Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Sapna Srivastava of Goldman Sachs. Your line is open.
Unidentified Analyst
This is actually [Vince] on behalf of Sapna. Our question is, how should we think about the tax rate going forward and specifically when do you expect to start incurring a tax expense?
Rick Shea
Well, again as long as we are going to be in a royalty for Enoxaparin, I am expecting that at least in second quarter through fourth quarter of 2012 we’ll be in a net loss position. So right now, I am expecting that we will have sufficient tax loss carry forwards coming into 2012 that we will not be in a tax paying situation for 2012. That of course could change depending on market conditions, results of litigation and other factors.
Operator
Thank you. Our next question comes from Sumant Kulkarni of Bank of America. Your line is open.
Sumant Kulkarni - Bank of America
My first is on your spending guidance; we know that it’s going to be $22 million to $28 million in a quarter, but do you have any kind of sense of how we should be modeling the incoming R&D revenues in the 2012 quarters?
Rick Shea
The incoming R&D revenues for 2012 will be just relating to Sandoz collaborations.
Sumant Kulkarni - Bank of America
So where will be $33 million payment from Baxter be showing up; does it flow through the income statement or is it just going to be through cash?
Rick Shea
We haven’t finalized the revenue accounting yet for the $33 million, so I am expecting that some of it will be recognized immediately, some of that will be deferred. But we haven’t yet worked that out; so the guidance with respect to the $33 million was more on a cash basis. We haven’t yet worked out the book accounting for that upfront payment.
Sumant Kulkarni - Bank of America
And how do you see the collaborations going so far; has anything started on that front or do we have to wait for the HSR to close before you can start; any look on that?
Craig Wheeler
Well, this is Craig, I would say, certainly we’re preparing to start the activities, but you know illegally HSR has clear before we can formally start activities on partnership.
Sumant Kulkarni - Bank of America
And my final question is on the Lovenox, litigation with Amphastar and Watson, what kind of timeframe do you expect ruling by given that the trial is in October?
Craig Wheeler
A ruling by the District Court or the Appellate Court?
Sumant Kulkarni - Bank of America
Both, I’ll take both?
Craig Wheeler
So the Appellate Court the ruling could come at any time. So it could come in anywhere between now and we would expect that will probably come within the next couple of months, but they’re really are under no time pressure because they have already stayed the lower court’s decision. We expect that in the District Court we will proceed to a trial which is scheduled in October and then of course, it depends on the judge and the docket, it could take anywhere; we’ve seen it in six months to a year afterwards. We have seen these rulings sometimes happen quicker. So it’s hard to predict right now.
Operator
Thank you. Our next question comes from Duane Nash of Wedbush Securities. Your line is open.
Duane Nash - Wedbush Securities
My understanding is that the Enoxaparin patents are owned solely by Momenta. So in the event that Amphastar is eventually found to infringe, do you need to share any damages with Sandoz or would you keep it entire to yourself?
Craig Wheeler
So they are our patents, but through the agreement that we have with Sandoz, they are licensed for the partnership, so it would be shared.
Duane Nash - Wedbush Securities
And have you discussed how those would be shared or is that a trade secret?
Craig Wheeler
No, we have not discussed about the sharing of any settlements or litigation.
Duane Nash - Wedbush Securities
And then one last quick one, I realize it’s still very early, but do you have any comments on, any effect on pricing that might have occurred subsequent to Watson’s launch?
Craig Wheeler
You know it’s really too early. They are just starting to come into the market and that’s why didn’t put more in the comments. I would certainly say that we had an idea, but it’s just too early yet.
Operator
Thank you. Our next question comes from Alan Sonnenfeld of Bernstein. Your line is open.
Alan Sonnenfeld - Sanford Bernstein
Just a couple of questions for you; first of all, when the court said a non-final reversal of the [PR] what does that mean?
Craig Wheeler
Well, they just stayed. They just stayed the lower courts actions. So they actually haven’t made any decision at all yet on it. I mean, I think, you know, to interpret it, I mean, if they stay the action, you can anticipate that the likely final decision will be a reversal of lower courts, but you can't know that for sure because they’re now looking at the totality of the evidence. So all they did is stay the lower court’s action at this point.
