NEWS RELEASE
Momenta, Insmed May Gain From Biotech Generics Law (Update1)
By Catherine Larkin
March 27 (Bloomberg) -- Momenta Pharmaceuticals Inc., Insmed Inc. and Cell Therapeutics Inc. are poised to benefit from growing pressure in the U.S. to approve generic copies of biotechnology drugs costing as much as $200,000 a year.
The biotechnology companies, each of whose shares are near all-time lows, are lobbying Congress to allow the first copies of medicines such as Amgen Inc.'s Epogen for anemia and Genentech Inc.'s Avastin for cancer, after patents expire. Pressure on lawmakers is rising because the generics could save Americans $71 billion over a decade, says Express Scripts Inc., a drug benefits firm.
Annual sales may top $5 billion for copycat versions of these so-called specialty medicines that carry lofty price tags, according to Doug Long of IMS Health Inc., a Norwalk, Connecticut research firm. Momenta, Insmed and Cell Therapeutics are racing to develop the genetic-engineering expertise to make duplicates of the treatments should the U.S. Food and Drug Administration be given new approval guidelines by Congress.
``Specialty spending in health care is growing much faster than primary-care spending so there's a lot of pressure'' to lower prices, Long, vice president of industry relations for IMS, said in a phone interview. ``Companies that invest in the market early could have an early advantage when the dust settles and a regulatory pathway emerges in the U.S.''
Pharmacy benefit managers, insurers and consumer groups support lobbying efforts in Washington by generic-drug companies and small biotechnology companies that are their allies. Measures have been introduced in Congress by members of both parties, including Democratic presidential candidate Hillary Clinton.
Pricing Generics
Generic versions of conventional pill-type drugs, approved under a 1984 law, can cost as little as 2 percent of the brand- name price. Copies of biotechnology drugs, genetically engineered versions of human proteins, may still cost 75 to 80 percent as much as the originals because there will be less competition and the manufacturing involved is more expensive than for pills, Long said.
The largest biotechnology companies, resigned to the passage of legislation, are seeking restrictions.
Amgen, of Thousand Oaks, California, the world's biggest biotechnology company, and No. 2 Genentech, of South San Francisco, support legislation permitting generics only after brand-name biotechnology drugs are on the market for at least 12 years, a time period separate from patents that can last 20 years. The measure would also bar pharmacists from substituting a generic drug for the original unless the FDA approved doing so.
Fewer Restrictions
Momenta, Insmed and Cell Therapeutics, joining with makers of conventional generic drugs, are pressing for fewer restrictions. The three companies are investing now in the technology needed to copy drugs such as Avastin, which costs $55,000 a year and had $2.3 billion in U.S. sales last year.
Momenta, based in Cambridge, Massachusetts, is dissecting the molecular makeup of biotech drugs to determine how to make copies. Swiss drugmaker Novartis AG's Sandoz unit, the world's second-biggest maker of generic medicines, committed as much as $263 million to Momenta to copy Lovenox, a blood-thinner from Paris-based Sanofi-Aventis SA, as well as three undisclosed biotech drugs.
Teva Pharmaceutical Industries Ltd., the Israeli company that is the world's biggest maker of generic drugs, and Barr Pharmaceuticals Inc. of Woodcliff Lake, New Jersey, spent billions of dollars on acquisitions since 2006 partly to gain the technology to make copies of gene-based therapies.
Mylan, Watson
Mylan Inc. of Canonsburg, Pennsylvania, and Watson Pharmaceuticals Inc. of Corona, California, the biggest U.S.- based generic companies, have said they are seeking partners to help produce the drugs known as ``biogenerics'' or ``biosimilars.''
``Momenta's technology definitely would be valuable to a company developing a biosimilar,'' said Robyn Karnauskas, an analyst who covers the drugmaker for Bear Stearns & Co. in New York, in a phone interview. ``To characterize biosimilars in the way that Momenta is doing or attempted to do, I don't know of any U.S. companies that are doing that.''
Karnauskas upgraded the stock in February and is the only analyst among five surveyed by Bloomberg who recommends buying shares. Delays in an effort to win approval of generic Lovenox under existing laws caused Momenta to lose more than half its value in November. The drugmaker fell 12 cents, or 1 percent, to $11.79 in Nasdaq Stock Market composite trading at 9:40 a.m. New York time.
Human Testing
Insmed lost almost half its value in Nasdaq trading last March after a legal settlement halted sales of its only product, Iplex for stunted growth. The company plans to start human testing of two generic biotech drugs this year.
``Our goal is to be the largest U.S. biotech company to have a focus on follow-on biologics,'' said Steve Glover, Insmed's president for therapeutic proteins, in an interview. The Richmond, Virginia-based drugmaker gained half a cent today to 63 cents.
Cell Therapeutics, a Seattle-based developer of cancer drugs, formed a subsidiary in May for technology that the company says will simplify the manufacture of gene-based medicines. The drugmaker rose 3 cents, or 4.6 percent, to 71 cents in Nasdaq trading after falling 89 percent in the 12 months before today.
The company is developing a medicine similar to Amgen's Neupogen for chemotherapy-related illness.
``There are challenges, but there were also challenges when generic manufacturers made chemistry-based drugs'' for the first time, said David Snow, chief executive officer of Medco Health Solutions Inc. of Franklin Lakes, New Jersey, the biggest U.S. manager of drug benefits, in a phone interview. ``It might not be as cheap because there is a little more technology involved, but nevertheless it will result in enormous savings.''
To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.
Last Updated: March 27, 2008 09:50 EDT