and to manipulate the cell's outputs using novel control strategies during the manufacturing with the goal of producing a
biologic with structural similarity to the brand. Nevertheless, because of the complexity and variability of biologic manufacturing systems, it is important to evaluate whether any small differences
between the biosimilar and the brand would be related to potential clinical differences. To minimize this residual uncertainty, we evaluate orthogonal sets of both structural and biologic data
(biocharacterization) from in-vitro, in-vivo and ex-vivo models to compare the function of the brand product and our product. We believe that our complex systems analysis approaches, including these
characterization methods, can significantly reduce residual uncertainty and may enable a relative reduction or even elimination of certain clinical trial requirements.
Novel Drugs
Momenta was originally founded to develop novel drugs, and this remains a key long term goal for us today. We believe that applying our
complex systems analysis platform to the discovery and development of novel medicines can enhance our probability of success in a number of ways. As with our complex generics and biosimilars, our
platform gives us a detailed understanding of the complex structures of our novel product candidates, their associated manufacturing processes and controls, and the targeted biologic systems.
In
our research efforts, we use computer algorithms to analyze related sets of biologic data to provide deeper insight into the complexities inherent in human biology. By embracing this
complexity
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early
in the discovery process, our goal is to better select targets, or sets of targets, that will yield important clinical benefit and a higher probability of success in clinical trials. As our drug
candidates progress into development, by using our platform in preclinical studies or early in the clinical trials cycle, we believe we can capture and better understand the activity of the drugs with
a goal of improving success by better selection of indications and/or dosing regimens.
We
are using these approaches with M402, our oncology product candidate presently in a Phase 1/2 clinical study. We are also applying our complex systems analysis platform to
identify potential improvements we can design into presently marketed complex mixture drugs. By evaluating their interaction with biologic systems, we can obtain an enhanced understanding of their
function to identify biological activities we can exploit. This is the approach behind our research efforts to exploit the sialylation of intravenous immunoglobulin, or IVIg, and our program to
develop a recombinant Fc version of IVIg.
Commercial, Development and Research Programs
Our Product Areas
Complex Generics
Enoxaparin Sodium InjectionGeneric Lovenox®
Enoxaparin Sodium Injection, our first product to receive marketing approval under an ANDA, is a generic version of Lovenox. Lovenox is
a complex drug consisting of a mixture of polysaccharide chains and is a widely-prescribed low molecular weight heparin, or LMWH, used for the prevention and treatment of deep vein thrombosis, or DVT,
and to support the treatment of acute coronary syndromes, or ACS. Lovenox is distributed worldwide by Sanofi-Aventis U.S. LLC, or Sanofi-Aventis, and is also known outside the United States as
Clexane® and Klexane®.
Lovenox is a heterogeneous mixture of complex polysaccharide chains that, in our view, prior to the application of our technology, had
not been adequately analyzed. The length and sequence of the polysaccharide chains vary, resulting in a diversity of chemical structures in the mixture. Our technology
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and
analytical approach allowed us to thoroughly characterize Lovenox which enabled FDA approval of the ANDA.
In
2003, we entered into a collaboration and license agreement, or the 2003 Sandoz Collaboration, with Sandoz N.V. and Sandoz Inc. to jointly develop, manufacture and
commercialize Enoxaparin Sodium Injection in the United States. Sandoz N.V. later assigned its rights in the 2003 Sandoz Collaboration to Sandoz AG, an affiliate of Novartis Pharma AG. We refer
to Sandoz AG and Sandoz Inc. together as Sandoz.
In
2006 and 2007, we entered into a series of agreements, including a Stock Purchase Agreement and an Investor Rights Agreement, with Novartis Pharma AG, and a collaboration and license
agreement, as amended, or the Second Sandoz Collaboration Agreement, with Sandoz AG. Together, this series of agreements is referred to as the 2006 Sandoz Collaboration. Under the Second Sandoz
Collaboration
Agreement, we and Sandoz AG expanded the geographic markets for Enoxaparin Sodium Injection covered by the 2003 Sandoz Collaboration to include the European Union.
Sandoz submitted ANDAs in its name to the FDA for Enoxaparin Sodium Injection in syringe and vial forms, seeking approval to market
Enoxaparin Sodium Injection in the United States. The ANDA for the syringe form of Enoxaparin Sodium Injection was approved in July 2010, making it the first ANDA for a generic Lovenox to be approved
by FDA. The ANDA for the vial form of Enoxaparin Sodium Injection was approved in December 2011.
Due to additional competition in the generic enoxaparin market, which has impacted pricing, the overall United States enoxaparin market
size has declined. Sanofi reported $248 million (€187 million) and $410 million (€319 million) in sales of brand Lovenox in the United
States in 2013 and 2012, respectively. Sandoz reported $213 million and $451 million in sales of Enoxaparin Sodium Injection in the United States in 2013 and 2012, respectively. Pursuant
to the 2003 Sandoz Collaboration, Sandoz is responsible for commercialization and distribution of Enoxaparin Sodium Injection.
In September 2011, we and Sandoz sued Amphastar Pharmaceuticals, Inc., or Amphastar, Watson Pharmaceuticals, Inc. (now
Actavis, Inc., or Actavis) and International Medical Systems, Ltd. (a wholly owned subsidiary of Amphastar) in the United States District Court for the District of Massachusetts for
infringement of two of our patents. Also in September 2011, we filed a request for a temporary restraining order and preliminary injunction to prevent Amphastar, Actavis and International Medical
Systems, Ltd. from selling their enoxaparin sodium product in the United States. In October 2011, the District Court granted our motion for a preliminary injunction and entered an order
enjoining Amphastar, Actavis and International Medical Systems, Ltd. from advertising, offering for sale or selling their enoxaparin product in the United States until the conclusion of a trial
on the merits and requiring us and Sandoz to post a security bond of $100 million in connection with the litigation. Amphastar, Actavis and International Medical Systems, Ltd. appealed
the decision to the Court of Appeals for the Federal Circuit, or CAFC, and in January 2012, the CAFC stayed the preliminary injunction. Amphastar has filed motions to increase the amount of the
security bond, which
we and Sandoz have opposed. In August 2012, the CAFC issued a written opinion vacating the preliminary injunction and remanding the case to the District Court, holding that Amphastar's use of our
patented method for processing Enoxaparin Sodium Injection was protected by the "safe harbor" from patent infringement under federal patent law, 35 U.S.C. Section 271(e)(1).
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In
January 2013, Amphastar and Actavis filed a motion for summary judgment in the District Court following the decision from the CAFC and in July 2013, the District Court granted the
motion for summary judgment. We have filed a notice of appeal of that decision to the CAFC.
In
December 2010, we sued Teva Pharmaceutical Industries Ltd., or Teva, in the United States District Court for the District of Massachusetts for infringement of two of our
patents related to Enoxaparin Sodium Injection. In January 2013, Teva filed a motion for summary judgment in the District Court following the decision from the CAFC in the aforementioned case and in
July, 2013, the District Court granted the motion for summary judgment. We have filed a notice of appeal of the decision to the CAFC.
M356Generic Copaxone® (glatiramer acetate injection)
Our second complex generic product candidate, M356, is designed to be a generic version of Copaxone (glatiramer acetate injection), a
complex drug consisting of a synthetic mixture of polypeptide chains. Copaxone is indicated for treatment of patients with relapsing-remitting multiple sclerosis, or RRMS, a chronic disease of the
central nervous system characterized by inflammation and neurodegeneration.
Under the Second Sandoz Collaboration Agreement, we and Sandoz AG agreed to exclusively collaborate on the development and
commercialization of M356, among other products. Given its structure as a complex mixture of polypeptide chains of various lengths and sequences, there are significant technical challenges involved in
thoroughly characterizing Copaxone
and in manufacturing an equivalent version. We believe our technology can be applied to characterize glatiramer acetate and to develop a generic product that has the same active ingredient as
Copaxone. We are continuing to expand our portfolio of pending patent applications related to glatiramer acetate injection.
In
connection with the 2006 Sandoz Collaboration, we sold 4,708,679 shares of common stock to Novartis Pharma AG at a per share price of $15.93 (the closing price of our common stock on
the NASDAQ Global Market was $13.05 on the date of purchase) for an aggregate purchase price of $75.0 million, resulting in an equity premium of $13.6 million. As of December 31,
2013, Novartis AG owns approximately 9% of our outstanding common stock.
In December 2007, Sandoz submitted to the FDA an ANDA seeking approval to market our joint product M356 in the United States containing
a Paragraph IV certification. This is a certification by the ANDA applicant that the patent relating to the drug product that is the subject of the ANDA is invalid, unenforceable or will not be
infringed. In July 2008, the FDA notified Sandoz that it had accepted the ANDA for review as of December 27, 2007. The Sandoz ANDA for M356 is currently under FDA review.
Since
2008, Teva has filed six Citizen Petitions with FDA requesting FDA deny approval of any ANDA filed for generic Copaxone. The FDA has denied the first four Citizen Petitions filed
by Teva. We anticipate Teva will continue to engage in activities that seek to challenge the approval of our M356 ANDA.
In North America, Copaxone is marketed by Teva Neuroscience, Inc., which is a subsidiary of Teva. Teva reported worldwide sales
of Copaxone of approximately $4.3 billion in 2013, with approximately 74%, or $3.2 billion, from the United States.
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Subsequent to FDA's acceptance of the ANDA for review, in August 2008, Teva and related entities and Yeda Research and
Development Co., Ltd., filed suit against us and Sandoz in the United States Federal District Court in the Southern District of New York. The suit alleged infringement related to four of
the seven Orange Book patents listed for Copaxone. We and Sandoz asserted various defenses and filed counterclaims for declaratory judgments to have all seven of the Orange Book patents as well as two
additional patents in the same patent family adjudicated in the present lawsuit. Another company, Mylan Inc., or Mylan, also has an ANDA for generic Copaxone under FDA review. In October 2009,
Teva sued Mylan for patent infringement related to the Orange Book patents listed for Copaxone, and in October 2010, the court consolidated the Mylan case with the case against us and Sandoz. A trial
on the issue of inequitable conduct occurred in July 2011 and the trial on the remaining issues occurred in September 2011 in the consolidated case. In June 2012, the Court issued its opinion and
found all of the claims in the patents to be valid, enforceable and infringed. In July 2012, the Court issued a final order and permanent injunction prohibiting Sandoz and Mylan from infringing all of
the patents in the suit. The Orange Book patents and one non-Orange book patent expire in May 2014 and one non-Orange Book patent expires in September 2015. In addition, the permanent injunction
further restricts the FDA, pursuant to 35 U.S.C. Section 271(e)(4)(A), from making the effective date of any final approval of the Sandoz or Mylan ANDA prior to the expiration of the Orange
Book patents. In July 2012, we appealed the decision to the CAFC, and in July 2013, the CAFC issued a written opinion invalidating several of the patents, including the one patent set to expire in
2015. Several patents expiring in May 2014 remain in force. The CAFC remanded the case to the District Court to modify the injunction in light of the CAFC decision. In September 2013, Teva filed a
petition for rehearing of the CAFC decision, and in October 2013 the CAFC denied the petition. Teva filed a petition for review by the Supreme Court in January 2014.
In
December 2009, in a separate action in the same court, Teva sued Sandoz, Novartis AG and us for patent infringement related to certain other non-Orange Book patents seeking
declaratory and injunctive relief that would prohibit the launch of our product until the last to expire of these patents as well as damages in the event that Sandoz has launched the product. In
January 2010, we and Sandoz filed a motion to dismiss this second suit on several grounds and in July 2013, the motion to dismiss the suit was granted.
Biosimilars
We are also applying our complex systems analysis platform to the development of biosimilar versions of marketed therapeutic proteins,
with a goal of obtaining FDA designation as interchangeable. In March 2010, an abbreviated regulatory process was codified in Section 351(k) of the Patient Protection and Affordable Care Act of
2010. This new pathway opened the market for biosimilar and interchangeable versions of a broad array of biologic therapeutics, including antibodies, cytokines, fusion proteins, hormones and blood
factors. By 2015, sales of biosimilars are expected to reach between $1.9 billion to $2.6 billion. In February 2012, FDA released three documents containing their preliminary guidelines
for applications under the Section 351(k) pathway. These guidelines state that FDA will use a step-wise review that considers the totality-of-the-evidence in determining extent of the clinical
development program. This approach puts a substantial emphasis on structural and functional characterization data in evaluating biosimilar products for approval. We believe that our strategy for the
development of biosimilars aligns well with the framework that the FDA has outlined in the draft guidance documents.
Given
the inadequacies of standard technology available at the time of original review and approval, many of these therapeutic proteins have not been thoroughly characterized. Most of
these
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products
are complex glycoprotein mixtures, consisting of proteins that contain branched sugars that vary from molecule to molecule. These sugars can impart specific biological properties to the
therapeutic protein and can often comprise a significant portion of the mass of the molecule. In addition to the structural characterization of several marketed therapeutic proteins, we are also
advancing our structure-process capabilities as we further define the relationship between aspects of the manufacturing process and the structural composition of the final protein product. We believe
our approach has the potential to drive regulatory advantages such as a reduction in the level of clinical data required for approval, or the achievement of a designation of interchangeability, which
would allow our products to be directly substituted for brand products at the pharmacy.
In
December 2011, we and Baxter International, Inc., Baxter Healthcare Corporation and Baxter Healthcare SA, collectively, Baxter, entered into a global collaboration and
license agreement, or the Baxter Agreement, to develop and commercialize biosimilars. The Baxter Agreement became effective in February 2012. Baxter is an established healthcare company with global
product development, manufacturing and commercial capabilities. Under the Baxter Agreement, we and Baxter agreed to collaborate, on a world-wide basis, on the development and commercialization of two
biosimilars, M923 and M834.
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M923, a biosimilar for a branded biologic indicated for certain autoimmune and inflammatory diseases, is our most advanced
biosimilar. We are working toward progressing this program to the clinic in Europe, which is targeted for the second half of 2014.
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M834, a biosimilar for a branded biologic indicated for certain autoimmune and inflammatory diseases. We are working
toward achievement of a pre-defined "minimum development criteria" license payment in 2014.
In
July 2012, Baxter selected a third product for inclusion in the collaboration, a monoclonal antibody for oncology designated as M511. On December 19, 2013, Baxter terminated
its option to license M511 under the Baxter Agreement following an internal portfolio review. We continue to collaborate with Baxter on M923 and M834 and evaluate additional products for development.
We are continuing to develop M511 as part of our biosimilars program. Baxter has the right, until February 2015, to select up to three additional biosimilars to be included in the collaboration. We
may also consent, at our option, to allow Baxter to name a replacement product for M511, if Baxter requests such replacement.
Most protein drugs have been approved by the FDA under the BLA regulatory pathway. The BLA pathway was created to review and approve
applications for biologic drugs that are typically produced from living systems. Until 2010, there was no abbreviated regulatory pathway for the approval of interchangeable or biosimilar versions of
BLA-approved products in the United States; however, there have been guidelines for biosimilar products in the European Union for several years.
In
March 2010, with the enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCI, an abbreviated pathway for the approval of biosimilars and interchangeable
biologics was created. The new abbreviated regulatory pathway established legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as
"interchangeable," based on its similarity to an existing brand product.
Under
the BPCI, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original brand product was approved under a BLA. There are many
biologics at this time for which this 12-year period has expired or is nearing expiration. We believe that scientific progress in the
analysis and characterization of complex mixture drugs is likely to play a significant role in FDA's approval of biosimilar (including interchangeable) biologics in the years to come.
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In
2012, the FDA implemented its proposed biosimilar user fee program which includes a fee-based meeting process for consultation between applicants and the division of FDA responsible
for reviewing biosimilar and interchangeable biologics applications under the new approval pathway. It contemplates well-defined meetings where the applicant can propose and submit analytic,
physicochemical and biologic characterization data along with a proposed development plan. The proposed development plan may have a reduced scope of clinical development based on the nature and extent
of the characterization data. There are defined time periods for meetings and written advice. In February 2012, the FDA published draft guidance documents for the development and registration of
biosimilars and interchangeable biologics. The draft guidance documents indicate that the FDA will consider the totality-of-the-evidence developed by an applicant in determining the nature and extent
of the nonclinical and clinical requirements for a biosimilar or interchangeable biologic product.
The
new law is complex and is in the initial stages of being interpreted and implemented by the FDA. As a result, we expect that its ultimate impact, implementation and meaning will be
subject to uncertainty for years to come.
Novel Drugs
Overview
Our novel drugs program uses the established characterization and process engineering capabilities from our complex generics and
biosimilars programswith a focus on polysaccharides and therapeutic proteins.
M402
M402 is a novel oncology drug candidate engineered to have a broad range of effects on tumor cells. The use of heparins to treat venous
thrombosis in cancer patients has generated numerous reports of antitumor activity; however, the dose of these products has been limited by their anticoagulant activity. M402, which is derived from
unfractionated heparin, has been engineered to have significantly reduced anticoagulant activity while preserving the relevant antitumor properties of heparin.
Researchers
have conducted a series of nonclinical experiments using different pancreatic cancer models to test the hypothesis that M402 can modulate tumor progression and metastasis and
enhance the efficacy of gemcitabine, a first-line standard of care chemotherapy treatment for pancreatic cancer. The nonclinical results showed potent binding of M402 to multiple growth factors,
adhesion molecules, and chemokines to inhibit tumor progression, metastasis, and angiogenesis. Additionally, the nonclinical data showed that M402 in combination with gemcitabine prolonged survival
and substantially lowered the incidence of metastasis, suggesting that M402 has the potential to complement conventional chemotherapy. We believe that M402's mechanism of action, by binding to
multiple heparin binding factors involved in tumor growth and metastasis, creates the potential for M402 to contribute to efficacy in a broad range of cancers.