Alan Sonnenfeld - Sanford Bernstein
And then, is there a reasonable room for Momenta to negotiate with Watson to reach a settlement at this point or is there really nothing to discuss now?
Craig Wheeler
Well, you know, as I said before when people ask questions on settlement, there is always a possibility of settlement. The complexity here is we actually have four parties, not two, to deal with. We have ourselves, we have Sandoz, we have Watson and we have Amphastar. So in any settlement, you have to get in alignment of interest of the parties. So this is a complex line if there were to be any settlement.
Alan Sonnenfeld - Sanford Bernstein
And then just on the biosimilars; do you have any sense of when we could see biosimilar trials on ClinicalTrials.gov?
Craig Wheeler
So, it really is hard to predict, because a lot of what we are trying to do is work through the FDA’s pathway and our products and that’s just being put in place. And as I said in my comments, that the FDA has provided the opportunity for us to be able to exhibit our characterization date, our bio-characterization, our process sciences and take us through that pathway.
So until we get more of a sense of how that pathway will work, how quickly the meetings will be granted, how long it’s going to take between them, the kinds of questions will be asked, it’s really hard to give guidance on that. Obviously, we are trying to take advantage, full advantage of that pathway and that’s a brand new pathway coming into existence.
Operator
Thank you. Our next question comes from Ritu Baral of Canaccord. Your line is open.
Ritu Baral - Canaccord
Craig you alluded to this very briefly, but maybe you could give us some more detail. What are the specific or more specific points of read through that we should be looking at or we should be taking away from the Sanofi versus FDA Lovenox ruling and how, as far as how FDA can evaluate a generic Copaxone; are there any sort of new points or new allowances that have been granted to FDA?
Craig Wheeler
Well, I think what is done in my view as re-affirmed but our interpretations of Copaxone has always been and enables the FDA to look at the totality of evidence provided to them and allows them to ask whatever questions they deem necessary around ensuring the products are equivalent and same in terms of purity etcetera.
So they basically, the question was really around immunogenicity and how you would factor that because this thing came through a natural process. I think it reaffirms strongly that the FDA has brought latitude to be able to take no counter factors necessary which we think is tremendous for read through in terms of things like Copaxone as well as follow-on biologics.
Ritu Baral - Canaccord
The FDA could ask you for clinical safety or immunogenicity information around Copaxone without triggering some sort of pathway change or any sort of response letter even?
Craig Wheeler
So as I understand it, it didn’t comment specifically on clinical request, but what it did talk about is the FDA’s ability to be able to look broadly for understanding sameness of the molecules including sameness that can be evaluated because of things like different ways to measure immunogenicity that might be in the product. So it reaffirms their ability to use the tools necessary. I don't think they have the right to ask you know per se efficacy question, that's not really part of the (j) pathway but they do have the ability to use whatever tools that are necessary to them to answer the questions that need to be asked in the (j) pathway.
Ritu Baral - Canaccord
Got it and looking on to interchangeability of biosimilars as part of your new Baxter deal, what is your feeling as far as characterization technology versus clinical trial data as far as proving interchangeability to FDA as part of biosimilars review. How important are those two data sets for interchangeability and how important are those two for just flat out normal approval?
Craig Wheeler
It’s a good question and it’s one I can only speculate on, but I will give you my impression. I think when you look at characterization data and the level that certainly the tools that we are developing and I am sure others are trying to develop as well are able to provide today, you can get a great, great deal of understanding of these molecules. And our goal is to get a total understanding of characterization of them so that we can actually show that we have specifically everything on the molecules, the same as in the brand.
That data if provided just like it was provided in a drug like enoxaparin and that we are providing Copaxone gives a great deal of confidence that you actually know that these molecules are the same. And it’s not just analytic data. You are also giving remember biologic data, biologic testing data into the agency. So if they may ask for supplemental clinical trials, but it should give them a great deal of confidence that in combined with trials, hopefully reduce trials, but you have no risk of having differences in the products.
