Momenta forges deal with Novartis

In a major endorsement of a small Cambridge company's new drug-making techniques, international pharmaceutical giant Novartis AG signed a deal with biotechnology firm Momenta Pharmaceuticals Inc. , buying $75 million of its stock in a long-term deal that could be worth up to $263 million .

It's the biggest deal yet signed by five-year-old Momenta, headquartered in Kendall Square. Investors reacted immediately, sending the company's stock up more than 50 percent on morning trading. It closed the day at $18.02, about a 38 percent gain.

Momenta has drawn attention in the drug industry for its novel technology, developed in an MIT lab, that allows its scientists to ``sequence" complicated sugar molecules, describing their structure precisely. Many drugs are made of such complex sugars, but a reliable way to analyze them has proved elusive.

Momenta's techniques for describing complicated drugs could help improve the safety of current treatments and lead to the design of new ones. It could also be a boon to the generic drug business, which has been frustrated in attempts to win approval for copycat versions of the complicated protein molecules known as biotechnology drugs.

The difficulty of copying biotech drugs has created long-term, carefully protected markets for local companies such as Genzyme Corp. and Biogen Idec Inc. , which produce complex protein drugs that cost as much as $300,000 per year for each patient. The industry lobbying group, the Biotech Industry Organization , has discouraged the Food and Drug Administration from approving generic biotech drugs, saying ``the science does not exist" to show a copycat is identical to the original.

Momenta hopes its sequencing techniques will give regulators enough new information to crack the door open for generic biological drugs.

``This is a very exciting time in the whole area of biogenerics -- I think the science is really beginning to get to the point where it can really have an impact," chief executive Alan Crane said in an interview yesterday.

To date, Momenta's techniques have not been used to produce any approved drugs, but the company is pushing hard to prove its technology by bringing its own generic product to market.

Momenta has developed a copy of Lovenox , a blood thinner made by Sanofi-Aventis that is one of the world's top-selling drugs, with annual sales of more than $2 billion. Made from the intestinal lining of pigs, Lovenox is a complex mixture of sugars that other companies have been unable to copy precisely. Momenta developed a new version using its sequencing technology and last August applied for approval to market it as a generic drug. The approval is still awaiting FDA action.

Momenta has also developed another blood thinner, and plans to apply soon to begin human testing of the product.

Yesterday's deal puts the muscle of one of the world's largest generic drug makers behind Momenta's efforts. It was signed with Sandoz , the generic drug-making unit of Novartis, which has been leading the fight to get regulators to approve generic biotech drugs.

In May, after suing the FDA, Sandoz won approval for a generic growth hormone, the first ``biogeneric" approved in the United States. But the FDA explicitly said that its approval did not create a precedent, leaving Sandoz and other generic manufacturers still struggling for ways to show regulators that a copycat biotech drug is safe.

The new collaboration builds on a 2003 deal between Momenta and Sandoz to develop and sell products using Momenta's technology. The financial terms of that earlier arrangement were not disclosed. The companies said yesterday they will work together to develop and sell generic Lovenox and three other biogeneric products, two made by Sandoz and one by Momenta.

Sandoz will buy $75 million worth of Momenta stock at $15.93 per share, giving it control of 13 percent of the company. It will also pay Momenta as much as $188 million if the collaboration hits certain undisclosed milestones.

Stephen Heuser can be reached at sheuser@globe.com.