In
2012, we initiated a Phase 1/2 proof-of-concept clinical study in patients with advanced metastatic pancreatic cancer. The trial consists of two parts and will evaluate the safety,
potential efficacy, pharmacokinetics and pharmacodynamics of M402 in combination with nab-paclitaxel and gemcitabine. Part A is an open-label, multiple ascending dose escalation study. We have
completed several cohorts in Part A of the trial. Dose escalation data from Part A are expected during the first half of 2014. Pending successful completion of this phase, we expect to
initiate Part B of the trial, which will be a randomized, controlled study investigating the safety and antitumor activity of M402 administered in combination with nab-paclitaxel and
gemcitabine, compared with nab-paclitaxel and gemcitabine alone.
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Discovery Research Program
The majority of human diseases result from the interaction of a complex web of biologic systems. We believe our core analytical tools
and approach may enable new insights into the complex biology underlying diseases. This enhanced understanding should help us establish the relative role of different biological targets and related
cell-to-cell signaling pathways in contributing to the disease process. Our goal is to leverage this knowledge to identify novel targets, novel combinations of therapies, and possibly exploit the
multi-targeting nature of complex mixture molecules to develop novel products which may positively modulate multiple pathways in a disease.
IVIg,
a mixture of human immunoglobulin G, or IgG, antibodies, is the last line of defense in many severe inflammatory diseases. IVIg is approved in several inflammatory disease
indications including idiopathic thrombocytopenic purpura, Kawasaki disease, chronic inflammatory demyelinating polyneuropathy, and multifocal motor neuropathy. Currently, IVIg is manufactured from
large pools of human plasma, resulting in a high cost supply chain with limited supply. IVIg is also approved to treat primary immunodeficiency for diseases such as AIDS. While not a focus of our
research, this indication further limits available supply of IVIg. Increasing demand for IVIg products already exceeds available supply worldwide thus limiting broader clinical applications.
Our
research program seeks to better understand the complex biology underlying the anti-inflammatory effects of IVIg and use this understanding to develop enhanced versions of IVIg or
alternative recombinant molecules with improved efficacy. In 2013, we advanced our understanding of the biologic impact of sialylation, a method to add sialic acid to proteins, on the activity of IVIg
as well as the behavior of recombinant molecules engineered from the Fc region of IgG. Through our testing in various models of inflammation, we have gained a deeper understanding of the basic
biologic pathways by which these molecules mediate their therapeutic effects. We are turning our efforts to developing recombinant product candidates to take advantage of this understanding. This
approach will give us an opportunity to more carefully design a product candidate to target the specific biologic effects we have observed as well as give us the opportunity to take advantage of a
recombinantly produced product.
Research and development expenses consist of costs incurred in identifying, developing and testing product candidates. These expenses
consist primarily of salaries and related expenses for personnel, license fees, consulting fees, nonclinical and clinical trial costs, contract research and manufacturing costs, and the costs of
laboratory equipment and facilities. Research and development expense for 2013 was $104.0 million, compared with $80.3 million in 2012 and $64.7 million in 2011.
Collaborations, Licenses and Asset Purchases
Sandoz
Under the terms of the 2003 Sandoz Collaboration, we and Sandoz agreed to exclusively work with each other to develop and commercialize
Enoxaparin Sodium Injection for any and all medical indications within the United States. In addition, we granted Sandoz an exclusive license under our intellectual property rights to develop and
commercialize injectable enoxaparin for all medical indications within the United States.
In
July 2010, Sandoz began the commercial sale of Enoxaparin Sodium Injection. The profit-share or royalties Sandoz is obligated to pay us under the 2003 Sandoz Collaboration differ
depending on whether (i) there are no third-party competitors marketing an interchangeable generic version of Lovenox, or Lovenox-Equivalent Product (as defined in the 2003 Sandoz
Collaboration), (ii) a
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Lovenox-Equivalent
Product is being marketed by Sanofi-Aventis, which distributes the brand name Lovenox, or licensed by Sanofi-Aventis to another company to be sold as a generic drug, both known as
authorized generics, or (iii) there are one or more third-party competitors which are not Sanofi-Aventis marketing a Lovenox-Equivalent Product. From July 2010 through September 2011, no
third-party competitor was marketing a Lovenox-Equivalent Product; therefore, during that period, Sandoz paid us 45% of the contractual profits from the sale of Enoxaparin Sodium Injection. In
September 2011, FDA approved the ANDA for the enoxaparin product of Amphastar. In October 2011, Sandoz confirmed that an authorized generic Lovenox-Equivalent Product was being marketed, which meant
that Sandoz was obligated to pay us a royalty on its net sales of Enoxaparin Sodium Injection until the contractual profits from those net sales in a product year
(July 1June 30) reached a certain threshold. Upon achievement of the contractual profit threshold in December 2011, Sandoz was obligated to pay us a profit share for the
remainder of the product year. In January 2012, following the CAFC's granting a stay of the preliminary injunction previously issued by the United States District Court for the District of
Massachusetts, Actavis announced that they and Amphastar launched their enoxaparin product. Consequently, in each product year, for net sales of enoxaparin up to a pre-defined sales threshold, Sandoz
is obligated to pay us a royalty on net sales at a 10% rate, and for net sales above the sales threshold, at a 12% rate.
Certain
development and legal expenses may reduce the amount of profit-share, royalty and milestone payments paid to us by Sandoz. Any product liability costs and certain other expenses
arising from patent litigation may also reduce the amount of profit-share, royalty and milestone payments paid to us by Sandoz, but only up to 50% of these amounts due to us from Sandoz each quarter.
Our contractual share of these development and legal expenses is subject to an annual adjustment at the end of each product year, and ends with the product year ending June 2015.
The
collaboration is governed by a joint steering committee and a joint project team, each consisting of an equal number of Sandoz and Momenta representatives. Most decisions must be
made unanimously, with Sandoz collectively having one vote and Momenta having one vote. Sandoz has the sole authority to determine the price at which it sells Enoxaparin Sodium Injection.
We
and Sandoz will indemnify each other for losses resulting from the indemnifying party's misrepresentation or breach of its obligations under the agreement. We will indemnify Sandoz if
we actually misappropriate the know-how or trade secrets of a third party. Sandoz will indemnify us and our collaborators involved in the enoxaparin program for any losses resulting from any
litigation by third parties, including any product liability claims with respect to Enoxaparin Sodium Injection and any other claims relating to the development and commercialization of Enoxaparin
Sodium Injection. To the extent that any losses result from a third-party claim for which we are obligated to indemnify Sandoz, Sandoz will have no obligation to indemnify us. After the expiration or
termination of the agreement, these indemnification obligations will continue with respect to claims that arise before or after the termination of the agreement due to activities that occurred before
or during the term of the agreement.
Unless
terminated earlier, the agreement will expire upon the last sale of Enoxaparin Sodium Injection by or on behalf of Sandoz in the United States. Either party may terminate the
collaboration relationship for material uncured breaches or certain events of bankruptcy or insolvency by the other. Sandoz may also terminate the agreement if the product or the market lacks
commercial viability, if new laws or regulations are passed or court decisions rendered that substantially diminish our legal avenues for redress, or, in multiple cases, if certain costs exceed
mutually agreed upon limits. If Sandoz terminates the agreement (except due to our uncured breach) or if we terminate the agreement due to an uncured breach by Sandoz, we will be granted an exclusive
license under certain intellectual property of Sandoz to develop and commercialize injectable enoxaparin in the United States and our obligation to indemnify Sandoz will survive with respect to claims
that arise due to our exclusive development or commercialization of injectable enoxaparin after the term of the agreement. In the
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event
of a termination by Sandoz due to the incurrence of costs beyond the agreed upon limits, we must pay certain royalties to Sandoz on our net sales of injectable enoxaparin. If Sandoz terminates
the agreement due to our uncured breach, Sandoz retains the exclusive right to develop and commercialize injectable enoxaparin in the United States. Sandoz's profit sharing, royalty and milestone
payment obligations survive and Sandoz's obligation to indemnify us will survive with respect to claims that arise due to Sandoz's exclusive development or commercialization of injectable enoxaparin
after the term of the agreement.
Under the Second Sandoz Collaboration Agreement, we and Sandoz AG agreed to exclusively collaborate on the development and
commercialization of M356, among other products, and expanded the geographic markets covered by the 2003 Sandoz Collaboration related to Enoxaparin Sodium Injection to include the European Union. In
December 2008, we and Sandoz AG terminated the collaborative program with regard to one of the follow-on products, M249, primarily due to its commercial prospects. In December 2009, we and Sandoz AG
terminated the collaborative program with regard to the other follow-on product, M178, and clarified the surviving rights of each of the parties following such termination. As a result, the Second
Sandoz Collaboration Agreement now principally governs the M356 collaborative program and the expansion of the 2003 Sandoz Collaboration.
Costs,
including development costs and the costs of clinical studies, will be borne by the parties in varying proportions depending on the type of expense and the related product. For
M356, we are generally responsible for all of the development costs in the United States. For M356 outside of the United States and for Enoxaparin Sodium Injection in the European Union, we share
development costs in proportion to our profit sharing interest. All commercialization responsibilities and costs will be borne by Sandoz AG worldwide as they are incurred for all products. We are
reimbursed at cost for any full-time equivalent employee expenses as well as any external costs incurred in the development of products to the extent development costs are born by Sandoz AG. Sandoz AG
is responsible for funding all of the legal expenses incurred under the Second Sandoz Collaboration Agreement; however a portion of certain legal expenses will be offset against the profit-sharing
amounts in proportion to our profit sharing interest. The parties will share profits in varying proportions, depending on the product. We are entitled to a 50% share of the contractual profits from
sales of M356. We are eligible to receive up to $163.0 million in milestone payments upon the achievement of certain regulatory, commercial and sales-based milestones for the products under the
collaboration, which include: a $10.0 million regulatory milestone payment related to the approval by the FDA of M356, and $153.0 million in sales-based and commercial milestone
payments, of which up to $140.0 million (including the M356 regulatory milestone) are U.S.-based milestones. None of these payments, once received, is refundable and there are no general rights
of return in the arrangement. Sandoz AG has agreed to indemnify us for various claims, and a certain portion of such costs may be offset against certain future payments received by us.
Under
the Second Sandoz Collaboration Agreement, each party has granted the other an exclusive license under its intellectual property rights to develop and commercialize such products
for all medical indications in the relevant regions. We have agreed to provide development and related services on a commercially reasonable best-efforts basis, which includes developing a
manufacturing process to make the products, scaling up the process, contributing to the preparation of regulatory filings, further scaling up the manufacturing process to commercial scale, and related
development of intellectual property. We have the right to participate in a joint steering committee, which is responsible for overseeing development, legal and commercial activities and which
prepares and approves the annual collaboration plans. Sandoz AG is responsible for commercialization activities and will exclusively distribute and market the products.
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The
term of the Second Sandoz Collaboration Agreement extends throughout the development and commercialization of the products until the last sale of the products, unless earlier
terminated by either party pursuant to the provisions of the Second Sandoz Collaboration Agreement. The Second Sandoz Collaboration Agreement may be terminated if either party breaches the Second
Sandoz Collaboration Agreement or files for bankruptcy. In addition, either we or Sandoz AG may terminate the Second Sandoz Collaboration Agreement as it relates to the remaining products, on a
product-by-product basis, if clinical trials are required.
Pursuant
to the terms of the Stock Purchase Agreement, we sold 4,708,679 shares of common stock to Novartis Pharma AG, an affiliate of Sandoz AG, at a per share price of $15.93 for an
aggregate purchase price of $75.0 million. This resulted in a paid premium of $13.6 million as the closing price of our common stock on the NASDAQ Global Market was $13.05 on the date of
the Stock Purchase Agreement.
Pursuant
to the terms of the Investor Rights Agreement, we granted to Novartis Pharma AG certain registration rights and inspection rights. Specifically, Novartis Pharma AG is entitled
to "piggyback" and demand registration rights under the Securities Act of 1933, as amended, with respect to the shares of common stock purchased under the Stock Purchase Agreement. We also granted
Novartis Pharma AG inspection rights whereby, subject to certain exceptions, Novartis Pharma AG may visit and inspect our properties and records, discuss our business and financial affairs with its
officers, employees and other agents, and meet, at least twice a year, with the members of our Board of Directors.
Baxter
In December 2011, we and Baxter entered into the Baxter Agreement, which became effective in February 2012, following expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended.
Under
the Baxter Agreement, we agreed to collaborate, on a world-wide basis, on the development and commercialization of two biosimilar products, M923 and M834, indicated for certain
autoimmune and inflammatory diseases, or the initial products. In July 2012, Baxter selected a third biosimilar for inclusion in the collaboration known as M511, a monoclonal antibody for oncology,
and we initiated development of this product. In December 2013, Baxter terminated its option to license M511 under
the Baxter Agreement following an internal portfolio review. We are continuing to develop M511 as part of our internal biosimilars program.
The
process for achieving milestones under the Baxter Agreement is as follows:
-
-
Baxter selects an additional product to the collaboration and we initiate development.
-
-
If we achieve pre-defined "minimum development" criteria related to the additional product, Baxter is given an option to
exercise exclusive license rights.
-
-
If Baxter exercises its exclusive license option to advance the additional product under the Baxter Agreement, we will
earn a license payment.
-
-
If we achieve pre-defined "technical development" criteria related to an initial product or additional product, we will
earn a milestone payment.
-
-
For an initial and additional product, if we either (a) submit an Investigational New Drug application, or IND, to
the FDA or equivalent application in the European Union or (b) are not required to file an IND, either referred to as the "Transition Period," we will earn a milestone
payment.
-
-
Following the Transition Period, Baxter will assume responsibility for development of each biosimilar, and we have the
potential to receive up to $250.0 million in regulatory milestone payments. These milestones are designed to reward the Company, on a sliding scale, for reducing the scope of the clinical
activities required to develop each biosimilar.
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Under
the Baxter Agreement, each party has granted the other an exclusive license under its intellectual property rights to develop and commercialize designated products for all
therapeutic indications. We have agreed to provide development and related services on a commercially reasonable basis through the Transition Period for each product, which include high-resolution
analytics, characterization, and product and process development. Baxter is responsible for clinical development, manufacturing and commercialization activities and will exclusively distribute and
market any products covered by the Baxter Agreement. We have the right to participate in a joint steering committee, consisting of an equal number of members from us and Baxter, to oversee and manage
the development and commercialization of products under the collaboration. Costs, including development costs, payments to third parties for intellectual property licenses, and expenses for legal
proceedings, including the patent exchange process pursuant to the Biologics Price Competition and Innovation Act of 2009, will be borne by the parties in varying proportions, depending on the type of
expense and the stage of development. We have the option to participate, at our discretion, in a cost and profit share arrangement for the three additional products up to 30%. If the profit share is
elected, the royalties payable would be reduced by up to nearly half. Absent a cost share arrangement, we will generally be responsible for research and process development costs prior to filing an
IND or equivalent application in the European Union, and the cost of in-human clinical trials, manufacturing in accordance with current good manufacturing practices and commercialization will be borne
by Baxter.
In
addition, we have agreed, for a period commencing six months following the effective date and ending on the earlier of (i) three years from the effective date of the Baxter
Agreement (subject to certain limited time extensions as provided in the Baxter Agreement) or (ii) the selection of the three additional products, to notify Baxter of bona fide offers from
third parties to develop or commercialize a biosimilar that could be an additional product candidate. Following such notification, if Baxter does not select such proposed product or products for
inclusion in the collaboration, we have the right to develop, manufacture, and commercialize such product or products on our own or with a third party. We also agreed to provide Baxter with a right of
first negotiation with respect to collaborating in the development of a competing product for a period of three years following the effectiveness of an IND exemption or waiver or regulatory authority
authorization to dose humans, subject to certain restrictions as outlined in the Baxter Agreement. Following the third anniversary of the effective date of the Baxter Agreement (subject to certain
limited time extensions, as provided for in the Baxter Agreement), we may develop, on our own or with a third party, any biosimilar products not named under the Baxter Agreement, subject to certain
restrictions.
Under
the terms of the Baxter Agreement, we received an initial cash payment of $33.0 million. We are also eligible to receive license payments totaling $21.0 million for
the exercise of options with respect to the additional three product candidates that can be named under the Baxter Agreement, payments of $5.0 million each for extensions of the period during
which such additional products may be selected, and a license payment of $7.0 million upon the achievement of pre-defined "minimum development" criteria, as defined in the agreement, for M834
(a selected biosimilar). In addition, we are eligible to receive an aggregate of approximately $316.0 million in potential milestone payments, comprised of (i) up to $66.0 million
in substantive milestone payments upon achievement of specified technical and
development milestone events across the five product candidates, and (ii) regulatory milestone payments totaling up to $250.0 million, on a sliding scale, across the five product
candidates where, based on the products' regulatory application, there is a significant reduction in the scope of the clinical trial program required for regulatory approval. Two of the technical and
development milestones were time-based and the total eligible milestones have been adjusted to correspond to current development plans. There are no other time-based milestones included in the Baxter
Agreement. The technical and development milestones include (i) achievement of certain criteria that will ultimately drive commercial feasibility for manufacturing the products and
(ii) acceptance by the FDA of an IND or acceptance in the European Union of an equivalent application.