If you just have a clinical trial it depends on the size of the clinical trial, the scale, but I think there's going to be questions as the brands themselves have found out with the trials. With a small clinical trial you may not pick up a difference of structure, that small difference is caused by structural differences in the molecule.
So you know my own expectation is that past few substitutability for companies that are not going to try to do the heavy analytic approach, you know try to use the clinical trials is going to be that they are going have to use obviously pretty significant trials and then probably significant in clinical experience beyond that and even that may not strong enough to get to substitutability. So I think the FDA is going to require certainly a very, very strong analytic package to drive to a substitutable decision at the agency like they.
Ritu Baral - Canaccord
Great. And just sort of a quick follow on with your Baxter relationship, they are a major producer of IVIG, is the Virdante technology some thing that the partnership can take advantage of or what does it set you up as a competitor?
Craig Wheeler
Well, I think the future is hard to predict on that one but we are sure that this could be something that is the potential that would be used in the partnership, but we will see.
Ritu Baral - Canaccord
Last question and I’ll hop back in the queue. What sort of headcount and CapEx investment do you expect to be making as part of the biosimilars initiative and partnership that Rick alluded to?
Craig Wheeler
Sure, while we are still working that out, it’s early in the partnership. As we said earlier we don’t have the HSR clearance yet. So we are already adding staff, but I think to get the final numbers and understand exactly what our investments are going, we’re going to have to sit down with our partner and really put plans to get that across the joint programs and so we’ll get more clarity over that over the course of the next three to six months but it really is going to have wait a little while until we actually get to sit down with our partner and really do the mapping out of the programs.
Ritu Baral - Canaccord
Is sort of a CapEx spend on a pilot plan part of at least a possibility?
Craig Wheeler
Yes, it’s certainly potentially part of the expenditures.
Operator
Thank you. Our next question comes from Ami Fadia of UBS. Your line is open.
Ami Fadia - UBS
I had two questions. Firstly on the operating expense guidance, when you say net of collaborative revenues, the US (inaudible) that remains in line with 2011 levels?
Rick Shea
Yeah. As I said the collaborative revenues for 2012 will be relating to our collaborations with Sandoz, Enox and Copaxone. So we don’t see a significant variation in those collaborative revenues, but they can fluctuate from quarter to quarter and sometimes it’s somewhat arbitrary as to what’s going through our P&L that is reimbursable by Sandoz. So I think it’s more straightforward to look at it, net of those collaborative revenues.
Craig Wheeler
And just to add to that, I think in Rick’s numbers that he didn’t say are guidance of the net expenses is going to be a little bit higher than last year and part of the reason behind that is the way the Baxter collaboration works where we have to invest to the technical milestones and so we will be investing in these programs and if we succeed scientifically, we will get milestones that will actually bring cash into the company in the future, that will cover a good portion of those expenses. And so it’s going to be a little bit lumpy because you will see us investing in programs and then down the road later you will see us hitting those milestones and are meant to cover hose costs retrospectively.
Ami Fadia - UBS
So just a follow up to that. In the fourth quarter you recorded about $3.3 million in collaborative revenue, do you expect that and can you remind us what that is and do you really expect that to continue?
Rick Shea
Again, I mean that’s reimbursement of expenses that go through our P&L. It includes both external expenses such as the manufacturing activities as well as the internal FTE cost. And again that represents both our Enox collaboration where we continue to do some background development work as well as some commercial work as well as on Copaxone program.
Ami Fadia - UBS
Got it.
Craig Wheeler
One of the things is I think, for folks who have followed the company through our Enoxaparin development program, those collaborative revenues can change pretty dramatically because the way these contracts work, we control basically external contracts and manufacturing programs until we get to commercial and then Sandoz controls that. So, those flows back and forth and reimbursements can look different at different points in time.
Ami Fadia - UBS
Okay. And just with respect to sort of the flow of the R&D expenditure through the four quarters, do you expect any sort of lumpiness or should we at this point assume that it is generally well spread out across the year?
Rick Shea
Probably we’re going to spread out. I don’t see anything significant enough that I could point out at this time.
