Shares of Momenta Pharmaceuticals Inc. jumped 38 percent on news of a four-product collaboration with a unit of Novartis AG valued at $260 million to develop biogenerics.

The deal will involve Momenta's characterization technology to create generic and follow-on versions of complex protein-based drugs and biologics, while taking advantage of the development, manufacturing and marketing capabilities of Sandoz GmbH, which earlier this year established itself as the first firm to gain FDA approval for a biogeneric drug.

Terms of the agreement call for Sandoz to make an initial investment in Momenta of $75 million by purchasing 4.7 million shares priced at $15.93, a 30 percent premium to the trailing 30-day average. If the companies succeed in developing four product candidates, Momenta stands to receive an additional $188 million in milestones.

Joint development will incorporate one undisclosed late-stage compound from Momenta and two late-stage drugs from Sandoz. The companies plan to jointly develop, manufacture and commercialize the product candidates and will share the profits from any sales, with separate profit-sharing arrangements for each product. If Momenta's compound is commercialized, the companies will split profits equally on that product.

The collaboration "highlights the broad potential of our analytic technology and the role that it can play in helping set the standard" for bringing biogenerics to the market, Alan Crane, Momenta's president and CEO, said during a conference call.

Wall Street agreed. Momenta's stock (NASDAQ:MNTA) gained $4.97, or 38.1 percent, Tuesday to close at $18.02.

Creating biogenerics and complex follow-on drugs that maintain bioequivalence "requires much more sophisticated science," Crane said, while "representing an exciting, untapped opportunity."

It also bodes well that Sandoz was the first to get the FDA's blessing on a biogeneric. The agency approved Omnitrope (somatropin [rDNA origin]), a follow-on version of a growth hormone drug, in late May. Omnitrope previously gained approval in the European Union and Australia. (See BioWorld Today, June 1, 2006.)

Cambridge, Mass.-based Momenta, which has patented technology designed to rapidly sequence sugars for precise bioequivalence, has been working with Sandoz, the generics business of Basel, Switzerland-based Novartis, since November 2003.

In that deal, the companies developed M-Enoxaparin, a generic version of the low-molecular-weight heparin product Lovenox (enoxaparin sodium, Sanofi-Aventis Group) to treat deep vein thrombosis and cardiovascular conditions. An abbreviated new drug application was submitted in August 2005.

As part of the new agreement, the companies expanded the M-Enoxaparin deal to include development and commercialization in the European Union as well as the U.S.

Momenta reported a first-quarter net loss of $11.3 million, and as of March 31, had cash, cash equivalents and marketable securities of $148.9 million.