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We
continue to advance toward achievement of defined milestones in 2014 for the two biosimilar products under development with Baxter. For our lead biosimilar M923, the
$12.0 million in milestones targeted for second half of 2014 are achievement of technical development criteria and the submission of a regulatory application in the European Union. The
achievement of pre-defined "minimum development" criteria would generate a $7.0 million milestone payment for M834 in 2014.
In
addition, if any of the five products are successfully developed and launched, Baxter will be required to pay us royalties on net sales of licensed products worldwide, with a base
royalty rate in the high single digits with the potential for significant tiered increases based on the number of competitors, the interchangeability of the product, and the sales tier for each
product. The maximum royalty with all potential increases would be slightly more than double the base royalty.
The
term of the collaboration will continue throughout the development and commercialization of the products, on a product-by-product and country-by-country basis, until there is no
remaining payment obligation with respect to a product in the relevant territory, unless earlier terminated by either party pursuant to the terms of the Baxter Agreement.
The
Baxter Agreement may be terminated by:
-
-
either party for breach by or bankruptcy of the other party;
-
-
us in the event Baxter elects to terminate the Baxter Agreement with respect to both of the initial two products within a
certain time period;
-
-
Baxter for its convenience; or
-
-
us in the event Baxter does not exercise commercially reasonable efforts to commercialize a product in the United States
or other specified countries, provided that we also have certain rights to directly commercialize such product, as opposed to terminating the Baxter Agreement, in event of such a breach by Baxter.
Massachusetts Institute of Technology
We have an agreement dated November 1, 2002 with the Massachusetts Institute of Technology, or M.I.T., granting us various
exclusive and non-exclusive worldwide licenses, with the right to grant sublicenses, under certain patents and patent applications relating to:
-
-
methods and technologies for characterizing polysaccharides;
-
-
certain heparins, heparinases and other enzymes; and
-
-
carbohydrate synthesis methods.
In
exchange for the licenses granted in the agreement, we have paid M.I.T. license maintenance fees, royalties on certain products and services covered by the licenses and sold by us or
our affiliates or
sublicensees, a percentage of certain other income received by us from corporate partners and sublicensees, and certain patent prosecution and maintenance costs.
The
following table summarizes the license maintenance fees and royalties paid to M.I.T. and recorded in the years ended December 31, 2013, 2012 and 2011 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
License maintenance fees
|
|
$
|
82
|
|
$
|
183
|
|
$
|
158
|
|
Royalties
|
|
|
252
|
|
|
1,013
|
|
|
6,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
334
|
|
$
|
1,196
|
|
$
|
6,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
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Beginning
in 2014, the annual license maintenance obligations, which extend through the life of the patents, are approximately $0.1 million per year.
We
are obligated to indemnify M.I.T. and related parties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the
agreements, unless the losses result from the indemnified parties' gross negligence or willful misconduct.
The
agreement expires upon the expiration or abandonment of all patents that issue and are licensed to us by M.I.T. under such agreement. The issued patents include over 40 United States
patents and foreign counterparts of some of those. Any such patent will have a term of 20 years from the filing date of the underlying application. M.I.T. may terminate the agreement
immediately if we cease to carry on our business, if any nonpayment by us is not cured within 60 days of written notice or if we commit a material breach that is not cured within 90 days
of written notice. We may terminate the agreement for any reason upon six months' notice to M.I.T., and we can separately terminate the license under a certain subset of patent rights upon three
months' notice.
We
granted Sandoz a sublicense under the agreement to certain of the patents and patent applications licensed to us. If M.I.T. converts our exclusive licenses under this agreement to
non-exclusive licenses due to our failure to meet diligence obligations, or if M.I.T. terminates this agreement, M.I.T. will honor the exclusive nature of the sublicense we granted to Sandoz so long
as Sandoz continues to fulfill its obligations to us under the collaboration and license agreement we entered into with Sandoz and, if our agreement with M.I.T. is terminated, Sandoz agrees to assume
our rights and obligations to M.I.T.
We
previously had an exclusive patent license agreement dated October 31, 2002 with M.I.T granting us various licenses under certain patents solely related to the commercial sale
or leasing of sequencing machines, including the performance of sequencing services. We terminated that agreement in January 2013. Nothing in the notice of termination impacts the agreement between us
and M.I.T dated November 1, 2002.
Patents and Proprietary Rights
Our success depends in part on our ability to obtain and maintain proprietary protection for our technology and product candidates, to
operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other
methods, filing United States and foreign patent applications related to our proprietary technology and product candidates that are important to the development of our business. We also rely on trade
secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.
We
license or own a patent portfolio of over 95 patent families, each of which includes United States patent applications and/or issued patents as well as foreign counterparts to certain
of the United States patents and patent applications. Our patent portfolio includes issued or pending claims covering:
-
-
methods and technologies for characterizing and making polysaccharides, peptides and proteins and other heterogeneous
mixtures;
-
-
the composition of matter and use of certain heparinases, heparinase variants and other enzymes;
-
-
methods and technologies for synthesis of polysaccharides;
-
-
the composition of matter and use of certain novel LMWHs and other therapeutic proteins, including M402;
-
-
methods to identify, analyze and characterize glycoproteins; and
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-
-
methods of manufacture of certain polysaccharide, polypeptide and glycoprotein products.
A
portion of our patent portfolio covering methods and technologies for analyzing and characterizing polysaccharides consists of patents and patent applications owned and licensed to us
by M.I.T. In addition, a portion of the claims in our patent portfolio covering the composition of matter of naturally occurring heparinases, heparinase variants and other enzymes, the use of these
heparinases and enzymes in the characterization of sugars consists of patents and patent applications that are owned and licensed to us by M.I.T.
The
patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. Our ability to maintain and solidify our proprietary position for our
technology will depend on our success in obtaining effective claims and enforcing those claims once granted. We do not know whether any of our patent applications will result in the issuance of any
patents. Moreover, any issued patent does not guarantee us the right to practice the patented technology or to commercialize the patented product. Third parties may have blocking patents that could be
used to prevent us from commercializing our patented products and practicing our patented technology. Our issued patents and those that may be issued in the future may be challenged, invalidated or
circumvented, which could limit our ability to stop competitors from marketing related products or the length of the term of patent protection that we may have for our products. In addition, the
rights granted under any issued patents may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may
independently develop similar technologies. For these reasons, we may have competition for our generic, biosimilar and novel products. Moreover, because of the extensive time required for development,
testing and regulatory review of a potential product, it is possible that, before any of our novel heparin or other products can be commercialized, any related patent may expire or remain in force for
only a short period following commercialization, thereby reducing any advantage of the patent.
We
may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets are difficult to protect. We seek to protect our technology and product candidates,
in part, by confidentiality agreements with our employees, consultants, advisors, contractors and collaborators. These agreements may be breached and we may not have adequate remedies for any breach.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our employees, consultants, advisors, contractors and collaborators use
intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Virdante
In December 2011, we entered into an asset purchase agreement to acquire the sialylation technology assets of Virdante
Pharmaceuticals, Inc., including intellectual property and cell lines, relating to the sialylation of IVIg and other proteins. We paid Virdante $4.5 million in cash at closing and have
agreed to pay Virdante up to an aggregate of $51.5 million in additional contingent milestone payments upon achievement of particular development goals for up to three products in the manner
and on the terms and conditions set forth in the purchase agreement. The contingent milestone payments are structured to include potential payments related to products based upon the acquired assets
as follows: (i) no more than $30 million if certain development and regulatory milestones are achieved for an initial product; (ii) no more than $15 million if certain
development and regulatory milestones are achieved for a second product; and (iii) no more than $6.5 million if certain development and regulatory milestones are achieved for a third
product if the development milestones for such third product are met within fifteen (15) years of the date of the purchase agreement.
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Parivid
In April 2007, we entered into an asset purchase agreement, or the Purchase Agreement, with Parivid, LLC, or Parivid, a provider
of data integration and analysis services to us, and S. Raguram, the principal owner and Chief Technology Officer of Parivid. Pursuant to the Purchase Agreement, we acquired certain of the assets and
assumed certain of the liabilities of Parivid related to the acquired assets in exchange for $2.5 million in cash paid at closing and up to $11.0 million in contingent milestone payments
in a combination of cash and/or stock in the manner and on the terms and conditions set forth in the Purchase Agreement.
The
contingent milestone payments are structured to include (i) potential payments of no more than $2.0 million in cash if certain milestones are achieved within two years
from the date of the Purchase Agreement, or the Initial Milestones, and (ii) the issuance of up to $9.0 million of our common stock to Parivid if certain other milestones are achieved
within fifteen years of the date of the Purchase Agreement.
In
August 2009, we entered into an Amendment to the Purchase Agreement where we agreed to extend the time period for completion of the Initial Milestones to June 30, 2009,
specified those Initial Milestones that had been achieved as of June 30, 2009 and, as consideration for the completion and satisfaction of the Initial Milestones that were achieved, agreed to
pay Parivid $0.5 million cash and to issue 91,576 shares of our common stock, at a value of $10.92 per share. In addition, in September 2009, we made a cash payment of $0.1 million to
Parivid, recorded as other expense, representing the difference between the net proceeds from Parivid's sale of the shares issued in satisfaction of the Initial Milestones and the value of such shares
as of the date of the Amendment.
In
July 2011, we entered into an Amendment to the Purchase Agreement where we agreed that a milestone payment would be made in cash rather than through the issuance of our common stock.
In August 2011, we paid Parivid $6.7 million in cash, in lieu of stock, pursuant to this Amendment as consideration for the completion and satisfaction of a milestone related to Enoxaparin
Sodium Injection developed technology that was achieved in July 2011. We capitalized the payment as developed technology, which is included in intangible assets in our consolidated balance sheets as
of December 31, 2011 and 2012. The developed technology is being amortized over the estimated useful life of the Enoxaparin Sodium Injection developed technology of approximately
10 years.
Manufacturing
We do not own facilities for manufacturing any products. Although we intend to rely on contract manufacturers, we have personnel with
experience in manufacturing, as well as process development, analytical development, quality assurance and quality control. Under the 2003 Sandoz Collaboration and the 2006 Sandoz Collaboration,
Sandoz is responsible for commercialization, including manufacturing, of the products covered by those agreements. Under the Baxter Agreement, Baxter is responsible for commercialization, including
manufacturing, of the products covered by that agreement.
We
have entered into various agreements with third party contractors for process development, analytical services and manufacturing. In each of our agreements with contractors, we retain
ownership of our intellectual property and generally own and/or are assigned ownership of processes, developments, data, results and other intellectual property generated during the course of the
performance of each agreement that primarily relate to our products. Where applicable, we are granted non-exclusive licenses to certain contractor intellectual property for purposes of exploiting the
products that are the subject of the agreement and in a few instances we grant non-exclusive licenses to the contract manufacturers for use outside of our product area. The agreements also typically
contain provisions for both parties to terminate for material breach, bankruptcy and insolvency.
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Sales, Marketing and Distribution
We do not currently have any sales, marketing and distribution capabilities, nor do we currently have any plans to build a sales,
marketing and distribution capability to support any of our products. In order to commercialize any products that are not encompassed by the 2003 Sandoz Collaboration, the 2006 Sandoz Collaboration or
the Baxter Agreement, we must either develop a sales, marketing and distribution infrastructure or collaborate with third parties that have sales, marketing and distribution experience, and we will
review these options as our other product candidates move closer to commercialization.
Regulatory and Legal Matters
Government authorities in the United States, at the federal, state and local level, the European Union and other countries extensively
regulate, among other things, the
research, development, testing, manufacture, labeling, promotion, advertising, distribution, marketing and exporting and importing of products such as those we are developing.
United States Government Regulation
In the United States, the information that must be submitted to the FDA in order to obtain approval to market a new drug or biologic
varies depending on whether the drug or biologic is a new product whose safety and effectiveness has not previously been demonstrated in humans, or a drug or biologic whose active ingredient(s) and
certain other properties are the same as those of a previously approved drug or biologic. Approval of new drugs and biologics follows the NDA and BLA routes, respectively. A drug that claims to be the
same as an already approved NDA drug may be able to file for approval under the ANDA approval pathway. Beginning in 2010, with the enactment of the BPCI, a biosimilar may also be filed for approval
under the new abbreviated pathway under Section 351(k) of the Public Health Service Act.
ANDA Approval Process
FDA approval is required before a generic equivalent of an existing brand name drug may be marketed. Such approval is typically
obtained by submitting an ANDA to the FDA and demonstrating therapeutic equivalence. However, it is within the FDA's regulatory discretion to determine the kind and amount of evidence required to
approve a product for marketing. An ANDA may be submitted for a drug on the basis that it is the same as a previously approved branded drug, also known as a reference listed drug. Specifically, the
generic drug that is the subject of the ANDA must have the same active ingredient(s), route of administration, dosage form, and strength, as well as the same labeling, with certain exceptions, and the
labeling must prescribe conditions of use that have been previously approved for the listed drug. If the generic drug product has a different route of administration, dosage form, or strength, the FDA
must grant a suitability petition approving the differences(s) from the listed drug before the ANDA may be filed. The ANDA must also contain data and information demonstrating that the generic drug is
bioequivalent to the listed drug (or alternatively seek a waiver as is requested for most injectables), or if the application is submitted pursuant to an approved suitability petition, information to
show that the listed drug and the generic drug can be expected to have the same therapeutic effect when administered to patients for a proposed condition of use.
Generic
drug applications are termed "abbreviated" because they are not required to duplicate the clinical (human) testing or, generally, nonclinical testing necessary to establish the
underlying safety and effectiveness of the branded product, other than the requirement for bioequivalence testing. However, the FDA may refuse to approve an ANDA if there is insufficient information
to show that the active ingredients are the same and to demonstrate that any impurities or differences in active ingredients do
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not
affect the safety or efficacy of the generic product. In addition, like NDAs, an ANDA will not be approved unless the product is manufactured in current Good Manufacturing Practices, or cGMP,
compliant facilities to assure and preserve the drug's identity, strength, quality and purity. As is the case for NDAs and BLAs, the FDA may refuse to accept and review insufficiently complete ANDAs.
Generally,
in an ANDA submission, determination of the "sameness" of the active ingredients to those in the reference listed drug is based on the demonstration of the chemical
equivalence of the components of the generic version to those of the branded product. While the standard for demonstrating chemical equivalence is relatively straightforward for small molecule drugs,
it is inherently more difficult to define sameness for the active ingredients of complex drugs. Under the NDA pathway, these types of drugs include such products as heparins and recombinant versions
of certain hormones, among others. Due to the limited number of ANDA submissions for generic complex drugs, the FDA has not reached a final position for demonstrating chemical equivalence for many of
these products specifically, nor provided broad guidance for achieving "sameness" for complex drugs in general. In many cases, the criteria the FDA may apply are evolving and are being determined on
an application-by-application basis.
To
demonstrate bioequivalence, ANDAs generally must also contain
in vivo
bioavailability data for the generic and branded drugs.
"Bioavailability" indicates the rate and extent of absorption and levels of concentration of a drug product in the bloodstream needed to produce a therapeutic effect. "Bioequivalence" compares the
bioavailability of one drug product with another, and when established, indicates that the rate of absorption and levels of concentration of a generic drug in the body are the same as the previously
approved branded drug. The studies required to demonstrate
in vivo
bioequivalence are generally very small, quick to complete, and involve relatively
few subjects. Under current regulations, the FDA may waive requirements for
in vivo
bioequivalence data for certain drug products, including products
where bioequivalence is self-evident such as injectable solutions which have been shown to contain the same active and inactive ingredients as the reference listed drug. Although the FDA may waive
requirements for
in vivo
bioequivalence data, it may still require the submission of alternative data on purity, such as immunogenicity and/or
pharmacokinetics and pharmacodynamics data, to provide additional evidence of pharmaceutical equivalence. The FDA, however, does not always waive requirements for
in
vivo
bioequivalence data.
Generic
drug products that are found to be therapeutically equivalent by the FDA receive an "A" rating in FDA's Orange Book, which lists all approved drug products and therapeutic
equivalence evaluations. Products that are therapeutically equivalent can be expected in the FDA's judgment to have equivalent clinical effect and no difference in their potential for adverse effects
when used under the approved conditions of their approved labeling. Products with "A" ratings are generally substitutable for the innovator drug by both in-hospital and retail pharmacies. Many health
insurance plans require automatic substitution for "A" rated generic versions of products when they are available, although physicians may still prescribe the branded drug for individual patients. On
rare occasions in the past,
generic products were approved that were not rated as therapeutically equivalent, and these products were generally not substitutable at retail pharmacies.
The
timing of final FDA approval of a generic drug for commercial distribution depends on a variety of factors, including whether the applicant challenges any listed patents for the drug
and/or its use and whether the manufacturer of the branded product is entitled to one or more statutory periods of non-patent regulatory exclusivity, during which the FDA is prohibited from accepting
or approving generic product applications. For example, submission of an ANDA for a drug that was approved under an NDA as a new chemical entity will be blocked for five years after the pioneer's
approval or for four years after approval if the application includes a paragraph IV certification of non-infringement or invalidity against a patent applicable to the branded drug. In certain
circumstances, a regulatory exclusivity period can extend beyond the life of a patent, and thus block ANDAs from being approved on or after the patent expiration date. For example, a three-year
exclusivity period may be granted for
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new
indications, dosage forms, routes of administration, or strengths of previously approved drugs, or for new uses, if approval of such changes required the sponsor to conduct new clinical studies.
In addition, the FDA may extend the exclusivity of a product by six months past the date of patent expiry or other regulatory exclusivity if the manufacturer undertakes studies on the effect of their
product in children, a so-called pediatric exclusivity.