Ami Fadia - UBS
Okay. And just on the sort of the progress of the work that’s going in to the collaboration. You guys mentioned that at some point when Baxter decides to opt in to one of these assets, that will trigger a milestone payment. Given where you’re at and given sort of that we are waiting for the FDA to come out with these guidelines, when do you anticipate this to happen and it’s not going to, could that potentially be a 2012 event or is it more like a 2013 event?
Craig Wheeler
Yeah, I wouldn’t anticipate any of those milestones being triggered in 2012. We thought it is possible, but I think the way to think about this collaboration is we have two lead programs where most of our resources are going to be invested and we will be starting those other programs certainly to present to our partner. But our main focus now is to get the two lead programs going as fast as we possibly can and then we will bring those other programs forward, hopefully in a very quick timeframe, but that’s one of our goals.
Ami Fadia - UBS
Got it. And just the one last follow-up from a question on tax that came up earlier. Can you confirm that you will end the year with more than $200 million in NOLs and can you carry it forward for a couple of years as and when and then instead of set off as and when you have profits?
Rick Shea
Yeah we actually entered 2011 with over $200 million in NOLs, actually about $220 million. Our book income for 2011 as you can see is about a $180 million. I think with some book tax differences ball park, again we haven’t done the tax return yet, but the taxable income might be in the range of $190 million. So that would mean we would be carrying in rough numbers about $30 million forward of NOLs into 2012.
Operator
Our next question comes from Joseph Schwartz of Leerink Swann. Your line is open. (Operator Instructions)
Joseph Schwartz - Leerink Swann
I was first going to ask how far are you into the discovery process and your patent infringement case against Watson and Amphastar and when do you expect to have sufficient visibility into whether or how they infringe upon your IP?
Craig Wheeler
Well we obviously are not going to comment on specific visibility into the IP. The Discovery process is ongoing, it’s been ongoing for a while. We obviously are stating that we feel confident about our case but beyond that we are not going to give comments in terms of what we are seeing in Discovery and the strategy there.
Joseph Schwartz - Leerink Swann
Okay, understandable. How jointly will you advance or consider the ROI with and without more expensive clinical trials for the Follow-On Biologics? Who makes the decision about which agency will pursue and how you will develop them when you might benefit more under the latter scenario without extensive clinical trials but obviously you need to consider all angles throughout time?
Craig Wheeler
I think first of all the agents are Baxter’s choice, so they get to opt into the program that they select. So we will obviously jointly evaluate things and certainly move forward if we both think makes sense but they have the final say on the agents.
I think your question as I understand you are asking, is there potentially a conflict of interest in terms of some of the developments that might happen. I actually don't see a conflict of interest. I think if you do the math on these programs where if you look at approval would reduce trials and therefore they reduce timelines if that would entail by getting approval. The value to both of us in the marketplace is much, much higher than any potential differences on interest in a clinical trial cost expenditure kind of model.
So I think our interest in the way we develop this contract are very strongly aligned. Obviously if we are not making progress from reducing clinical trials we will jointly say we are not going to be assured that to get the approximate market value by actually doing the trials and so we will actually execute in that direction.
Joseph Schwartz - Leerink Swann
And then lastly what is the regulatory pathway that you would envision for the Virdante IG product. It doesn't sound like an ANDA is possible since it would be a different molecule with different glycans but would you be doing clinical trials for that or is that maybe 505(b) (2)? What do you think on that?
Craig Wheeler
Yeah, I thought on that is would be a new molecule a new drug application, a BOA application. It’s going to take some time for us to really do the internal pre-clinical work to make a selection on what I see the best clinical path forward for that asset. And obviously its early we still have to do the basic biology experiments to make sure it all works our satisfaction. And so if we get closer will be able to give you a better sense of what the clinical direction path of that molecule might take but its still early days here. So I think we got to back into our homework on that.
Operator
Thank you. Our next question comes from Jami Rubin. Your line is open.
