As patents on major drugs face expiration and biotech along with big pharma scramble to hold their ground, deals such as last summer's expanded pact between Momenta Pharmaceuticals Inc. and Sandoz GmbH could draw more interest - especially as Momenta makes progress, as the firm did earlier this month, in the legal challenge by Sanofi-Aventis Group.

Progress it was, though Wall Street hardly reflected as much.

With the unit of Novartis AG, Momenta signed a four-product collaboration worth up to $260 million, taking aim at generic and follow-on versions of protein-based drugs and biologics. The arrangement, which brought an initial investment in Momenta of $75 million - giving Sandoz about 12.5 percent of Momenta - came on the heels of the FDA's approval of Omnitrope (somatropin [rDNA origin]), Sandoz' follow-on version of a growth hormone drug.

Omnitrope, previously cleared in the European Union and Australia, was the first biogeneric given the FDA's marketing go-ahead, but not without a battle. In September 2005, Sandoz filed a lawsuit against the agency (as the pharma company had done against regulators in Europe) to force a ruling on the new drug application that had been filed in July 2003. At the end of the third quarter of 2004, the FDA said that although there were no deficiencies in the application, it could not reach a decision because of uncertainty around the scientific and legal issues involved in registering biogenerics, or "follow-on protein products" (as the FDA terms copies of recombinant proteins).

In approving Omnitrope, the agency emphasized that the compound is not therapeutically equivalent to or substitutable for any of the other approved human growth hormones and thus not a generic biologic - so not much regarding rules on generics got clarified.

Sandoz had been working with Momenta since November 2003, when the pair entered a pact that led to M-Enoxaparin, a generic version of the low-molecular-weight heparin (LMWH) Lovenox (enoxaparin sodium) from Sanofi, to treat deep vein thrombosis and cardiovascular conditions. The patent for Lovenox expired in 2004, and an abbreviated new drug application for M-Enoxaparin was submitted in August 2005. As part of last summer's agreement, the companies expanded the M-Enoxaparin deal to include development and commercialization in the European Union as well as the U.S.

Not surprisingly, M-Enoxaparin ended up in a legal skirmish, too. Momenta's news on that front was that the U.S. District Court had invalidated Sanofi's key Lovenox patent for the second time. Sanofi plans to appeal, and M-Enoxaparin can't get on the market until a final court decision is made on the Lovenox patent, which could take another nine months, in Momenta's view.

The wait could prove worthwhile. Sanofi's original patent was struck down because the court found the firm had made misleading claims regarding its half-life, and the appellate court agreed about omissions of fact. It cited a "strong inference" that Sanofi wanted to deceive patent officials - but did not find enough evidence to go along with the district court, and so it reversed that court's decision.

Now, the district court has invalidated the patent again, this time based on "inequitable conduct," and again the appeals judges must take up the case. Bret Holley, analyst with CIBC World Markets, called the outlook for Momenta "more favorable" with the recent district ruling, but the FDA might still be a hurdle.

Momenta says the profile of its Lovenox generic beats those of Teva Pharmaceuticals Industries Ltd. and Amphastar Pharmaceuticals Inc., both of which also have filed ANDAs (and challenged the Lovenox patent in the court case). It remains to be seen whether this profile will impress the FDA enough to overcome the agency's lack of formal regulatory guidelines for approval of generic biologics.

Weirdly, shares of Momenta plunged more than 20 percent on word of the latest court decision. Investors apparently believe Teva or Amphastar, if given the FDA's nod for their products before Momenta wins clearance, would go ahead and launch, beating M-Enoxaparin to market. But the hard-to-budge agency confronts all three companies - and if Teva or Amphastar puts out a product before the court decision and Sanofi wins the latest appeal, they could be liable for damages.

Whatever happens, Momenta seems in good hands. Last year, CEO Alan Crane, a start-up whiz who had also worked in business development at Millennium Pharmaceuticals Inc., resigned but kept a seat on Momenta's board. The reins were turned over to Craig Wheeler, who'd been president of Chiron Corp.'s biopharmaceuticals division, where global sales in cancer, cystic fibrosis and multiple sclerosis more than doubled under his watch, to $640 million. Wheeler cited M-Enoxaparin as an important factor in deciding to take the top seat at Momenta.

And the company has more in the pipeline than M-Enoxaparin. In Phase I trials is M118, a next-generation anticoagulant for acute coronary syndromes. There's also a lineup of generics and follow-ons, including a generic version of Fragmin (dalteparin sodium), another LMWH, from Pfizer Inc.

Biologics generate about $51 billion worldwide each year and may hit $87 billion by 2010. Other biogeneric deals include the pact between ViroPro Inc. and Tunisia-based BioChallenge, entered in June. This month, Cell Therapeutics Inc. spun out a new company, Aequus BioPharma Inc., to create follow-on biologics using Genetic Polymer technology.

Momenta reported earnings just before Valentine's Day, a pro forma fourth-quarter 2006 loss per share of 34 cents, slightly above Holley's 31-cent loss estimate. Revenues of $4 million landed slightly below his $4.5 million estimate, and pro forma expenses of $18.6 million exceeded the $16.9 million guess.

At the end of the year, Momenta had $191.3 million in cash and equivalents. That's plenty to get M118 (a compound with at least as much promise as the lead compound) into Phase II trials this year. But eyes, naturally enough, are on M-Enoxaparin.

Momenta remains optimistic about launching this year. The FDA decision is independent of the court ruling, and the agency, upon granting approval, gives 180-day market exclusivity to the compound whose ANDA was first to file.

"If we're correct in our primary strategy that we're the only ones to get approved, as soon as that [180-day] clock starts ticking, that's a wasting asset for [Teva and Amphastar], and therefore we feel that is a place where we could strike a deal," Wheeler told investors during the conference call on earnings. "If they're not approved, we also have the course of being able to apply to the FDA to eliminate that 180-day [window] based on futility of their application."

In what Wheeler called the "worst-case" scenario - that is, if Teva or Amphastar wins approval first - Momenta would have to wait out the 180 days before launching M-Enoxaparin. Company officials downplayed an even less savory possibility: that the appeals court would reverse the lower court again, and uphold the Sanofi patent.

Meanwhile, the FDA has given no signals that M-Enoxaparin will have trouble, said Steven Brugger, vice president of strategic business operations for Momenta.

"We're not discussing any specific questions we may have been receiving from the FDA," he said, but the situation so far has proven routine. "We've been getting questions, and we've been addressing those questions to their satisfaction."