The
brand manufacturer may seek to delay or prevent the approval of an ANDA by filing a Citizen Petition with the FDA. For example, a Citizen Petition may request the FDA to rule that a
determination of "sameness" and/or therapeutic equivalence for a particular ANDA is not possible without extensive clinical testing, based on the characteristics of the brand product. Because
relatively few ANDAs for complex mixture drugs have been reviewed by FDA, such a petition could substantially delay approval, or result in non-approval, of an ANDA for a complex mixture generic
product. For example, Sanofi-Aventis filed a Citizen Petition that argued that "sameness" could not be established by any applicant filing an ANDA for a generic Lovenox on the grounds that Lovenox was
too complex to be thoroughly characterized. The FDA denied Sanofi-Aventis petition in connection with the approval of the ANDA for Enoxaparin Sodium Injection. The review of the Citizen Petition and
the preparation of the FDA response, however, involved significant legal and regulatory resources that may have extended the time for FDA review and approval of the ANDA.
Patent Challenge Process Regarding ANDAs
The Hatch-Waxman Act provides incentives for generic pharmaceutical manufacturers to challenge patents on branded pharmaceutical
products and/or their methods of use, as well as to develop products comprising non-infringing forms of the patented drugs. The Hatch-Waxman legislation places significant burdens on the ANDA filer to
ensure that such challenges are not frivolous, but also offers the opportunity for significant financial reward if the challenge is successful.
If
there is a patent listed for the branded drug in the FDA's Approved Drug Products with Therapeutic Equivalence and Evaluations listing or "Orange Book" at the time of submission of
the ANDA, or at any time before the ANDA is approved, the generic manufacturer's ANDA must include one of four types of patent certification with respect to each listed patent. If the applicant seeks
approval to market the generic equivalent prior to the expiration of a listed patent, the generic company includes a certification asserting that the patent is invalid or unenforceable or will not be
infringed, a so-called "paragraph IV certification." Within 20 days after receiving notice from the FDA that its application is acceptable for review, or immediately if the ANDA has been
amended to include a paragraph IV certification after the application was submitted to the FDA, the generic applicant is required to send the patent owner and the holder of the NDA for the
brand-name drug notice explaining why it believes that the listed patents in question are invalid, unenforceable or not infringed. If the patent holder commences a patent infringement lawsuit within
45 days of receipt of such notice, the Hatch-Waxman Act provides for an automatic stay on the FDA's ability to grant final approval of the ANDA for the generic product, generally for a period
of 30 months. A 30-month stay may be shortened or lengthened by a court order if the district court finds that a party has failed to reasonably cooperate in expediting the action. Moreover, the
district court may, before expiration of the stay, issue a preliminary injunction prohibiting the commercial sale of the generic drug until the court rules on the issues of validity, infringement, and
enforceability. If the district court finds that the relevant patent is invalid, unenforceable, or not infringed, such ruling terminates the 30-month stay on the date of the judgment. If it is finally
determined that the patent is valid, enforceable, and infringed, approval of the ANDA may not be granted prior to the expiration of the patent. In addition, if the challenged patent expires during the
30-month period, the FDA may grant final approval for the generic drug for marketing, if the FDA has determined that the application meets all technical and regulatory requirements for approval and
there are no other obstacles to approval.
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In
most cases, patent holders may only obtain one 30 month stay with respect to patents listed in the Orange Book. Specifically, for ANDAs with paragraph IV certifications
to a patent listed for the branded drug in the Orange Book on or after August 18, 2003, a single 30-month stay is available for litigation related to that patent only if the patent was
submitted to the FDA before the date that the ANDA (excluding an amendment or supplement) was submitted. In other words, 30-months stays are not triggered by later listed patents submitted to the FDA
on or after the date the ANDA application
was submitted. Because of this limitation, in most cases ANDAs will be subject to no more than one 30-month stay.
Under
the Hatch-Waxman Act, the first ANDA applicant to have submitted a substantially complete ANDA that includes a paragraph IV certification may be eligible to receive a
180-day period of generic market exclusivity during which the FDA may not approve any other ANDA for the same drug product. However, this exclusivity does not prevent the sponsor of the innovator drug
from selling an unbranded "authorized generic" version of its own product during the 180-day exclusivity period. This period of market exclusivity may provide the patent challenger with the
opportunity to earn a return on the risks taken and its legal and development costs and to build its market share before other generic competitors can enter the market. Under the Hatch-Waxman Act, as
amended by the Medicare Modernization Act of 2003, or MMA, there are a number of ways an applicant who has filed an ANDA after the date of the MMA may forfeit its 180-day exclusivity, including if the
ANDA is withdrawn or if the applicant fails to market its product within the specified statutory timeframe or achieve at least tentative approval within the specified timeframe. In addition, for ANDAs
filed after the MMA was enacted, it is possible for more than one ANDA applicant to be eligible for 180-day exclusivity. This occurs when multiple "first" applicants submit substantially complete
ANDAs with paragraph IV certifications on the same day.
Biosimilars
With the enactment of federal healthcare reform legislation in March 2010, the BPCI was enacted which created a new abbreviated
approval pathway for biosimilars. The new abbreviated pathway is codified in Section 351(k) of the Public Health Service Act. Under Section 351(k), the FDA must wait four years after
approval of a product under a BLA before accepting a filing for a biosimilar version of the brand product, and the FDA cannot approve a biosimilar version of the brand product until 12 years
after the brand product was approved under a BLA. In addition, the new legislation redefines "biologic" versus "drug." There is a ten year transition period during which applicants can elect
regulation as a drug or biologic when applications are filed. For example, heparin-based products may now have the potential option of filing for approval as either a drug or a biologic.
The
new Section 351(k) pathway creates two primary regimes to encourage the development of biosimilars. First, it authorizes the FDA to rely on the safety and efficacy of a brand
biologic approved under a BLA to approve biosimilar products under the abbreviated pathway. Second, it establishes a process for negotiation and clearance of patents controlled by the brand biologic
BLA holder. The law defines a biosimilar product as a biologic that:
-
-
is "highly similar" to the brand product, notwithstanding minor differences in clinically inactive components; and
-
-
has no clinically meaningful differences from the brand product in terms of safety, purity and potency.
The
new Section 351(k) pathway further defines a subset of biosimilar products as "interchangeable" if an applicant can demonstrate that:
-
-
the interchangeable biological product can be expected to produce the same clinical result as the brand biologic product
in any given patient; and
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-
-
if the product is administered more than once in a patient, that the risk in terms of safety or diminished efficacy of
alternating or switching between the use of the interchangeable biologic product and the brand biologic product is no greater than the risk of using the brand biologic product without switching.
The
new Section 351(k) pathway states that a biosimilar product that is determined to be interchangeable may be substituted for the brand biologic product without the intervention
of a health care provider who prescribed the brand biologic product. The law states that the biosimilar must be for the same indication as a the brand biologic, involve the same mechanism of action
and that the manufacturing facility meets the standards necessary to assure that the product continues to be safe, pure and potent. The types of data that would ordinarily be required in an
application to show similarity would include:
-
-
analytical data and studies to demonstrate chemical similarity;
-
-
nonclinical studies (including toxicity studies); and
-
-
clinical studies.
The
FDA has the discretion to determine whether one or more of these elements are necessary. The FDA has not established final guidance on proving similarity or in demonstrating
interchangeability and applicants will need to develop appropriate scientific evidence to support their filings. In 2012, the FDA implemented its biosimilar user fee program which includes a fee-based
meeting process for consultation between applicants and the FDA reviewing division on biosimilar and interchangeable biologics applications under the new approval pathway. It contemplates well-defined
meetings where the applicant can propose and submit analytic, physicochemical and biologic characterization data along with a proposed development plan. The proposed development plan may have a
reduced scope of clinical development based on the nature and extent of the characterization data. There are defined time periods for meetings and written advice. In February 2012, the FDA published
draft guidance documents for the development and registration of biosimilars and interchangeable biologics. The draft guidance documents indicate that the FDA will consider the
totality-of-the-evidence developed by an applicant in determining the nature and extent of the development, nonclinical and clinical requirements for a biosimilar or interchangeable biologic product.
Upon
filing an abbreviated application, the patent negotiation and clearance process is triggered. Under the provisions, an applicant and the brand biologic company are required to share
information to seek to resolve any patent disputes. A failure to share information or participate in the process has defined consequences that include the loss of the right to seek patent clearance on
the applicant's part and the loss of the right to seek lost profits or injunctive relief for infringement on the brand biologic patent right holder's part. The process, if initiated by the applicant,
has several stages, including defining which patents to include in a pre-approval litigation proceeding, initiating litigation, notice 180 days prior to launch of a biosimilar, the initiation
of a second round of litigation relating to patents the parties did not include in the first round litigation, and, following approval, litigation on patents brought by the brand biologic company or
other patent holders not involved in the prior patent process.
The
new law is complex and is only beginning to be interpreted and implemented by the FDA. As a result, its ultimate impact, implementation and meaning will be subject to uncertainty for
years to come.
NDA and BLA Approval Processes for New Drugs and Biologics
In the United States, the FDA regulates drugs and biologics under the Federal Food, Drug, and Cosmetic Act, and, in the case of
biologics, also under the Public Health Service Act, and
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implementing
regulations. The steps required before a new or branded drug or biologic may be marketed in the United States include:
-
-
completion of nonclinical laboratory tests, nonclinical studies and formulation studies under the FDA's good laboratory
practices;
-
-
submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may
begin and must include independent Institutional Review Board, or IRB, approval at each clinical site before the trial is initiated;
-
-
performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the investigational
drug product for each indication or the safety, purity and potency of the biological product for its intended indication;
-
-
completion of developmental chemistry, manufacturing and controls activities and manufacture under current Good
Manufacturing Practices, or cGMP;
-
-
submission to the FDA of an NDA or BLA;
-
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satisfactory completion of an FDA Advisory Committee review, if applicable;
-
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced
to assess compliance with cGMPs and to assure that the facilities, methods and controls are adequate to preserve the drug's identity, strength, quality and purity or to meet standards designed to
ensure the biologic's continued safety, purity and potency;
-
-
satisfactory completion of FDA inspections of nonclinical and or clinical testing sites; and
-
-
FDA review and approval of the NDA or BLA.
Nonclinical
tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as nonclinical studies. An IND sponsor must submit the results of the nonclinical
tests, together with manufacturing information and analytical and stability data, to the FDA as part of the IND. An IND will automatically become effective 30 days after receipt by the FDA
unless, before that time, the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND. In that case, the IND sponsor and the FDA must resolve any
outstanding FDA concerns or questions before clinical trials can proceed. Submission of an IND may not result in the FDA allowing clinical trials to commence.
Clinical
trials involve the administration of the investigational product to human subjects or patients in accordance with specific protocols and under the supervision of qualified
investigators in accordance with good clinical practices, or GCPs. Each clinical trial protocol must be submitted to the FDA as part of the IND, and an IRB at each site where the study is conducted
must also approve the study. Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Phase 1 trials usually involve the initial
introduction of the investigational drug into humans to evaluate the product's safety, dosage tolerance, pharmacokinetics and pharmacodynamics. If feasible, Phase 1 studies also attempt to
detect any early indication of a drug's potential effectiveness. Phase 2 trials usually involve controlled trials in a limited patient population to evaluate dosage tolerance and appropriate
dosage, identify possible adverse effects and safety risks and evaluate the preliminary efficacy of the drug for specific indications. Phase 3 trials usually test a specific hypothesis to
evaluate
clinical efficacy and test further for safety in an expanded patient population, to establish the overall benefit-risk relationship of the product and to provide adequate information for the labeling
of the product. Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within any specified period, if at all. Furthermore, the FDA, an IRB or a sponsor may
suspend or terminate clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk. The FDA can also request that
additional clinical trials be
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conducted
as a condition of product approval. Finally, sponsors are required to publicly disseminate information about ongoing and completed clinical trials on a government website administered by the
National Institutes of Health, or NIH, and are subject to civil money penalties and other civil and criminal sanctions for failing to meet these obligations.
Assuming
successful completion of the required clinical testing, the results of the nonclinical studies and of the clinical studies, together with other detailed information, including
information on the chemistry, manufacture and control of the product, are submitted to the FDA in the form of an NDA or BLA requesting approval to market the product for one or more indications. The
FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product's
identity, strength, quality and purity. The FDA reviews a BLA to determine, among other things, whether the product is safe, pure and potent and the facility in which it is manufactured, processed,
packed or held meets standards designed to assure the product's continued safety, purity and potency. The FDA may refuse to accept and review insufficiently complete applications.
Before
approving an NDA or BLA, the FDA will inspect the facility or the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that
the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before
approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. If the FDA determines the application, manufacturing process or manufacturing
facilities are not acceptable; it will outline the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested additional
information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.
The
testing and approval process requires substantial time, effort and financial resources, and each may take several years to complete. Moreover, after approval, some types of changes
to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval of a new NDA or BLA, or NDA or BLA
supplement, before the change can be implemented.
Upon
approval of a new drug or a new indication based under an NDA or a supplement to an NDA, the holder of the approval receives the benefit of protection from generic competition. As
discussed above, for example, the FDA must wait at least four years before accepting a filing for approval of a generic version of the brand product under an ANDA, and the FDA cannot approve a generic
version of the brand product under an ANDA until five years after the brand product was approved under the NDA. In addition, in certain circumstances where a brand product files additional data as
outlined above for a new indication or use of a brand based upon new clinical studies and receives an approval, the FDA is similarly precluded from approving a generic version of the brand product for
such new indication or use until three years after the new use or indication was approved by the brand.
The
BPCI added new exclusivity provisions for brand biologics along with the creation of a new approval pathway for biosimilars. Under the law, the FDA must wait four years after
approval of a biologic under a BLA before accepting a filing for a biosimilar version of the brand product, and the FDA cannot approve a biosimilar version of the brand product until 12 years
after the brand product was approved under a BLA. In addition, the new legislation redefines the definition of biologic versus drug and, as a result, a number of products that were previously
regulated as drugs may now be regulated as biologics. There is a ten year transition period during which applicants can elect regulation as a drug or as a biologic when applications are filed. For
example, heparin based products may now have the option of filing for approval as a biologic. This could provide an applicant that elects regulation as a biologic with the longer twelve year period of
exclusivity protection as compared to the five year period of exclusivity protection against generic drug competition.
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Post-Approval Requirements
After regulatory approval of a product is obtained, we will be required to comply with a number of post-approval requirements. For
example, as a condition of approval of an NDA, BLA, ANDA or Section 351(k) application, the FDA may require post-marketing testing and surveillance to further assess and monitor the product's
safety or efficacy after commercialization. Any post-approval regulatory obligations, and the cost of complying with such obligations, could expand in the future.
In
addition, holders of an approved NDA, BLA, ANDA or Section 351(k) approval are required to report, among other things, certain adverse reactions and production problems to the
FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products. Also, quality control and manufacturing
procedures must continue to conform to cGMP after approval. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive and
recordkeeping requirements. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects
of regulatory compliance.
Discovery
of problems with a product or failure to comply with the applicable United States requirements at any time during the product development process, approval process or after
approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an IRB of a clinical hold on or termination of studies, the FDA's
refusal to approve pending applications or supplements, license suspension or revocation, withdrawal of an approval, restriction on marketing, warning letters, product recalls, product seizures, total
or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Also, new government requirements may be established that could delay or prevent
regulatory approval of our products under development.
Foreign Regulation
In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and
commercial sales and distribution of our products if and when we enter those markets. Whether or not we obtain FDA approval for a product, we must obtain approval of a clinical trial application or
product from the applicable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country
to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary
greatly from country to country.
Under
European Union regulatory systems, we may submit marketing authorizations either under a centralized or decentralized procedure. The centralized procedure is mandatory for the
approval of biotechnology products and many pharmaceutical products and provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized
procedure provides for mutual recognition of national approval decisions and is available at the request of the applicant for products that are not subject to the centralized procedure. Under this
procedure, the holder of a national marketing authorization from one European Union member state (the reference member state) may submit an application to the remaining member states. Generally, each
member state decides whether to recognize the reference member state's approval in its own country.
Related Matters
From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions
governing the approval, manufacturing and marketing of products regulated by the FDA or reimbursed under Medicare by the Center for Medicare Services. In addition,
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FDA
regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative
changes will be enacted, or FDA regulations, guidance or interpretations will be changed, or what the impact of such changes, if any, may be.
Hazardous Materials
Our research and development processes involve the controlled use of certain hazardous materials and chemicals, including radioactive
materials and equipment. We are subject to federal, state and local environmental, health and workplace safety laws and regulations governing the use, manufacture, storage, handling and disposal of
hazardous materials and waste products. We do not expect the cost of complying with these laws and regulations to be material.
Competition
The development and commercialization of pharmaceutical products is highly competitive, particularly the development and
commercialization of complex generics and biosimilars due to existing brand competition at the time of product launch. Many of our competitors, who already market or are developing products similar to
those in our portfolio, have considerable experience in product development, obtaining regulatory approval, and commercializing pharmaceutical products. Further, certain of these competitive companies
have substantially greater financial, marketing, research and development and human resources than we do.
We
believe that our ability to successfully compete will depend on a number of factors, including our ability to successfully develop safe and efficacious products, the timing and scope
of regulatory approval of our products and those of our competitors, our ability to collaborate with third parties, our ability to maintain favorable patent protection for our products, our ability to
obtain market acceptance of our products and our ability to manufacture sufficient quantities of our products at commercially acceptable costs.