Jami Rubin - Goldman Sachs
Okay, great. Just a question again on to generic Copaxone investors are highly skeptical that the FDA will approved generic Copaxone without our clinical trials and clearly you have a very different opinion on this and I am just wondering how is the market going to get visibility on what the FDA is requiring or what they are not requiring? Do we have to wait until March 2014 when the first path expires to find out if FDA does decide in fact to require clinical trials? So how do you see this playing out and will the guidelines or bi-similar guidelines, which by the FDA which we understand will be issued imminently? Will that provide any visibility at all on the path forward for generic Copaxone? Thanks.
Craig Wheeler
Sure, first I actually think that the agency since this is 505 (j) pathway they had hinted that was a 505 (j) application and as I said before is efficacy trials are not the purview or mandate of the opposite generic drugs and there are actively working on this applications. So our view is that unless something tells us otherwise, that we are working directly and very aggressively toward a 505 (j) pathway approval.
I can assure you that if we were having to do significant clinical trials that we would be back out to the market and you will also see that in clinic trials. There will no secret on that if we are actually pushing the clinical trial halfway. But I think the agency is not, trying to keep a secret, at the end they are going to have to do clinical trials. They are obviously reviewing our application, and another applications as well on this program. So, we are hopeful that this pathway can continue just like it did with Enoxaparin and it will ultimately prevail in 505 (j) pathway.
I do not think there is going to be much read through at all from the Follow-On Biologics guidance. In fact I think the guidance is going to be coming out. Follow-On Biologics is not going to be specific to required clinical trials for Follow-On Biologics. It is going to be much more about pathways, how the agency will make decisions, naming conventions etcetera. I do not think you are going to actually see, for these programs, agency is going to require Phase III clinical trial. They exclusively said both in their public comments as well as the way that they created a statute that they will look at individual applications and the data that was provided to them by the applicants to determine what trials are going to be necessary. So, I wouldn’t anticipate you would see guidance, either that is going to be specific to our pushing Biologics to certain clinical trial pathways, nor reading critical Copaxone in the guidance which was coming up from the FDA.
Jami Rubin - Goldman Sachs
So just lastly on Copaxone, what’s the timeline that you are anticipating, setting the patent trial aside? The patents expire in 2014 and 2015 as I understand it. So what would your expectations be in terms of an ANDA approval for Copaxone?
Craig Wheeler
I have avoided and I will continue to avoid giving any guidance on that as we learn through the process of Enoxaparin when you file these complex new signed applications into OGD. They take time to process through the agency and so I don’t want to get caught on where we were in Enoxaparin by signaling we expect approval, now, next year, the year after, etcetera. So, we’re just kind of keep quiet on that and obviously if the application gets derailed, that will be a significant payback for us when we have to come talk to you but right now we’re comfortable with the progress we are making on it, but I am not going to guidance on when.
Operator
Thank you. Our next question comes from Imran Babar. Your line is open.
Imran Babar - Cowen & Co
I have a couple of questions. Actually, a number of my questions already got answered. So will be real quick. One is really a technical question. Could you quantify what your restricted cash flows. Just give us a little query on that. I think I am sorry if I missed that?
Rick Shea
Yeah, in connection with the Amphastar Watson litigation, when the preliminary injunction was imposed, we and Sandoz were required to put up a bond in favor of Amphastar and Watson in the eventuality that we lost the patent case and would have to pay damages to Amphastar Watson. A portion of the bond that we’re responsible for is $17.5 million.
Imran Babar - Cowen & Co
Okay. Great, thanks. And I guess, the next question I had was, just in terms of for Q1, the competition and I am just kind of curious how this will effect the deal terms, in particular for Q1s for example, will be one month of profit share and then couple of months of royalty. I just wondered if you can explain that, given sort of competition arriving in Q1.
Rick Shea
Yeah, that is correct. We will have one month of profit share and two months of royalty.
Operator
Thank you. Our next question comes Sumant Kulkarni of Bank of America. Your line is open.
Sumant Kulkarni - Bank of America
Thanks for the follow up. So just to be clear does your spend guidance include a fully built out spend on the Baxter partnership for 2012 or could it actually be higher?
Rick Shea
This is our best estimate at time for what our expenses are going to be. So it does include our estimate of spending related to the Baxter collaboration.
Craig Wheeler
I just put one more caveat after Rick. We are just at the start of this we are sitting down with our partners as soon HSR clears and we will get a better sense of tightening down that budget as soon as we go through that process.
