The best drug company is probably the one that creates the most innovative, life-saving products. The best drug company stock is the one that gives you the highest returns, right?
That's what I'm thinking in nominating Momenta
What does Momenta do?
Momenta is what you might call a biogenerics company -- an industry niche that barely exists today, but will be a big deal in the not-so-distant future. Complex biotechnology drugs aren't often as easy to duplicate as conventional pills, but to the companies that can pass the technological, regulatory, and legal hurdles, great rewards await.
Momenta, for example, has made a copycat of the Sanofi-Aventis
What's the opportunity?
If all goes well, Momenta's generic Lovenox could be bringing in more than $1 billion in annual revenues within a couple years of an early 2008 launch. Those revenues will be shared 50/50 with its marketing partner Sandoz (the generic division of Novartis
If all goes well -- there's the rub. First, there's that list of hurdles I mentioned. Momenta and Sandoz have to get FDA to approve the generic Lovenox, a feat that relies on Momenta's technology satisfying FDA demands of bioequivalence where others have so far failed. (And for Momenta to really succeed, FDA must continue not to approve rival generics).
Also, there's the issue of Sanofi-Aventis' intellectual property, which is the subject of ongoing litigation. In June 2005, a federal court effectively threw out Sanofi's remaining Lovenox patent on summary judgment, saying the company had deliberately misled the patent office. An appeals court subsequently remanded the case back to the district court on procedural grounds, saying Sanofi should at least have its day in court -- which it did, just this past December.
A decision should be coming down in the next few weeks. A loss for Sanofi will be a huge win for Momenta and its shareholders. Affirmation of Sanofi's patent rights will give Lovenox exclusivity through 2012 and certainly hurt Momenta's stock. Even if its big release is delayed a few years, however, Momenta looks like it has the only generic game in town. A setback could be a good opportunity for bargain-hunters.
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