Coming down the pipe, with supposed huge implications for the biotech industry, the FDA has approved a generic version of Sanofi's blood thinner Lovenox.
The new version will be marketed by Novartis and Momenta Pharmaceuticals and will be available immediately. The fears are that Lovenox could suffer rapid sales losses in the very near term. It’s interesting to note that Momenta's stock price soared 70% on the news, while Sanofi’s shares dropped nearly 5%.
Unknown and perhaps of little interest to the people betting heavy on Momenta is that Lovenox was genericized in Canada more than 5 years ago. Canada's HPB granted a notice of compliance to NovoPharm (now TEVA) to market the copycat version.
The generic never made it to market and two years after pulling the plug on their sales and marketing efforts, Sanofi relaunched Lovenox in Canada. Today sales of brand name Lovenox have never been better. It’s unknown why Novo never did bring the drug to market, but sure to say the effort to replace Lovenox would have been an immense undertaking, even with Sanofi tucking under.
What does this say for Momenta's version of Lovenox? If I were a betting man (thankfully I’m not), I'd be buying September put options on Momenta expecting it to fall off quite a bit from that 70% surge.
We are a quite a ways off from seeing generic versions of drugs that are made through genetic engineering. That’s why there was barely a ripple in the stock prices of Amgen, Genzyme, Ortho Biotech, and even Sanofi following the news from the FDA.
Keep your eye on the ball and look for underlying value in pipelines when it comes to investing in the biotech industry.
Cheers
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