Sumant Kulkarni - Bank of America
And given that assuming status quo on Lovenox that is like Watson Amphastar launch and we also have the AG back on the back on the market, if that does not change and if you do not get a Copaxone approval, do you expect the company to be loss-making in every foreseeable future quarter or could there be something else that could be offsetting that could lead to a profit in any given quarter?
Rick Shea
Well certainly with the way our expenses are building and it says we are actually in a loss situation until we actually bring up the revenue it going to be as to it, there could be quarters where we see cash coming in through milestone payments, we could get aid as a result of the lawsuit, we could get revenues in from winning the law suit. So those types of things. So there is lots that could happen, that could change the cash position but I think what we are doing is we are planning the company based upon what we have right now and the timelines we see with Copaxone patents in the market place.
Sumant Kulkarni - Bank of America
And this one is a bigger picture question based of that answer. Given that you could be loss making and there are no other potential revenue making opportunity, does that make the company more amenable to more partnerships and what would you say the ripeness of the products in the pipeline that are not related to Baxter are?
Craig Wheeler
Well, I think we’re always open to partnerships in the company and we think that's a great way to build the company, be able to build our internal capabilities in scales and grow the company in the long run. It really depends for us in terms of the nature of the products how far along they are and we obviously want to maximize the value for us.
So for example 402 is to get them to clinical could be a candidate for partnership, but we certainly want to carry it further than it is now, so I wouldn't expect that to happen in the near term, but as we start to get positive results that could be a candidate for partnership.
On follow-on biologics we have only six tied up with Baxter; we are free to do whatever we want beyond that, but it’s going to take us a while to scale and be able to do that much work. So again, probably not immediately, but if that business continues to grow and go well there could be an opportunity for partnerships there and then obviously the platform that we are building internally and the Virdante assets as they move forward.
So I think there is lots of opportunity and lots of willingness to partner, but our view on that is a strategic view. We’re certainly not one a company in the position that would have to do that out of desperation for cash. And so we would try to bring those assets to the point where we really feel we can maximize the value for our shareholders, but certainly at the right time; we’re very open to partnerships.
Sumant Kulkarni - Bank of America
And my last one is a very specific question on Copaxone. In the past, when we have asked tell about whether they have been in settlement discussions, you said no, we haven't done some recently, but if I would propose the same question to you today what would you say?
Craig Wheeler
I would say the same thing I always say, that settlement discussions are always possible. There is multiple parties that have to come to the table and beyond that we don’t comment on any discussions that we might have had.
Operator
(Operator Instructions) Our next question comes from Ritu Baral of Canaccord. Your line is open.
Ritu Baral - Canaccord
My question is focused on M402 and you said that we would have an IND filing in 2012. Can you give us any more specificity about when during the year or what sort of preclinical studies are outstanding and what sort of first phase of development might look like for that drug?
Craig Wheeler
First, I am not going to give more guidance on 402 because we actually have a policy here, when we are at product close we’ll announce when we actually are going into Phase I, so we are not going to give color on that before because all sorts of things can happen in the process. I can’t say that we are optimistic about that program but we’ll give an announcement when we actually put that into the clinic.
In terms of the path of the clinic, I mean it’s going to be I think a typical oncology compound where you would actually see us doing those ranging in the early trials and then picking a path forward and thus we’ve said before this agent is potentially attractive in multiple different to these areas. And so, we’re going to be making the trade-out that all oncology companies make to try to find the trials that we can do most quickly, but also open up the market to us as quickly as possible as well. So we’ll be giving a lot of guidance on that as we get more into the clinic and get the results on that trial, but we don’t want to really talk about it until we actually get to the clinic.
Ritu Baral - Canaccord
And as heparin sort of base compound, what sort of potential directions do you think that they would be optimal to develop it in; the scientific rationale?
Craig Wheeler
I mean, as we said before this compound, this is one of the unique characteristics of heparin is that it hit multiple targets in the progression in cancer. And so you know this agent, as we’ve time before its at least five different targets and so we actually think its pretty, its got a pretty high potential of an anti-cancer agent, anti-metastatic agent broadly and so we are in some sense if it works through the phase, why don’t we have a wealth and riches in terms of the determining which product it goes forward with.