Our
Enoxaparin Sodium Injection product faces competition from Sanofi, the company currently marketing Lovenox, as well as from other companies with enoxaparin products. In October 2011,
through its authorized third-party distributor, Sanofi-Aventis began marketing its generic version of Lovenox. In January 2012, Actavis and Amphastar launched an enoxaparin product. As a result of
this competition, our Enoxaparin Sodium Injection product has lost market share and Sandoz has lowered its price. We may face more generic competition as ANDAs have been submitted to the FDA by Teva
and Hospira, Inc., and other ANDAs or other regulatory applications may have been submitted or may be submitted in the future.
In
addition to competition from Lovenox and other enoxaparin products, our Enoxaparin Sodium Injection product faces competition from other anticoagulants used to treat DVT and ACS.
These competitive products include Factor Xa inhibitors, other LMWH products, and products in clinical development. The Factor Xa inhibitors include: GlaxoSmithKline plc's Arixtra®,
which is approved in the prevention and treatment of several DVT indications, Bristol-Myers Squibb Company's apixaban (Eliquis®), which is approved in the United States for the reduction
of risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation and rivaroxaban (Xarelto®), which is approved in the United States for DVT prophylaxis and the
reduction of risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation. Xarelto® is marketed worldwide by Bayer AG and Johnson & Johnson Pharmaceutical
Research & Development, L.L.C. The Factor IIa inhibitors in development include Boehringer Ingelheim GmbH's dabigatran etexilate (Pradaxa®), which is currently approved to
reduce the risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation and is under review by FDA for DVT prophylaxis.
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In
the event that we receive approval to market M356, a generic version of Copaxone, we would face competition from a number of sources, including branded Copaxone, which is marketed
worldwide by Teva Pharmaceutical Industries Ltd., or Teva. In addition, in January 2014, Teva's Supplemental NDA for a three-times-a-week formulation of Copaxone was approved by FDA. Teva's new
formulation allows for a less frequent dosing regimen and will compete with our M356 product, if approved. We could also face competition from other companies if they receive marketing approval for
generic versions of Copaxone. While there are no generic versions of Copaxone approved by the FDA to date, ANDAs have been submitted to the FDA by Mylan Inc. and Synthon BV and Synthon
Pharmaceuticals, Inc. Other ANDAs or other regulatory applications may have been submitted or may be submitted in the future. In addition, there are other products that currently compete with
Copaxone in the United States. These include Rebif (interferon-beta-1a), which is co-promoted by EMD Serono Inc., a subsidiary of Merck Serono, a division of Merck KGaA, and Pfizer Inc.
in the United States, and is marketed by Merck Serono in the European Union; Avonex (interferon beta-1a) and Tysabri (natalizumab), which are both marketed worldwide by Biogen Idec Inc.;
Tecfidera, a novel oral compound, which is marketed by Biogen Idec Inc. in the United States, Canada and Australia and is approved but pending commercialization in the European Union; Betaseron
(interferon-beta-1b), which is marketed by Bayer HealthCare Pharmaceuticals Inc., the pharmaceuticals affiliate of Bayer Schering Pharma AG, in the United States, and is marketed under the name
Betaferon by Bayer Schering Pharma, a division of Bayer AG, in the European Union; Extavia (interferon-Beta-1b) and
Gilenya (fingolimod), which are both marketed by Novartis Pharmaceuticals Corporation in the United States; Aubagio (teriflunomide), which is marketed by Sanofi in the United States and
in the European Union; Novantrone (mitoxantrone for injection concentrate), which is marketed by EMD Serono, Inc.; and Lemtrada (alemtuzumab), a once annual infusion compound, which is marketed
by Genzyme Corporation in the European Union but was declined approval by FDA in December 2013.
With
the approval of the new biosimilar and interchangeable biologic pathway under Section 351(k) of the Public Health Service Act, many companies have announced their intention
to develop and commercialize biosimilars. Amgen, Inc. has announced a collaboration with Actavis, Inc., Hospira has biosimilars agreements in place with Celltrion, Human Genome Sciences,
NovaQuest Co-Investment Fund and Stada, Merck and Biogen Idec Inc. have announced collaborations with Samsung Bioepis, and Baxter has partnered with Coherus. Other companies expected to launch
biosimilars in the United States include Sandoz, Biocon, Pfizer Inc., Roche, Boehringer Ingelheim and Teva. Many of these companies are significantly larger than us, have substantially greater
financial resources and have significant pre-existing resources to devote to the biosimilars business. There has been substantial growth in recent years in the number of generic and pharmaceutical
companies looking to develop biosimilar (including potentially interchangeable) versions of protein-based products. Biotechnology and pharmaceutical companies also continue to invest significantly in
better understanding their own products or creating improved versions of marketed products.
Similarly,
our discovery work in oncology faces substantial competition from major pharmaceutical and other biotechnology companies that are actively working on improved and novel
products.
The
field of polysaccharides generally is a growing field with increased competition. However, the capabilities of the field can generally be segmented into those companies using
polysaccharides as therapeutics, companies focused on engineering or modifying polysaccharides, including pegylation technologies, and companies focused on analytics. Among those in analytics, we are
not aware of others that have similar capabilities for detailed chemical characterization of complex polysaccharides. We believe Procognia Limited's technology is largely focused on analyzing proteins
and their glycosylation. In addition, many major pharmaceutical and biotechnology companies such as Amgen Inc. and Biogen Idec Inc. have successfully improved products through sugar
modification. Potential competitors with broad glycobiology capabilities include Optimer Pharmaceuticals, Inc. (acquired by Cubist), Keryx Pharmaceuticals, Merck and Company, Inc. and
Pro-Pharmaceuticals, Inc. as well as many private,
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start-up
pharmaceutical organizations. Many of these companies with polysaccharide capabilities are focused on providing services to pharmaceutical companies rather than focused on drug discovery and
product development.
Employees
We believe that our success will depend greatly on our ability to identify, attract and retain capable employees. As of
December 31, 2013, we had 269 employees, including 3 employees who hold M.D. degrees and 88 employees who hold Ph.D. degrees. Our employees are not represented by any collective bargaining
unit, and we believe our relations with our employees are good.
Financial Information about Segments and Geographic Areas
We have only one operating segment. See Part II, Item 6 for financial information about the segment. See also the section
entitled "Segment Reporting" appearing in Note 2 to our consolidated financial statements for information about our segment and for financial information about geographic areas. The Notes to
our consolidated financial statements are contained in Part II, Item 8 of this Annual Report on Form 10-K.
Company Background and Securities Exchange Act Reports
We were incorporated in Delaware in May 2001 under the name Mimeon, Inc. In September 2002, we changed our name to Momenta
Pharmaceuticals, Inc. Our principal executive offices are located at 675 West Kendall Street, Cambridge, Massachusetts 02142, and our telephone number is (617) 491-9700.
In
this Annual Report on Form 10-K, the terms "Momenta," "we," "us" "the Company" and "our" refer to Momenta Pharmaceuticals, Inc. and its subsidiary.
We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and, accordingly, file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy statements and other information can be read and copied at the public reference facilities maintained by the Securities and
Exchange Commission at the Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained
by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
maintains a web site (
http://www.sec.gov
) that contains material regarding issuers that file electronically with the Securities and Exchange Commission.
Our
Internet address is
www.momentapharma.com.
We are not including the information contained on our web site as a part of, or
incorporating it by reference into, this Annual Report on Form 10-K.
We
make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the
Securities and Exchange Commission.
Our
logo, trademarks, and service marks are the property of Momenta. Other trademarks or service marks appearing in this Annual Report on Form 10-K are the property of their
respective holders.
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Item 1A. RISK FACTORS
Investing in our stock involves a high degree of risk. You should carefully consider the risks and uncertainties and other important
factors described below in addition to other information included or incorporated by reference in this Annual Report on Form 10-K before purchasing our stock. If any of the following risks
actually occur, our business, financial conditions or results of operations would likely suffer.
Risks Relating to Our Business
We have incurred a cumulative loss since inception. If we do not generate significant revenue, we may not return to profitability.
We have incurred significant losses since our inception in May 2001. At December 31, 2013, our accumulated deficit was
$270.5 million. We may incur annual operating losses over the next several years as we expand our drug commercialization, development and discovery efforts. In addition, we must successfully
develop and obtain regulatory approval for our other drug candidates, and effectively manufacture, market and sell any drugs we successfully develop. Accordingly, we may not generate significant
revenue in the longer term and, even if we do generate significant revenue, we may never achieve long-term profitability.
To
be profitable, we and our collaborative partners must succeed in developing and commercializing drugs with significant market potential. This will require us and our collaborative
partners to be successful in a range of challenging activities: developing product candidates; obtaining regulatory approval for product candidates through either existing or new regulatory approval
pathways; clearing allegedly infringing patent rights; enforcing our patent rights; and manufacturing, distributing, marketing and selling products. Our potential profitability will also be adversely
impacted by the entry of competitive products and, if so, the degree of the impact could be affected by whether the entry is before or after the launch of our products. We may never succeed in these
activities and may never generate revenues that are significant.
Our current product revenue is dependent on the continued successful manufacture and commercialization of Enoxaparin Sodium Injection.
Our near-term ability to generate product revenue depends, in large part, on Sandoz's continued ability to manufacture and
commercialize Enoxaparin Sodium Injection, maintain pricing levels and market share and compete with Lovenox brand competition as well as authorized and other generic competition.
Sandoz
is facing increasing competition and pricing pressure from brand, authorized generic and other currently-approved generic competitors, which has and will continue to impact Sandoz
net sales of Enoxaparin Sodium Injection, which will therefore impact our product revenue. Furthermore, other competitors may in the future receive approval to market generic enoxaparin products which
would further impact our product revenue.
Due
to these circumstances, the resulting market price for our Enoxaparin Sodium Injection product has decreased and may decrease further, and we have lost market share and may continue
to lose market share for Enoxaparin Sodium Injection. All of this may further impact our revenue from Enoxaparin Sodium Injection and, as a result, our business, including our near-term financial
results and our ability to fund future discovery and development programs, may suffer.
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If our patent litigation against Amphastar or Teva related to Enoxaparin Sodium Injection is not successful, we may be liable for damages. In addition, third parties may be
able to commercialize a generic Lovenox product without risk of patent infringement damages, and our business may be materially harmed.
If we are not successful in the patent litigation against Amphastar and Actavis and do not succeed in obtaining injunctive relief or
damages, the reduction in our revenue stream will be permanent and our ability to fund future discovery and development programs may suffer. Furthermore, in the event that we are not successful in our
appeal of the District Court decision to grant summary judgment against us, and Amphastar and Actavis are able to prove they suffered damages as a result of the preliminary injunction having been in
effect, we could be liable for up to $35 million of the security bond for such damages. This amount may be increased if Amphastar and Actavis are successful in their motion to increase the
amount of the security bond.
In
addition, if we are not successful in the patent case against Teva and do not succeed in obtaining injunctive relief or a declaratory judgment that we are entitled to damages for our
lost profits due to infringing sales, and if Teva receives marketing approval, it will be able to commercialize a generic Lovenox. Under these circumstances, the resulting market price for our
Enoxaparin Sodium Injection product may decline further and we may lose significant market share for Enoxaparin Sodium Injection. Consequently, our revenue would be reduced and our business, including
our near-term financial results and our ability to fund future discovery and development programs, may suffer.
If efforts by manufacturers of branded products to delay or limit the use of generics or biosimilars are successful, our sales of generic and biosimilar products may suffer.
Many manufacturers of branded products have increasingly used legislative, regulatory and other means to delay regulatory approval and
to seek to restrict competition from manufacturers of generic drugs and could be expected to use similar tactics to delay competition from biosimilars. These efforts have
included:
-
-
settling patent lawsuits with generic or biosimilar companies, resulting in such patents remaining an obstacle for generic
or biosimilar approval by others;
-
-
settling paragraph IV patent litigation with generic companies to prevent the expiration of the 180-day generic
marketing exclusivity period or to delay the triggering of such exclusivity period;
-
-
submitting Citizen Petitions to request the FDA Commissioner to take administrative action with respect to prospective and
submitted generic drug or biosimilar applications;
-
-
appealing denials of Citizen Petitions in United States federal district courts and seeking injunctive relief to reverse
approval of generic drug or biosimilar applications;
-
-
restricting access to reference brand products for equivalence and biosimilarity testing that interfere with timely
generic and biosimilar development plans, respectively;
-
-
conducting medical education with physicians, payors and regulators that claim that generic or biosimilar products are too
complex for generic or biosimilar approval and influence potential market share;
-
-
seeking state law restrictions on the substitution of generic and biosimilar products at the pharmacy without the
intervention of a physician or through other restrictive means such as excessive recordkeeping requirements or patient and physician notification;
-
-
seeking federal or state regulatory restrictions on the use of the same non-proprietary name as the reference brand
product for a biosimilar or interchangeable biologic;
-
-
seeking changes to the United States Pharmacopeia, an industry recognized compilation of drug and biologic standards;
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pursuing new patents for existing products or processes which could extend patent protection for a number of years or
otherwise delay the launch of generic drugs or biosimilars; and
-
-
influencing legislatures so that they attach special patent extension amendments to unrelated federal legislation.
The
FDA's practice is to rule within 180 days on Citizen Petitions that seek to prevent approval of an ANDA if the petition was filed after the Medicare Prescription Drug
Improvement and Modernization Act of 2003, or MMA. If, at the end of the 180-day period, the ANDA is not ready for approval or rejection, then the FDA has typically denied and dismissed the petition
without acting on the petition. Teva Neuroscience, Inc. has filed several Citizen Petitions regarding M356, of which the first four have been denied and dismissed. However, Teva may seek to
file future petitions and may also seek reversal of the denial of a Citizen Petition in federal court. Other third parties may also file Citizen Petitions requesting that the FDA adopt specific
approval standards for generic or biosimilar products. If the FDA grants future Citizen Petitions, we and Sandoz may be delayed in obtaining, or potentially unable to obtain, approval of the ANDA for
M356 which would materially harm our business.
If
these efforts to delay or block competition are successful, we may be unable to sell our generic products, which could have a material adverse effect on our sales and profitability.
If other generic versions of our product candidates, including M356, are approved and successfully commercialized, our business would suffer.
Generic versions of our products contribute most significantly to revenues at the time of their launch, especially with limited
competition. As such, the timing of competition can have a significant impact on our financial results. We expect that certain of our product candidates may face intense and increasing competition
from other manufacturers of generic and/or branded products. For example, in September 2009, Mylan announced that the FDA had accepted for filing its ANDA for generic Copaxone and in 2011 Synthon
announced that it submitted an ANDA to the FDA for a generic Copaxone. Furthermore, as patents for branded products and related exclusivity periods expire, manufacturers of generic products may
receive regulatory approval for generic equivalents and may be able to achieve significant market share. As this happens, and as branded manufacturers launch authorized generic versions of such
products, market share, revenues and gross profit typically decline, in some cases, dramatically. If any of our generic or biosimilar product offerings, including M356, enter markets with a number of
competitors, we may not achieve significant market share, revenues or gross profit. In addition, as other generic products are introduced to the markets in which we participate, the market share,
revenues and gross profit of our generic products could decline.
If an improved version of a reference brand product, such as Copaxone, is developed that has a new product profile and labeling, the improved version of the product could
significantly reduce the market share of the original reference brand product, and may cause a significant decline in sales or potential sales of our generic and biosimilar products.
Brand companies may develop improved versions of a reference brand product as part of a life cycle extension strategy, and may obtain
approval of the improved version under a supplemental new drug application, for a drug, or biologics license application for a biologic. Should the brand company succeed in obtaining an approval of an
improved product, it may capture a significant share of the collective reference brand product market and significantly reduce the market for the original reference brand product and thereby the
potential size of the market for our generic or biosimilar products. For example, in January 2014, Teva's three-times a week formulation of Copaxone received marketing approval by FDA. Teva's new
formulation will compete with our M356 product. In addition, the improved product may be protected by additional patent rights as well as have the benefit, in the case
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of
drugs, of an additional three years of FDA marketing approval exclusivity, which would prohibit a generic version of the improved product for some period of time. As a result, our business,
including our financial results and our ability to fund future discovery and development programs, would suffer.
If the market for a reference brand product, such as Copaxone, significantly declines, sales or potential sales of our generic and biosimilars product and product candidates
may suffer and our business would be materially impacted.
Competition in the biotechnology industry is intense. Brand name products face competition on numerous fronts as technological advances
are made or new products are introduced. As new products are approved that compete with the reference brand product to our generic product and generic or biosimilar product candidates, such as
Copaxone, sales of the reference brand products may be significantly and adversely impacted and may render the reference brand product obsolete.
Current
injectable treatments commonly used to treat multiple sclerosis, including Copaxone, are competing with novel drug products, including oral therapies. These oral therapies may
offer patients a more convenient form of administration than Copaxone and may provide increased efficacy.
If
the market for the reference brand product is impacted, we in turn may lose significant market share or market potential for our generic or biosimilar products and product candidates,
and the value for our generic or biosimilar pipeline could be negatively impacted. As a result, our business, including our financial results and our ability to fund future discovery and development
programs, would suffer.
Teva may allege that we are infringing existing, additional issued or pending patents they hold. If this occurs we may expend substantial resources in resulting litigation,
the outcome of which would be uncertain. Any unfavorable outcome in such litigation could delay our launch of M356, if approved, and may have a material adverse effect on our business.
