Red Tape May Protect Teva From Momenta Generic

Momenta Pharma (MNTA Quote) said Friday that the Food and Drug Administration has accepted an abbreviated new-drug application (ANDA) for a generic version of Teva Pharmaceutical's (TEVA Quote) multiple sclerosis drug Copaxone, filed by its partner Sandoz. But regulatory uncertainty and clinical complexities have some on Wall Street brushing off any near-term threat to Teva's drug.

The news sent Momenta's shares up more than 12% early on, though the stock settled Friday with a 6.3% gain at $13.90. Teva's shares lost $3.18, or 7.1%, to $41.82. Novartis (NVS Quote), parent company of Sandoz, declined 2.4% to $56.81.

Copaxone, which uses a different mechanism of action from Biogen Idec's (BIIB Quote) MS drugs Avonex and Tysabri, garnered sales of roughly $1.7 billion in 2007. Wachovia estimates that North American Copaxone sales represent roughly 20% of Teva's overall profit.

Teva, for its part, announced Friday that it is filing a patent infringement suit against Momenta. Subsequently, a 30-month stay will prevent the FDA approval of the ANDA for a generic version of Copaxone until early 2011, according to Wachovia's Michael Tong, who has a market perform rating for Teva.

Copaxone is under patent protection until 2014. But it's no secret that generic-drug competition is gearing up, and Wall Street has been expecting filings for generic version from either Momenta or Mylan (MYL Quote) before the end of 2008. Earlier in June, Mylan said it signed a distribution agreement with NATCO pharma for a generic of Copaxone.

Last week, Teva announced that Copaxone at a 40-mg dose was no more effective than the already-approved 20-mg dose in relapsing-remitting MS. That finding, from top-line results of a trial dubbed "FORTE," sent Teva's stock down roughly 9%. More importantly, the results likely closed one avenue to offset potential generic-drug competition.