We’ll also be looking very carefully because this is where we believe oncology is going and what would be the agents we use in conjunction with it so that we can actually find very potential applications of combinations to bring it forward. So it’s early; I think we’ll have to look at how dosing plays out; what levels of dosing, frequency of dosing in the early trials and then we can make those decisions more intelligently.
Ritu Baral - Canaccord
My last question, what and this is for Rick, what allowances have you made in the guidance right now for litigation cost going forward and can you remind us of the terms of the litigation fee, responsibilities for Momenta versus Sandoz or even if you have any details of litigation expenses in terms in the Baxter agreement?
Rick Shea
The litigation between us and Sandoz for Copaxone; Copaxone litigation, Sandoz is bearing 100% of the cost, so that litigation in any of the Enox-related litigation, those expenditures are shared. I have included some allowance for those costs in 2012 in my guidance. But again, they can fluctuate significantly from quarter-to-quarter and not always clear on how those expenses are going to play out.
Ritu Baral - Canaccord
And any detail in the Baxter deal at this point?
Rick Shea
Regarding?
Ritu Baral - Canaccord
Litigation expenses.
Rick Shea
While I think it is little early, still early for that right now. So that wouldn’t be in 2012.
Ritu Baral - Canaccord
And just in general as far as the terms of the partnership?
Craig Wheeler
Yeah, we haven’t disclosed that specific portion of the contract. At this point, we will have to clear that, but I think you will get more color certainly as we get closer.
Operator
Thank you. At this time I am not showing any further questions. I would like to turn the call back to Craig Wheeler for any further remarks.
Craig Wheeler
Sure. Thanks, thanks very much. And I would like to thank everybody for joining us for this call. As I said before, we are disappointed with the District Court’s decision, but we still have our product in the marketplace and still have the litigation. So Enoxaparin is not dead and we have lots of other things to look forward in the company. And I look forward to seeing and talking to you all guys as the year progresses. Thanks so much.
Operator
Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.
CAMBRIDGE, Mass., Feb. 9, 2012 (GLOBE NEWSWIRE) -- Momenta Pharmaceuticals, Inc. (Nasdaq:MNTA), a biotechnology company specializing in the characterization and engineering of complex drugs, today reported its financial results for the fourth quarter and year ended December 31, 2011.
"2011 was an outstanding year for Momenta. We recorded our second year of profitability, added $200 million to our cash position, and signed a global collaboration with Baxter to develop and commercialize biosimilars and potentially interchangeable biologics. We believe this area represents a major commercial opportunity and is very well suited to our technology and capabilities," commented Craig A. Wheeler, President and Chief Executive Officer. "In 2012 we are committed to progressing our pipeline, including generic Copaxone, follow-on biologics and novel drugs."
For the fourth quarter of 2011, the Company reported a net loss of $1.3 million, or $0.02 per share, compared to a net income of $36.3 million, or $0.77 per diluted share, for the same period in 2010. For the year ended December 31, 2011, the Company reported net income of $180.4 million, or $3.55 per diluted share, compared to net income of $37.3 million, or $0.81 per diluted share, for the same period in 2010. At December 31, 2011, the Company had cash, cash equivalents, and marketable securities of $365.9 million (including restricted cash of $17.5 million), compared to $154.5 million (including restricted cash of $1.8 million) at December 31, 2010.
The Company noted the following highlights and recent developments:
- In December 2011, Momenta and Baxter entered into a collaboration to develop up to six follow-on biologic compounds. Under the terms of the agreement, Baxter will make an upfront cash payment of $33 million to Momenta and may make additional payments over the next several years for the development of the compounds, contingent upon the achievement of technical, development and regulatory milestones with respect to all six products.
- In December 2011, Momenta entered into an agreement to acquire certain assets of Virdante Pharmaceuticals, Inc., including intellectual property and cell lines, relating to the sialylation of intravenous immunoglobulin (IVIG) and other proteins.