Teva may assert existing, additional issued or pending patents, and they may claim that we are infringing those patents, including
pursuit of Supreme Court review of the 2013 appellate ruling that patent claims previously asserted against us and Sandoz were invalid. If that occurs, we may incur significant expenses to respond to
and litigate the claims. In addition, if we are unsuccessful in litigation, or pending the outcome of litigation or while litigation is pending, a court could issue a temporary injunction or a
permanent injunction preventing us from marketing and selling M356. Furthermore, we may be ordered to pay damages, potentially including treble damages, if we launch M356 and are subsequently found to
have willfully infringed Teva's patent rights. Litigation concerning intellectual property and proprietary technologies is widespread and can be protracted and expensive, and can distract management
and other key personnel from running our business.
If
we were unsuccessful in any additional patent suits brought by Teva, we may be unable to effectively market M356, which could limit our ability to generate revenue or achieve
profitability and possibly prevent us from generating revenue sufficient to sustain our operations.
If the raw materials, including unfractionated heparin, or UFH, used in our products become difficult to obtain, significantly increase in cost or become unavailable, we may
be unable to produce our products and this would have a material adverse impact on our business.
We and our collaborative partners and vendors obtain certain raw materials, including UFH, from suppliers who in turn source the
materials from other countries, including four suppliers in China. In 2008, due to the occurrence of adverse events associated with the use of UFH, there were global recalls of UFH products, including
in the United States, putting our supply chain at risk. Based on investigation by the FDA into those adverse events, the FDA identified a heparin-like contaminant in the implicated UFH products and
recommended that manufacturers and suppliers of UFH use additional tests to screen their UFH active pharmaceutical ingredient. We and our collaborative partner
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worked
with the appropriate regulatory authorities to document and to demonstrate that our testing standards meet or exceed all requirements for testing and screening the supply of UFH active
pharmaceutical ingredient. The FDA and other authorities have also placed restrictions on the import of some raw materials from China, and may in the future place additional restrictions and testing
requirements on the use of raw materials, including UFH, in products intended for sale in the United States. As a result, the raw materials, including UFH, used in our products may become difficult to
obtain, significantly increase in cost, or become unavailable to us. If any of these events occur, we and our collaborative partners may be unable to produce our products in sufficient quantities to
meet the requirements for the commercial launch or demand for the product, which would have a material adverse impact on our business.
If we or our collaborative partners and other third parties are unable to satisfy FDA quality standards and related regulatory requirements, experience manufacturing
difficulties or are unable to manufacture sufficient quantities of our products or product candidates, our development and commercialization efforts may be materially harmed.
We have limited personnel with experience in, and we do not own facilities for, manufacturing any products. We depend upon our
collaborative partners and other third parties to provide raw materials meeting FDA quality standards and related regulatory requirements, manufacture the drug substance, produce the final drug
product and provide certain analytical services with respect to our products and product candidates. We, our collaborative partners or our third-party contractors may have difficulty meeting FDA
manufacturing requirements, including, but not limited to, reproducibility, validation and scale-up, and continued compliance with current good manufacturing
practices requirements. In addition, events such as the contamination of UFH may have an adverse impact on the supply of starting or raw materials for some of our products and product candidates, and
we, our collaborative partners or our third-party contractors may have difficulty producing products in the quantities necessary to meet FDA requirements or meet anticipated market demand. If we, our
collaborative partners or our third-party manufacturers or suppliers are unable to satisfy the FDA manufacturing requirements for our products and product candidates, or are unable to produce our
products in sufficient quantities to meet the requirements for the launch of the product or to meet market demand, our revenue and gross margins could be adversely affected, and could have a material
adverse impact on our business.
Competition in the biotechnology and pharmaceutical industries is intense, and if we are unable to compete effectively, our financial results will suffer.
The markets in which we intend to compete are undergoing, and are expected to continue to undergo, rapid and significant technological
change. We expect competition to intensify as technological advances are made or new biotechnology products are introduced. New developments by competitors may render our current or future product
candidates and/or technologies non-competitive, obsolete or not economical. Our competitors' products may be more efficacious or marketed and sold more effectively than any of our products.
Many
of our competitors have:
-
-
significantly greater financial, technical and human resources than we have at every stage of the discovery, development,
manufacturing and commercialization process;
-
-
more extensive experience in commercializing generic drugs, conducting nonclinical studies, conducting clinical trials,
obtaining regulatory approvals, challenging patents and manufacturing and marketing pharmaceutical products;
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-
products that have been approved or are in late stages of development;
and
-
-
collaborative arrangements in our target markets with leading companies and/or research institutions.
If
we successfully develop and obtain approval for our drug candidates, we will face competition based on many different factors,
including:
-
-
the safety and effectiveness of our products;
-
-
with regard to our generic or biosimilar product candidates, the differential availability of clinical data and experience
and willingness of physicians, payors and formularies to rely on biosimilarity data;
-
-
the timing and scope of regulatory approvals for these products and regulatory opposition to any product approvals;
-
-
the availability and cost of manufacturing, marketing, distribution and sales capabilities;
-
-
the effectiveness of our marketing, distribution and sales capabilities;
-
-
the price of our products;
-
-
the availability and amount of third-party reimbursement for our products;
and
-
-
the strength of our patent position.
Our
competitors may develop or commercialize products with significant advantages in regard to any of these factors. Our competitors may therefore be more successful in commercializing
their products than we are, which could adversely affect our competitive position and business.
If we or our collaborators are unable to establish and maintain key customer distribution arrangements, sales of our products, and therefore revenue, would decline.
Generic pharmaceutical products are sold through various channels, including retail, mail order, and to hospitals through group
purchasing organizations, or GPOs. As Enoxaparin Sodium Injection is primarily a hospital-based product, a large percentage of the revenue for Enoxaparin Sodium Injection is derived through
contracts with GPOs. Currently, a relatively small number of GPOs control a substantial portion of generic pharmaceutical sales to hospital customers. In order to establish and maintain
contracts with these GPOs, we believe that we, in collaboration with Sandoz, will need to maintain adequate drug supplies, remain price competitive, comply with FDA regulations and provide
high-quality products. The GPOs with whom we or our collaborators have established contracts may also have relationships with our competitors and may decide to contract for or otherwise prefer
products other than ours, limiting access of Enoxaparin Sodium Injection to certain hospital segments. Our sales could also be negatively affected by any rebates, discounts or fees that are required
by our customers, including the GPOs, wholesalers, distributors, retail chains or mail order services, to gain and retain market acceptance for our products. We anticipate that M356 will be
primarily distributed through retail channels and mail order services. If we or our collaborators are unable to establish and maintain distribution arrangements with all of these customers, sales of
our products, our revenue and our profits would suffer.
Even if we receive approval to market our product candidates, the market may not be receptive to our product candidates upon their commercial introduction, which could
adversely affect our ability to generate sufficient revenue from product sales to maintain or grow our business.
Even if our product candidates are successfully developed and approved for marketing, our success and growth will also depend upon the
acceptance of our products by patients, physicians and third-
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party
payors. Acceptance of our products will be a function of our products being clinically useful, being cost effective and demonstrating superior therapeutic effect with an acceptable side effect
profile as compared to existing or future treatments. In addition, even if our products achieve market acceptance, we may not be able to maintain that market acceptance over time.
Factors
that we believe will materially affect market acceptance of our product candidates under development include:
-
-
the timing of our receipt of any marketing approvals, the terms of any approval and the countries in which approvals are
obtained;
-
-
the safety, efficacy and ease of administration of our products;
-
-
the competitive pricing of our products;
-
-
physician confidence in the safety and efficacy of complex generic products or biosimilars;
-
-
the absence of, or limited clinical data available from sameness, biosimilarity or interchangeability testing of our
complex generic or biosimilar products;
-
-
the success and extent of our physician education and marketing programs;
-
-
the clinical, medical affairs, sales, distribution and marketing efforts of competitors;
and
-
-
the availability and amount of government and third-party payor reimbursement.
If
our products do not achieve market acceptance, we will not be able to generate sufficient revenue from product sales to maintain or grow our business.
We will require substantial funds and may require additional capital to execute our business plan and, if additional capital is not available, we may need to limit, scale
back or cease our operations.
As of December 31, 2013, we had cash, cash equivalents and marketable securities totaling $245.7 million. For the year
ended December 31, 2013, we had a net loss of $108.4 million and cash used in operating activities of $86.8 million. We will continue to require substantial funds to conduct
research and development, process development, manufacturing, nonclinical testing and clinical trials of our product candidates, as well as funds necessary to manufacture and market products that are
approved for commercial sale. Because successful development of our drug candidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development and
commercialize our products under development.
Our
future capital requirements may vary depending on the following:
-
-
the level of sales of Enoxaparin Sodium Injection;
-
-
a final decision, after appeal, is issued in favor of Teva in its patent infringement litigation matters against us;
-
-
the timing of the approval, launch and commercialization of our product candidates, including M356;
-
-
the advancement of our product candidates and other development programs, including the timing and costs of obtaining
regulatory approvals;
-
-
the advancement of our biosimilar product candidates and receipt of license and milestone payments under our Baxter
Agreement;
-
-
the timing of FDA approval of the products of our competitors;
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the cost of litigation, including with Amphastar and Actavis relating to enoxaparin, that is not otherwise covered by our
collaboration agreement, or potential patent litigation with others, as well as any damages, including possibly treble damages, that may be owed to third parties should we be unsuccessful in such
litigation;
-
-
the ability to enter into strategic collaborations;
-
-
the continued progress in our research and development programs, including completion of our nonclinical studies and
clinical trials;
-
-
the potential acquisition and in-licensing of other technologies, products or assets;
and
-
-
the cost of manufacturing, marketing and sales activities, if any.
We
expect to finance our current programs and planned operating requirements principally through our current cash, cash equivalents and marketable securities. We believe that these funds
will be sufficient to meet our operating requirements through at least 2015. We may seek additional funding in the future and intend to do so through collaborative arrangements and public or private
equity and debt financings or from other sources. Any additional capital raised through the sale of equity may dilute existing investors' percentage ownership of our common stock. Capital raised
through debt financing would require us to make periodic interest payments and may impose potentially restrictive covenants on the conduct of our business. Additional funds may not be available to us
on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding on a timely basis, we may
be required to significantly curtail one or more of our research or development programs. We also could be required to seek funds through arrangements with collaborators or others that may require us
to relinquish rights to some of our technologies, product candidates or products which we would otherwise pursue on our own.
If we are not able to retain our current management team or attract and retain qualified scientific, technical and business personnel, our business will suffer.
We are dependent on the members of our management team for our business success. Our employment arrangements with our executive
officers are terminable by either party on short notice or no notice. We do not carry key person life insurance on the lives of any of our personnel. The loss of any of our executive officers would
result in a significant loss in the knowledge and experience that we, as an organization, possess and could cause significant delays, or outright failure, in the development and approval of our
product candidates. In addition, there is intense competition from numerous pharmaceutical and biotechnology companies, universities, governmental entities and other research institutions, for human
resources, including management, in the technical fields in which we operate, and we may not be able to attract and retain qualified personnel necessary for the successful development and
commercialization of our product candidates.
There is a substantial risk of product liability claims in our business. If our existing product liability insurance is insufficient, a product liability claim against us
that exceeds the amount of our insurance coverage could adversely affect our business.
Our business exposes us to significant potential product liability risks that are inherent in the development, manufacturing and
marketing of human therapeutic products. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing products, such claims could result in a
recall of our products or a change in the approved indications for which they may be used. While we currently maintain product liability insurance coverage that we believe is adequate for our current
operations, we cannot be sure that such coverage will be adequate to cover any incident or all incidents. Furthermore, clinical trial and product liability insurance is becoming increasingly
expensive. As a result, we may be unable to maintain sufficient insurance at a reasonable cost to protect us against losses that could have a material adverse effect on our business. These liabilities
could prevent or interfere with our product development and commercialization efforts.
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As we evolve from a company primarily involved in drug discovery and development into one that is also involved in the commercialization of pharmaceutical products, we may
have difficulty managing our growth and expanding our operations successfully.
As we advance our product candidates through the development process, we will need to expand our development, regulatory,
manufacturing, quality, distribution, sales and marketing capabilities or contract with other organizations to provide these capabilities for us. As our operations expand, we expect that we will need
to manage additional relationships with various collaborative partners, suppliers and other organizations. Our ability to manage our operations and growth requires us to continue to improve our
operational, financial and management controls, reporting systems and procedures. For example, some jurisdictions, such as the District of Columbia, have imposed licensing requirements for sales
representatives. In addition, the District of Columbia and the Commonwealth of Massachusetts, as well as the federal government by way of the Sunshine Act provisions of the Patient Protection and
Affordable Care Act of 2010, have established reporting requirements that would require public reporting of consulting and research fees to health care professionals. Because the reporting
requirements vary in each jurisdiction, compliance will be complex and expensive and may create barriers to entering the commercialization phase. The need to build new systems as part of our growth
could place a strain on our administrative and operational infrastructure. We may not be able to make improvements to our management information and control systems in an efficient or timely manner
and may discover deficiencies in existing systems and controls. Such requirements may also impact our opportunities to collaborate with physicians at academic research centers as new restrictions on
academic-industry relationships are put in place. In the past,
collaborations between academia and industry have led to important new innovations, but the new laws may have an effect on these activities. While we cannot predict whether any legislative or
regulatory changes will have negative or positive effects, they could have a material adverse effect on our business, financial condition and potential profitability.
We may acquire or make investments in companies or technologies that could have an adverse effect on our business, results of operations and financial condition or cash
flows.
We may acquire or invest in companies, products and technologies. Such transactions involve a number of risks,
including:
-
-
we may find that the acquired company or assets does not further our business strategy, or that we overpaid for the
company or assets, or that economic conditions change, all of which may generate a future impairment charge;
-
-
difficulty integrating the operations and personnel of the acquired business, and difficulty retaining the key personnel
of the acquired business;
-
-
difficulty incorporating the acquired technologies;
-
-
difficulties or failures with the performance of the acquired technologies or drug products;
-
-
we may face product liability risks associated with the sale of the acquired company's products;
-
-
disruption or diversion of management's attention by transition or integration issues and the complexity of managing
diverse locations;
-
-
difficulty maintaining uniform standards, internal controls, procedures and policies;
-
-
the acquisition may result in litigation from terminated employees or third parties;
and
-
-
we may experience significant problems or liabilities associated with product quality, technology and legal contingencies.
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These
factors could have a material adverse effect on our business, results of operations and financial condition or cash flows, particularly in the case of a larger acquisition or
multiple acquisitions in a short period of time. From time to time, we may enter into negotiations for acquisitions that are not ultimately consummated. Such negotiations could result in significant
diversion of management time, as well as out-of-pocket costs.
The
consideration paid in connection with an acquisition also affects our financial results. If we were to proceed with one or more significant acquisitions in which the consideration
included cash, we could be required to use a substantial portion of our available cash to consummate any acquisition. To the extent we issue shares of stock or other rights to purchase stock,
including options or other rights, existing stockholders may be diluted and earnings per share may decrease. In addition, acquisitions may result in the incurrence of debt, large one-time write-offs
and restructuring charges. They may also result in goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges.
Risks Relating to Development and Regulatory Approval
If we are not able to obtain regulatory approval for commercial sale of our generic product candidate, M356, as a therapeutic equivalent to Copaxone, our future results of
operations will be adversely affected.
Our future results of operations depend to a significant degree on our ability to obtain regulatory approval for and commercialize
M356. We will be required to demonstrate to the satisfaction of the FDA, among other things, that M356:
-
-
contains the same active ingredients as Copaxone;
-
-
is of the same dosage form, strength and route of administration as Copaxone, and has the same labeling as the approved
labeling for Copaxone, with certain exceptions; and
-
-
meets compendial or other applicable standards for strength, quality, purity and identity, including potency.
In
addition, approval of a generic product generally requires demonstrating that the generic drug is bioequivalent to the reference listed drug upon which it is based, meaning that there
are no significant differences with respect to the rate and extent to which the active ingredients are absorbed and become available at the site of drug action. However, the FDA may or may not waive
the requirements for certain bioequivalence data (including clinical data) for certain drug products, including injectable solutions that have been shown to contain the same active and inactive
ingredients in the same concentration as the reference listed drug.
Determination
of therapeutic equivalence of M356 to Copaxone will be based, in part, on our demonstration of the chemical equivalence of our versions to their respective reference listed
drugs. The FDA may not agree that we have adequately characterized M356 or that M356 and Copaxone are chemical equivalents. In that case, the FDA may require additional information, including
nonclinical or clinical test results, to determine therapeutic equivalence or to confirm that any inactive ingredients or impurities do not compromise the product's safety and efficacy. Provision of
sufficient information for approval may be difficult, expensive and lengthy. We cannot predict whether M356 will receive FDA approval as therapeutically equivalent to Copaxone.
In
the event that the FDA modifies its current standards for therapeutic equivalence with respect to generic versions of Copaxone, or requires us to conduct clinical trials or complete
other lengthy procedures, the commercialization of M356 could be delayed or prevented or become more expensive. In addition, FDA is currently prohibited from granting final marketing approval until
May 2014 as a result of ongoing patent litigation. Delays in any part of the process or our inability to obtain
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regulatory
approval for M356 could adversely affect our operating results by restricting or significantly delaying our introduction of M356.
Although health care reform legislation that establishes a regulatory pathway for the approval by the FDA of biosimilars has been enacted, the standards for determining
similarity or interchangeability for biosimilars are only just being implemented by the FDA. Therefore, substantial uncertainty remains about the potential value our proprietary technology platform
can offer to biosimilars development programs.
