Dive Brief:

• Momenta Pharmaceuticals Inc. and Novartis AG believe they could launch a generic version of Copaxone before July, now that some of the bigger violations at a facility manufacturing their drug are settled.
• It came to light early last year that Pfizer Inc. had received a warning letter for compliance issues at its fill and finish plant in McPherson, Kansas, which was producing a 40 mg version of Momenta and Novartis' copycat drug, Glatopa. Though the drug was under regulatory review with the Food and Drug Administration, the warning letter effectively put an approval decision on hold until Pfizer remedied the issues.
• Following a fourth quarter re-inspection, FDA regulators gave the plant a Voluntary Action Initiated (VAI) classification, meaning that while compliance problems remain, they aren't serious enough to prevent drugs made there from gaining approval.

Dive Insight:

Manufacturing infractions have plagued Pfizer over the last few years. Last March, the pharma giant ran into trouble when a couple EpiPen (epinephrine) auto-injectors prepared at one of its subsidiaries were found to have defective parts. The defects led to a widespread recall that touched U.S., European and Asian markets. More recently, a manufacturing "disruption" is causing an EpiPen shortage in Canada.

Pfizer's acquisition of Hospira Inc. in 2015 also brought some headaches. Over the last decade, the FDA flagged a handful of Hospira facilities for current good manufacturing practice violations, including the McPherson plant, which received a warning letter after inspectors observed foreign particulates, such as tiny pieces of cardboard, contaminating its drug products.

The FDA's revised classification of the McPherson plant indicates Pfizer made most of the necessary steps to get the facility up to code. That's particularly good news for Momenta, which saw its stock tumble after publicly disclosing receipt of the warning letter.

"This past year of uncertainty regarding the resolution of the McPherson facility warning letter has been difficult for Momenta and its shareholders, but with this announced change in status we believe we are well-positioned to gain marketing approval and launch our Glatopa 40 mg in the first half of 2018," the company announced in a Tuesday statement.

Glatopa (glatiramer acetate) is a generic version of Teva Pharmaceutical Industries Ltd.'s flagship drug, Copaxone. The FDA has already approved a 20 mg version of Glatopa, as well as 20 mg and 40 mg doses of Mylan N.V.'s Copaxone copycat.

Glatiramer acetate is the top-selling treatment for multiple sclerosis. The drug brought in $1.15 billion for Teva during the third quarter, though that was down 12% year over year from the same period in 2016.

Given how much potential revenue is at stake, Teva, Momenta and Mylan each saw their stocks dip in 2017 due to negative Copaxone updates. Momenta took a hit in March due to the McPherson warning letter; Teva sunk 18% in early August amid weak second quarter earnings, including a double-digit drop in Copaxone sales; and Mylan dropped almost 10% in August after lowering full-year revenue expectations, reflecting its decision to defer all major U.S. launches from 2017 guidance to 2018 guidance.

Momenta shares ticked up 6% to $17.40 on Jan. 30, surely in reaction to the VAI classification. Cowen & Co. analyst Ken Cacciatore acknowledged in a note issued the same day how beneficial the FDA's decision could be for Momenta and its 40 mg Glatopa.

​"This potential introduction — which could occur at any time — would cause further share dilution, and likely additional pricing pressure on the market. Further, it means Momenta could finally help alleviate its cash burn," he wrote.

Cacciatore estimates U.S. Copaxone sales reached $2.8 billion last year. Teva won't be able to hold onto those large returns for much longer, however, given the steep pricing discounts needed to compete with Mylan's — and soon Momenta and Novartis' — generics.

"As we look into 2019 and beyond, if we simply assume that all three competitors eventually end at a 50% price discount and capture equal share, this would likely lead to Teva's Copaxone (as well as Mylan's and Momenta's respective products) leveling at a roughly [$400 million to $500 million] annual run rate."