- A preliminary injunction preventing Amphastar Pharmaceuticals, Inc., Watson Pharmaceuticals, Inc. and their subsidiaries from launching a generic version of Lovenox was stayed on January 26, 2012.
- The recent launch of a competitive generic Lovenox triggered a change in the contract terms with our collaboration partner, Sandoz, from a hybrid profit share/royalty to a royalty.
Financial Results
Revenue for the fourth quarter of 2011 was $29.5 million (including product revenue of $26.1 million), compared to $58.3 million (including product revenue of $52.4 million) for the same period in 2010. The decrease in product revenue was due to a decrease in net sales of enoxaparin by Sandoz, due primarily to lower unit pricing, and by a contractual change in the basis of calculating our enoxaparin product revenue, both related to the launch of an authorized generic Lovenox in October 2011. In the fourth quarter of 2010, we earned a profit share on sales of enoxaparin, and in the fourth quarter of 2011, we earned a hybrid royalty/profit share. For the year ended December 31, 2011, revenue was $283.1 million, compared to $116.8 million for 2010. The enoxaparin product was approved and launched in July 2010, so the year 2011 included a full year of product revenue while 2010 included two quarters.
Research and development expenses for the fourth quarter of 2011 were $21.2 million, compared to $15.2 million for the same period in 2010. The increase of $6.0 million in research and development expenses from fourth quarter 2010 to fourth quarter 2011 was due to an in-process research and development charge of $4.5 million recorded in the fourth quarter of 2011 relating to the acquisition of assets from Virdante, and increases in stock compensation expense and other headcount related expenses, offset by a decrease in development expenses for our M356 program. For the year ended December 31, 2011, research and development expenses were $64.7 million, compared to $51.7 million for 2010. The increase in research and development expenses from 2010 to 2011 principally resulted from the in-process R&D expense related to the Virdante asset purchase, an increase in headcount related expenses, and an increase in amortization expense.
General and administrative expenses for the fourth quarter of 2011 totaled $9.7 million, compared with $7.8 million for the same period in 2010. The increase in general and administrative expenses from fourth quarter 2010 to fourth quarter 2011 was primarily due to increased legal expenses relating to the enoxaparin litigation and increased stock compensation and other headcount related expenses, offset by a decrease in the royalty payable to the Massachusetts Institute of Technology. For the year ended December 31, 2011, general and administrative expenses were $38.7 million, compared to $28.6 million for 2010. The increase in general and administrative expenses from 2010 to 2011 was primarily due to an increase in the royalty payable to the Massachusetts Institute of Technology and increased legal expenses.
Financial Guidance
We anticipate that total operating expenses, excluding stock compensation and royalties payable to MIT, and net of collaborative revenues, will increase to approximately $22 to $28 million per quarter for 2012.
Conference Call Information
Management will host a conference call on Thursday, February 9, 2012 at 10:00 am ET to discuss these results and provide an update on the Company. To access the call, please dial (877) 224-9084 (domestic) or (720) 545-0022 (international) prior to the scheduled conference call time and provide the access code 46791297. An archived version of the webcast will be posted on the Momenta website approximately two hours after the call.
About Momenta
Momenta Pharmaceuticals is a biotechnology company specializing in the detailed structural analysis of complex mixtures and is headquartered in Cambridge, MA. Momenta is applying its technology to the development of generic versions of complex drug products, as well as to the discovery and development of novel drugs.
To receive additional information about Momenta, please visit the website at www.momentapharma.com, which does not form a part of this press release.
Forward Looking Statements
Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, the Company's revenue, expenses and other results of operations, including the quarter and year ended December 31, 2011, projections regarding expenses, our profitability, and our other product development plans and expectations may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by terminology such as "anticipate," "believe," "could," "could increase the likelihood," "hope," "target," "project," "goals," "potential," "predict," "might," "estimate," "expect," "intend," "is planned," "may," "should," "will," "will enable," "would be expected," "look forward," "may provide," "would" or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors referred to in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed with the Securities and Exchange Commission under the section "Risk Factors," as well as other documents that may be filed by Momenta from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, the Company's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. Momenta is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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