The regulatory climate in the United States for follow-on versions of biologic and complex protein products remains uncertain, even
following the recent enactment of legislation establishing a regulatory pathway for the approval of biosimilars. The new pathway contemplates approval of two categories of follow-on biologic products:
(1) biosimilar products, which are highly similar to the existing brand product, notwithstanding minor differences in clinically inactive components, and for which there are no clinically
meaningful differences from the brand product and (2) interchangeable biologic products, which in addition to being biosimilar can be expected to produce the same clinical result in any given
patient without an increase in risk due to switching from the brand product. Only interchangeable biosimilar products would be considered interchangeable at the retail pharmacy level without the
intervention of a physician. The new legislation authorizes but does not require the FDA to establish standards or criteria for determining biosimilarity and interchangeability, and also authorizes
the FDA to use its discretion to determine the nature and extent of product characterization, nonclinical testing and clinical testing on a product-by-product basis. Our competitive advantage in this
area will depend on our success in demonstrating to the FDA that our analytics, biocharacterization and protein engineering platform technology provides a level of scientific assurance that
facilitates determinations of interchangeability, reduces the need for expensive clinical or other testing, and raises the scientific quality requirements for our competitors to demonstrate that their
products are highly similar to a brand product. Our ability to succeed will depend in part on our ability to invest in new programs and develop data in a timeframe that enables the FDA to consider our
approach as the agency begins to implement the new law. In addition, the FDA will likely require significant new resources and expertise to review biosimilar applications, and the timeliness of the
review and approval of our future applications could be adversely affected if there were a decline or even limited growth in FDA funding.
The
new regulatory pathway also creates a number of additional obstacles to the approval and launch of biosimilar and interchangeable products,
including:
-
-
a requirement for the applicant, as a condition to using the patent exchange and clearance process, to share, in
confidence, the information in its abbreviated pathway application with the brand company's and patent owner's counsel;
-
-
the inclusion of multiple potential patent rights in the patent clearance process; and
-
-
a grant to each brand company of 12 years of marketing exclusivity following the brand approval.
Furthermore,
the new regulatory pathway creates the risk that the brand company, during its 12-year marketing exclusivity period, will develop and replace its product with a
non-substitutable or modified product that may also qualify for an additional 12-year marketing exclusivity period, reducing the opportunity for substitution at the retail pharmacy level for
interchangeable biosimilars. Finally, the new legislation also creates the risk that, as brand and biosimilar companies gain experience with the new regulatory pathway, subsequent FDA determinations
or court rulings could create additional areas for potential disputes and resulting delays in biosimilars approval.
In
addition, there is reconsideration and legislative debate that could lead to the repeal or amendment of the new healthcare legislation. If the legislation is significantly amended or
is repealed with respect to the biosimilar approval pathway, our opportunity to develop biosimilars (including
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interchangeable
biologics) could be materially impaired and our business could be materially and adversely affected. Similarly, the legislative debate at the federal level regarding the federal
government budget in 2013 restricted federal agency funding for the biosimilar pathway, including biosimilar user fee funding for fiscal year 2014, and has resulted in delays in the conduct of
meetings with biosimilar applicants and the review of biosimilar meeting and application information. The scheduling and conduct of biosimilar meeting and applications review was also suspended during
the U.S. Government
shutdown in October 2013, and could be subject to future suspensions as a result of future deadlocks in passage of federal appropriations bills. Depending on the timing and the extent of these
funding, meeting and review disruptions, the Company's development of biosimilar products could be delayed.
Even if we are able to obtain regulatory approval for our generic and interchangeable biologic product candidates as therapeutically equivalent or interchangeable, state
pharmacy boards or agencies may conclude that our products are not substitutable at the pharmacy level for the reference listed drug. If our generic or interchangeable biologic products are not
substitutable at the pharmacy level for their reference listed drugs, this could materially reduce sales of our products and our business would suffer.
Although the FDA may determine that a generic product is therapeutically equivalent to a brand product and provide it with an "A"
rating in the FDA's Orange Book, this designation is not binding on state pharmacy boards or agencies for generic drugs. As a result, in states that do not deem our generic drug candidates
therapeutically equivalent, physicians will be required to specifically prescribe a generic product alternative rather than have a routine substitution at the pharmacy level for the prescribed brand
product. Should this occur with respect to one of our generic product candidates, it could materially reduce sales in those states which would substantially harm our business.
While
a designation of interchangeability is a finding by the FDA that a biosimilar can be substituted at the pharmacy without physician intervention or prescription, brand
pharmaceutical companies are lobbying state legislatures to enact physician prescription requirements, or in the absence of a prescription, physician and patient notification requirements, special
labeling requirements and alternative naming requirements which if enacted could create barriers to substitution and adoption rates of interchangeable biologics as well as biosimilars. Should this
occur with respect to one of our biosimilars or interchangeable biologic product candidates, and it is not determined to be unlawful or preempted by federal law, it could materially reduce sales in
those states which would substantially harm our business.
If our nonclinical studies and clinical trials for our development candidates, including M402, are not successful, we will not be able to obtain regulatory approval for
commercial sale of our novel or improved drug candidates.
To obtain regulatory approval for the commercial sale of our novel product candidates, we are required to demonstrate through
nonclinical studies and clinical trials that our drug development candidates are safe and effective. Nonclinical studies and clinical trials of new development candidates are lengthy and expensive and
the historical failure rate for development candidates is high.
A
failure of one or more of our nonclinical studies or clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of,
nonclinical studies and clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize M402 or our other drug candidates,
including:
-
-
regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at
a prospective trial site;
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our nonclinical studies or clinical trials may produce negative or inconclusive results, and we may be required to conduct
additional nonclinical studies or clinical trials or we may abandon projects that we previously expected to be promising;
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enrollment in our clinical trials may be slower than we anticipate, resulting in significant delays, and participants may
drop out of our clinical trials at a higher rate than we anticipate;
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-
we might have to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health
risks;
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-
regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various
reasons, including noncompliance with regulatory requirements or if, in their opinion, participants are being exposed to unacceptable health risks;
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-
the cost of our clinical trials may be greater than we anticipate;
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-
the effects of our drug candidates may not be the desired effects or may include undesirable side effects or our product
candidates may have other unexpected characteristics; and
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-
we may decide to modify or expand the clinical trials we are undertaking if new agents are introduced which influence
current standard of care and medical practice, warranting a revision to our clinical development plan.
The
results from nonclinical studies of a development candidate may not predict the results that will be obtained in human clinical trials. If we are required by regulatory authorities
to conduct additional clinical trials or other testing of M402 or our other product candidates that we did not anticipate, if we are unable to successfully complete our clinical trials or other tests,
or if the results of these trials are not positive or are only modestly positive, we may be delayed in obtaining marketing approval for our drug candidates or we may not be able to obtain marketing
approval at all. Our product development costs will also increase if we experience delays in testing or approvals. Significant clinical trial delays could allow our competitors to bring products to
market before we do and impair our ability to commercialize our products or potential products. If any of these events occur, our business will be materially harmed.
Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products abroad.
We intend in the future to market our products, if approved, outside of the United States, either directly or through collaborative
partners. In order to market our products in the European Union and many other foreign jurisdictions, we must obtain separate regulatory approvals and comply with the numerous and varying regulatory
requirements of each jurisdiction. The approval procedure and requirements vary among countries, and can require, among other things, conducting additional testing in each jurisdiction. The time
required to obtain approval abroad may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval,
and we may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign
regulatory authority does not ensure approval by regulatory authorities in any other foreign country or by the FDA. We and our collaborators may not be able to file for regulatory approvals and may
not receive necessary approvals to commercialize our products in any market outside of the United States. The failure to obtain these approvals could materially adversely affect our business,
financial condition, and results of operations.
Even if we obtain regulatory approvals, our marketed products will be subject to ongoing regulatory review. If we fail to comply with continuing United States and foreign
regulations, we could lose our approvals to market products and our business would be seriously harmed.
Even after approval, any drugs or biological products we develop will be subject to ongoing regulatory review, including the review of
clinical results which are reported after our products are made commercially available. Any regulatory approvals that we obtain for our product candidates may
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also
be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing
testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. In addition, the manufacturer and manufacturing facilities we use to
produce any of our product candidates will be subject to periodic review and inspection by the FDA, or foreign equivalent, and other regulatory agencies. We will be required to report any serious and
unexpected adverse experiences and certain quality problems with our products and make other periodic reports to the FDA. The discovery of any new or previously unknown problems with the product,
manufacturer or facility may result in restrictions on the product or manufacturer or facility, including withdrawal of the product from the market. Certain changes to an approved product, including
in the way it is manufactured or promoted, often require prior FDA approval before the product as modified may be marketed. If we fail to comply with applicable FDA regulatory requirements, we may be
subject to fines, warning letters, civil penalties, refusal by the FDA to approve pending applications or supplements, suspension or withdrawal of regulatory approvals, product recalls and seizures,
injunctions, operating restrictions, refusal to permit the import or export of products, and/or criminal prosecutions and penalties.
Similarly,
our commercial activities will be subject to comprehensive compliance obligations under state and federal reimbursement, Sunshine Act, anti-kickback and government pricing
regulations. If we make false price reports, fail to implement adequate compliance controls or our employees violate the laws and regulations governing relationships with health care providers, we
could also be subject to substantial fines and penalties, criminal prosecution and debarment from participation in the Medicare, Medicaid, or other government reimbursement programs.
In
addition, the FDA's policies may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates. We
cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or
unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able
to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business.
If third-party payors do not adequately reimburse customers for any of our approved products, they might not be purchased or used, and our revenue and profits will not
develop or increase.
Our revenue and profits will depend heavily upon the availability of adequate reimbursement for the use of our approved product
candidates from governmental and other third-party payors, both in the United States and in foreign markets. Reimbursement by a third-party payor may depend upon a number of factors, including the
third-party payor's determination that use of a product is:
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-
a covered benefit under its health plan;
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-
safe, effective and medically necessary;
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-
appropriate for the specific patient;
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cost-effective; and
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neither experimental nor investigational.
Obtaining
coverage and reimbursement approval for a product from each government or other third-party payor is a time-consuming and costly process that could require us to provide
supporting scientific, clinical and cost-effectiveness data for the use of our products to each payor. We may not be able to provide data sufficient to gain acceptance with respect to coverage and
reimbursement. There is substantial uncertainty whether any particular payor will reimburse the use of any drug product
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incorporating
new technology. Even when a payor determines that a product is eligible for reimbursement, the payor may impose coverage limitations that preclude payment for some uses that are approved
by the FDA or comparable authority. Moreover, eligibility for coverage does not imply that any product will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our
costs. Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the product
and the clinical setting in which it is used, may be based on payments allowed for lower-cost products that are already reimbursed, may be incorporated into existing payments for other products or
services, and may reflect budgetary constraints and/or imperfections in Medicare, Medicaid or other data used to calculate these rates. Net prices for products may be reduced by mandatory discounts or
rebates required by government health care programs or by any future relaxation of laws that restrict imports of certain medical products from countries where they may be sold at lower prices than in
the United States.
There
have been, and we expect that there will continue to be, federal and state proposals to constrain expenditures for medical products and services, which may affect payments for our
products. The Centers for Medicare and Medicaid Services, or CMS, frequently change product descriptors, coverage policies, product and service codes, payment methodologies and reimbursement values.
Third-party payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and both CMS and other third-party payors may have sufficient market power to
demand significant price reductions. Due in part to actions by third-party payors, the health care industry is experiencing a trend toward containing or reducing costs through various means, including
lowering reimbursement rates, limiting therapeutic class coverage and negotiating reduced payment schedules with service providers for drug products.
We
also anticipate that application of the existing and evolving reimbursement regimes to biosimilar products will be somewhat uncertain as CMS determines whether to apply generic drug
reimbursement approaches or to develop new mechanisms for assigning reimbursement codes to biosimilar products. Reimbursement uncertainty could adversely impact market acceptance of biosimilar
products.
Our
inability to promptly obtain coverage and profitable reimbursement rates from government-funded and private payors for our products could have a material adverse effect on our
operating results and our overall financial condition.
Federal legislation will increase the pressure to reduce prices of pharmaceutical products paid for by Medicare or may otherwise seek to limit healthcare costs, either of
which could adversely affect our revenue, if any.
The Medicare Modernization Act of 2003, or MMA, changed the way Medicare covers and reimburses for pharmaceutical products. The
legislation introduced a new reimbursement methodology based on average sales prices for drugs that are used in hospital settings or under the direct supervision of a physician and, starting in 2006,
expanded Medicare coverage for drug purchases by the elderly. In addition, the MMA requires the creation of formularies for self-administered drugs, and provides authority for limiting the number of
drugs that will be covered in any therapeutic class and provides for plan sponsors to negotiate prices with manufacturers and suppliers of covered drugs. As a result of the MMA and the expansion of
federal coverage of drug products, we expect continuing pressure to contain and reduce costs of pharmaceutical products. Cost reduction initiatives and other provisions of this legislation could
decrease the coverage and price that we receive for our products and could materially adversely affect our operating results and overall financial condition. While the MMA generally applies only to
drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement policies and any reduction in coverage or
payment that results from the MMA may result in a similar reduction in coverage or payments from private payors.
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Furthermore,
health care reform legislation was enacted in 2010 is being implemented that could significantly change the United States health care system and the reimbursement of
products. A primary goal of the law is to reduce or limit the growth of health care costs, which could change the market for pharmaceuticals and biological products.
The
law contains provisions that will affect companies in the pharmaceutical industry and other healthcare-related industries by imposing additional costs and changes to business
practices. Provisions affecting pharmaceutical companies include an increase to the mandatory rebates for drugs sold into the Medicaid program, an extension of the rebate requirement to drugs used in
risk-based Medicaid managed care plans, an extension of mandatory discounts for drug products sold to certain critical access hospitals, cancer hospitals and other covered entities, and discounts and
fees applicable to brand-name drugs. Although many of these provisions may not apply directly to us, they may change business practices in our industry and, assuming our products are approved for
commercial sale, such changes could adversely impact our profitability.
Additionally,
the new law establishes an abbreviated regulatory pathway for the approval of biosimilars and provides that brand biologic products may receive 12 years of market
exclusivity, with a possible six-month extension for pediatric products. By creating a new approval pathway for biosimilars and
adjusting reimbursement for biosimilars, the new law could promote the development and commercialization of biosimilars. However, given the uncertainty of how the law will be interpreted and
implemented, the impact of the law on our strategy for biosimilars as well as novel biologics remains uncertain. Other provisions in the law, such as the comparative effectiveness provisions, may
ultimately impact positively or negatively both brand and biosimilars products alike depending on an applicant's clinical data, effectiveness and cost profile. If a brand product cannot be shown to
provide a benefit over other therapies, then it might receive reduced coverage and reimbursement. While this might increase market share for biosimilars based on cost savings, it could also have the
effect of reducing biosimilars market share.
The
financial impact of this United States health care reform legislation over the next few years will depend on a number of factors, including but not limited to the issuance of
implementation regulations and guidance and changes in sales volumes for products eligible for the new system of rebates, discounts and fees. Assuming our products are approved for commercial sale,
the new legislation could also have a positive impact on us by increasing the aggregate number of persons with health care coverage in the United States and expanding the market for our products, but
such increases, if any, are unlikely to be realized until approximately 2014 at the earliest.
The
full effects of the United States health care reform legislation cannot be known until the new law is implemented through regulations or guidance issued by the CMS and other federal
and state health care agencies. While we cannot predict whether any legislative or regulatory changes will have negative or positive effects, they could have a material adverse effect on our business,
financial condition and potential profitability. In addition, litigation may prevent some or all of the legislation from taking effect. Consequently, there is uncertainty regarding implementation of
the new legislation.
Foreign governments tend to impose strict price or reimbursement controls, which may adversely affect our revenue, if any.
In some foreign countries, particularly the countries of the European Union, the pricing and/or reimbursement of prescription
pharmaceuticals are subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a
product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available
therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.
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If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.
Our research and development involves, and may in the future involve, the use of hazardous materials and chemicals and certain
radioactive materials and related equipment. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and
workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials. Insurance may not provide adequate
coverage against potential liabilities and we do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us. Additional federal, state and local laws and
regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.
The FDA has reported that it has a substantial backlog of ANDA filings that have resulted in significant delays in review and approval of applications. As a result, the
review and potential approval of our application for M356 may be significantly delayed.
The FDA has reported that it has a substantial backlog of ANDA filings that have resulted in significant delays in the review and
approval of ANDAs and amendments or supplements due to insufficient staffing and resources. Resource constraints have also resulted in significant delays in conducting ANDA-related pre-approval
inspections. Enactment of user fee legislation in 2012 is only beginning to fund additional resources and the impact of the new legislation which implements goals and metrics for application review
has been reported by the FDA to have had limited impact to this backlog and the delays as it recruits and trains new FDA staff. Until such time as resources are actually increased and in place at the
FDA, our applications and supplements may be subject to significant delays during their review cycles. In addition, if a user fee statute is enacted, we may become liable for fees that could be
material to our earnings.
Risks Relating to Patents and Licenses
If we are not able to obtain and enforce patent protection for our discoveries, our ability to successfully commercialize our product candidates will be harmed and we may
not be able to operate our business profitably.
Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under the patent and other
intellectual property laws of the United States and other countries, so that we can prevent others from using our inventions and proprietary information. Because patent applications in the United
States and many foreign jurisdictions are typically not published until 18 months after filing, or in some cases not at all, and because publications of discoveries in scientific literature lag
behind actual discoveries, we cannot be certain that we were the first to make the inventions claimed in issued patents or pending patent applications, or that we were the first to file for protection
of the inventions set forth in our patent applications. As a result, we may be required to obtain licenses under third-party patents to market our proposed products. If licenses are not available to
us on acceptable terms, or at all, we will not be able to market the affected products.
Assuming
the other requirements for patentability are met, the first inventor to file a patent application is entitled to the patent. We may be subject to a third-party
preissuance submission of prior art to the U.S. Patent and Trademark Office, or become involved in opposition, derivation, reexamination,
inter partes
review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or
invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or
commercialize products without infringing third-party patent rights.
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Our strategy depends on our ability to rapidly identify and seek patent protection for our discoveries. This process is expensive and time consuming, and we may
not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
Despite
our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. The issuance of a patent does not
guarantee that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against third parties.
Our
pending patent applications may not result in issued patents. The patent position of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves
complex legal and factual considerations. The standards which the U.S. Patent and Trademark Office and its foreign counterparts use to grant patents are not always applied predictably or uniformly and
can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical or biotechnology patents. The laws of some foreign
countries do not protect proprietary information to the same extent as the laws of the United States, and many companies have encountered significant problems and costs in protecting their proprietary
information in these foreign countries.
Although
we are aggressively pursuing patent applications on our innovative approaches to characterization and manufacture of complex generics, biosimilars and new drugs, there is
presently uncertainty regarding the scope of the safe harbor from a patent infringement enforcement under federal patent law, 35 USC section 271(e)(1). This uncertainty may impair our ability
to enforce certain of our patent rights and reduce the likelihood of enforcing certain of our patent rights to protect our innovations and our products. Accordingly, we do not know the degree of
future enforceability for some of our proprietary rights.
The
breadth of patent claims allowed in any patents issued to us or to others may be unclear. The allowance of broader claims may increase the incidence and cost of patent interference
proceedings and/or opposition proceedings, and the risk of infringement litigation. On the other hand, the allowance of narrower claims may limit the value of our proprietary rights. Our issued
patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products, or provide us with any competitive advantage. Moreover, once they have
issued, our patents and any patent for which we have licensed or may license rights may be challenged, narrowed, invalidated or circumvented. If our patents are invalidated or otherwise limited, other
companies will be better able to develop products that compete with ours, which could adversely affect our competitive business position, business prospects and financial condition.
We
also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. If any trade secret, know-how or other technology not
protected by a patent were to be disclosed to or independently developed by a competitor, our business and financial condition could be materially adversely affected.
Third parties may allege that we are infringing their intellectual property rights, forcing us to expend substantial resources in resulting litigation, the outcome of which
would be uncertain. Any unfavorable outcome of such litigation could have a material adverse effect on our business, financial position and results of operations.
The issuance of our own patents does not guarantee that we have the right to practice the patented inventions. Third parties may have
blocking patents that could be used to prevent us from marketing our own patented product and practicing our own patented technology.
If
any party asserts that we are infringing its intellectual property rights or that our creation or use of proprietary technology infringes upon its intellectual property rights, we
might be forced to incur
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expenses
to respond to and litigate the claims. Furthermore, we may be ordered to pay damages, potentially including treble damages, if we are found to have willfully infringed a party's patent
rights. In addition, if we are unsuccessful in litigation, or pending the outcome of litigation, a court could issue a temporary injunction or a permanent injunction preventing us from marketing and
selling the patented drug or other technology for the life of the patent that we have been alleged or deemed to have infringed. Litigation concerning intellectual property and proprietary technologies
is widespread and can be protracted and expensive, and can distract management and other key personnel from performing their duties for us.
Any
legal action against us or our collaborators claiming damages and seeking to enjoin any activities, including commercial activities relating to the affected products, and processes
could, in addition to subjecting us to potential liability for damages, require us or our collaborators to obtain a license in order to continue to manufacture or market the affected products and
processes. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, some licenses may be non-exclusive, and therefore, our competitors
may have access to the same technology licensed to us.
If
we fail to obtain a required license or are unable to design around a patent, we may be unable to effectively market some of our technology and products, which could limit our ability
to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations.
If we remain involved in patent litigation or other proceedings to determine or enforce our intellectual property rights, we could incur substantial costs which could
adversely affect our business.
We may need to continue to resort to litigation to enforce a patent issued to us or to determine the scope and validity of a
third-party patent or other proprietary rights such as trade secrets in jurisdictions where we intend to market our products, including the United States, the European Union, and many other foreign
jurisdictions. The cost to us of any litigation or other proceeding relating to determining the validity of intellectual property rights, even if resolved in our favor, could be substantial and could
divert our management's efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they may have substantially greater
resources. Moreover, the failure to obtain a favorable outcome in any litigation in a jurisdiction where there is a claim of patent infringement could significantly delay the marketing of our products
in that particular jurisdiction. Counterclaims for damages and other relief may be triggered by such enforcement actions. The costs, uncertainties and counterclaims resulting from the initiation and
continuation of any litigation could limit our ability to continue our operations.
We in-license a portion of our proprietary technologies and if we fail to comply with our obligations under any of the related agreements, we could lose license rights that
are necessary to develop our product candidates.
We are a party to and rely on a number of in-license agreements with third parties, such as those with the Massachusetts Institute of
Technology and Rockefeller University, that give us rights to intellectual property that is necessary for certain parts of our business. In addition, we expect to enter into additional licenses in the
future. Our current in-license arrangements impose various diligence, development, royalty and other obligations on us. If we breach our obligations with regard to our exclusive in-licenses, they
could be converted to non-exclusive licenses or the agreements could be terminated, which would result in our being unable to develop, manufacture and sell products that are covered by the licensed
technology.
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Risks Relating to Our Dependence on Third Parties
The 2003 Sandoz Collaboration and 2006 Sandoz Collaboration are important to our business. If Sandoz fails to adequately perform under either collaboration, or if we or
Sandoz terminate all or a portion of either collaboration, the development and commercialization of some of our drug candidates, including Enoxaparin Sodium Injection, would be delayed or terminated
and our business would be adversely affected.
2003 Sandoz Collaboration
Either we or Sandoz may terminate the 2003 Sandoz Collaboration for material uncured breaches or certain events of bankruptcy or
insolvency by the other party. Sandoz may also terminate the 2003 Sandoz Collaboration if the Enoxaparin Sodium Injection product or the market lacks commercial viability, if new laws or regulations
are passed or court decisions rendered that substantially diminish our legal avenues for commercialization of Enoxaparin Sodium Injection, or, in multiple cases, if certain costs exceed mutually
agreed upon limits. If the 2003 Sandoz Collaboration is terminated other than due to our uncured breach or bankruptcy, we will be granted an exclusive license under certain intellectual property of
Sandoz to develop and commercialize Enoxaparin Sodium Injection in the United States. In that event, we would need to expand our internal capabilities or enter into another collaboration, which could
cause significant delays that could prevent us from commercializing Enoxaparin Sodium Injection. If Sandoz terminates the 2003 Sandoz Collaboration due to our uncured breach or bankruptcy, Sandoz
would retain the exclusive right to commercialize Enoxaparin Sodium Injection in the United States. In that event, we would no longer have any influence over the commercialization strategy of
Enoxaparin Sodium Injection in the United States. In addition, Sandoz would retain its rights of first negotiation with respect to certain of our other products in certain circumstances and its rights
of first refusal outside of the United States and the European Union.
Accordingly,
if Sandoz terminates the 2003 Sandoz Collaboration, we may decide to discontinue the Enoxaparin Sodium Injection project, or our revenue may be reduced, any one of which
could have a material adverse effect on our business.
2006 Sandoz Collaboration
Either we or Sandoz may terminate the Second Sandoz Collaboration Agreement for material uncured breaches or certain events of
bankruptcy or insolvency by the other party. In addition, either we or Sandoz may terminate some of the products, on a product-by-product basis, if clinical trials are required. For some of the
products, for any termination of the Second Sandoz Collaboration Agreement other than a termination by Sandoz due to our uncured breach or bankruptcy, or a termination by us alone due to the need for
clinical trials, we will be granted an exclusive license under certain intellectual property of Sandoz to develop and commercialize the particular product. In that event, we would need to expand our
internal capabilities or enter into another collaboration, which could cause significant delays that could prevent us from completing the development and commercialization of such product. For some
products, if Sandoz terminates the Second Sandoz Collaboration Agreement due to our uncured breach or bankruptcy, or if there is a termination by us alone due to the need for clinical trials, Sandoz
would retain the exclusive right to develop and commercialize the applicable product. In that event, we would no longer have any influence over the development or commercialization strategy of such
product. In addition, for other products, if Sandoz terminates due to our uncured breach or bankruptcy, Sandoz retains a right to license certain of our intellectual property without the obligation to
make any additional payments for
such licenses. For certain products, if the Second Sandoz Collaboration Agreement is terminated other than due to our uncured breach or bankruptcy, neither party will have a license to the other
party's intellectual property. In that event, we would need to expand our internal capabilities or enter into another collaboration, which could cause significant delays that could prevent us from
completing the development and commercialization of such product. Accordingly, if the Second Sandoz Collaboration
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Agreement
is terminated, our introduction of certain products may be significantly delayed, or our revenue may be significantly reduced either of which could have a material adverse effect on our
business.
The Baxter Agreement is important to our business. If we or Baxter fail to adequately perform under the Agreement, or if we or Baxter terminate all or a portion of the
Agreement, the development and commercialization of some of our biosimilar candidates would be delayed or terminated and our business would be adversely affected.
The Baxter Agreement may be terminated:
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by either party for breach by the other party (in whole or on a product by product or country-by-country basis);
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by either party for bankruptcy of the other party;
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by us in the event Baxter elects to terminate the Baxter Agreement with respect to both of the initial two products within
a certain time period;
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by Baxter for its convenience (in whole or on a product by product basis);
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by us in the event Baxter does not exercise commercially reasonable efforts to commercialize a product in the United
States or other specified countries, provided, that we also have certain rights to directly commercialize such product, as opposed to terminating the Baxter Agreement, in event of such a breach by
Baxter; or
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by either party in the event there is a condition constituting force majeure for more than a certain consecutive number of
days.
If
the Baxter Agreement were terminated by Baxter for convenience or if Baxter elects to terminate the Baxter Agreement with respect to both of the initial two products in the specified
time frame or if we terminate the Baxter Agreement for breach by Baxter, while we would have the right to research, develop, manufacture or commercialize the terminated products or license a third
party to do so, we would need to expand our internal capabilities or enter into another collaboration, which could cause significant delays that could prevent us from commercializing our biosimilar
candidates. In addition, we may need to seek additional financing to support the research, development and commercialization of the terminated products or alternatively we may decide to discontinue
the terminated products, which could have a material adverse effect on our business. If Baxter terminates the Baxter Agreement due to our uncured breach, Baxter would retain the exclusive right to
commercialize the terminated products on a world-wide basis, subject to certain payment obligations to us as outlined in the Agreement. In addition, depending upon the timing of the termination, we
would no longer have any influence over or input into the clinical development strategy or/and the commercialization strategy or/and the legal strategy of the products in the territory.
We and our collaborative partners depend on third parties for the manufacture of products. If we encounter difficulties in our supply or manufacturing arrangements, our
business may be materially adversely affected.
We have a limited number of personnel with experience in, and we do not own facilities for, manufacturing products. In addition, we do
not have, and do not intend to develop, the ability to manufacture material for our clinical trials or at commercial scale. To develop our product candidates, apply for regulatory approvals and
commercialize any products, we or our collaborative partners need to contract for or otherwise arrange for the necessary manufacturing facilities and capabilities. In order to generate revenue from
the sales of Enoxaparin Sodium Injection, sufficient quantities of such product must also be produced in order to satisfy demand. If these contract manufacturers are unable to manufacture sufficient
quantities of product, comply with regulatory requirements, or breach or
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terminate
their manufacturing arrangements with us, the development and commercialization of the affected products or drug candidates could be delayed, which could have a material adverse effect on
our business. In addition, any change in these manufacturers could be costly because the commercial terms of any new arrangement could be less favorable and because the expenses relating to the
transfer of necessary technology and processes could be significant.
We
have relied upon third parties to produce material for nonclinical and clinical studies and may continue to do so in the future. We cannot be certain that we will be able to obtain
and/or maintain long-term supply and supply arrangements of those materials on acceptable terms, if at all. If we are unable to arrange for third-party manufacturing, or to do so on commercially
reasonable terms, we may not be able to complete development of our products or market them.
In
addition, the FDA and other regulatory authorities require that our products be manufactured according to current good manufacturing practices, or cGMP, regulations and that proper
procedures are implemented to assure the quality of our sourcing of raw materials and the manufacture of our products. Any failure by us, our collaborative partners or our third-party manufacturers to
comply with cGMP, and/or our failure to scale-up our manufacturing processes could lead to a delay in, or failure to obtain, regulatory approval. In addition, such failure could be the basis for
action by the FDA to withdraw approvals for drug candidates previously granted to us and for other regulatory action, including product recall or seizure, fines, imposition of operating restrictions,
total or partial suspension of production or injunctions. To the extent we rely on a third-party manufacturer, the risk of non-compliance with cGMPs may be greater and the ability to effect corrective
actions for any such noncompliance may be compromised or delayed.
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to
generate product revenue.
We do not have a sales organization and have no experience as a company in the sale, marketing or distribution of pharmaceutical
products. There are risks involved with establishing our own sales and marketing capabilities, as well as entering into arrangements with third parties to perform these services. For example,
developing a sales force is expensive and time consuming and could delay any product launch. In addition, to the extent that we enter into arrangements with third parties to perform sales, marketing
or distribution services, we will have less control over sales of our products and our future revenue would depend heavily on the success of the efforts of these third parties.
General Company Related Risks
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may
prevent attempts by our stockholders to replace or remove our current management.
Provisions in our certificate of incorporation and our by-laws may delay or prevent an acquisition of us or a change in our management.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of
our board of directors. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to
replace current members of our management team. These provisions include:
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a classified board of directors;
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a prohibition on actions by our stockholders by written consent; and
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limitations on the removal of directors.
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Moreover,
because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in
excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date
of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Finally, these provisions
establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings. These provisions would apply even
if the offer may be considered beneficial by some stockholders.
Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.
The stock market in general and the market prices for securities of biotechnology companies in particular have experienced extreme
volatility that often has been unrelated or disproportionate to the operating performance of these companies. The trading price of our common stock has been, and is likely to continue to be, volatile.
Furthermore, our stock price could be subject to wide fluctuations in response to a variety of factors, including the following:
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failure to obtain FDA approval for the M356 ANDA or other announcements that indicated a material delay in the approval of
the M356 ANDA;
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failure of Enoxaparin Sodium Injection to sustain profitable sales or market share that meet expectations of securities
analysts;
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other adverse FDA decisions relating to our Enoxaparin Sodium Injection product or M356 program, including an FDA decision
to require additional data, including requiring clinical trials, as a condition to M356 ANDA approval;
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litigation involving our company or our general industry or both, including litigation pertaining to the launch of our,
our collaborative partners' or our competitors' products;
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a decision in favor of or against Teva or Amphastar and Actavis our material patent litigation suits, or a settlement
related to any case;
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announcements by other companies regarding the status of their ANDAs for generic versions of Lovenox or Copaxone;
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FDA approval of other companies' ANDAs for generic versions of Lovenox or Copaxone;
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marketing and/or launch of other companies' generic versions of Lovenox or Copaxone;
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adverse FDA decisions regarding the development requirements for one or our biosimilar development candidates or failure
of our other product applications to meet the requirements for regulatory review and/or approval;
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results or delays in our or our competitors' clinical trials or regulatory filings;
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enactment of legislation that repeals the law enacting the biosimilar regulatory approval pathway or amends the law in a
manner that is adverse to our biosimilar development strategy;
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failure to demonstrate therapeutic equivalence, biosimilarity or interchangeability with respect to our technology-enabled
generic product candidates or biosimilars;
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demonstration of or failure to demonstrate the safety and efficacy for our novel product candidates;
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our inability to manufacture any products in conformance with cGMP or in sufficient quantities to meet the requirements
for the commercial launch of the product or to meet market demand;
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failure of any of our product candidates, if approved, to achieve commercial success;
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the discovery of unexpected or increased incidence in patients' adverse reactions to the use of our products or product
candidates or indications of other safety concerns;
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developments or disputes concerning our patents or other proprietary rights;
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changes in estimates of our financial results or recommendations by securities analysts;
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termination of any of our product development and commercialization collaborations;
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significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;
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investors' general perception of our company, our products, the economy and general market conditions;
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rapid or disorderly sales of stock by holders of significant amounts of our stock; or
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significant fluctuations in the price of securities generally or biotech company securities specifically.
If
any of these factors causes an adverse effect on our business, results of operations or financial condition, the price of our common stock could fall and investors may not be able to
sell their common stock at or above their respective purchase prices.
We could be subject to class action litigation due to stock price volatility, which, if it occurs, will distract our management and could result in substantial costs or
large judgments against us.
The stock market in general has recently experienced extreme price and volume fluctuations. In addition, the market prices of
securities of companies in the biotechnology industry have been extremely volatile and have experienced fluctuations that have often been unrelated or disproportionate to the operating performance of
these companies. These fluctuations could adversely affect the market price of our common stock. In the past, securities class action litigation has often been brought against companies following
periods of volatility in the market prices of their securities. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert our
management's attention and resources, which could cause serious harm to our business, operating results and financial condition.