Shares of Momenta Pharmaceuticals Inc., a development-stage biotechnology company, jumped by about a third on Tuesday after the company said it reached a deal with Novartis AG to develop generic versions of four existing drugs.

Momenta, based in Cambridge, Massachusetts, said it will receive up to $263 million under the deal, including an initial payment of $75 million from Novartis' Sandoz generic unit and additional payments up to $188 million based on various milestones.

The deal covers the development of generic versions of four existing biotechnology and complex drugs.

Biotechnology drugs involve large proteins that are costly and difficult to manufacture. They must be given via injection or infusion because large proteins are destroyed by the stomach. Some other types of complex drugs also cannot be taken orally.

Momenta, which is focused on developing technology-enabled generic versions of sugar-based and other complex drugs, said the deal involves one drug it has been testing in late-stage clinical trials and two late-stage compounds from Sandoz.

The deal also expands a three-year collaboration between the companies on developing M-Enoxaparin, a generic version of Sanofi-Aventis' blockbuster anti-clotting drug Lovenox that is awaiting U.S. marketing approval.

Under the deal, the two companies will jointly develop, manufacture and sell the products, should they be approved. They will share profits, under a different formula for each medicine.

Novartis, based in Switzerland and among the world's largest drugmakers, is in the forefront of developing generic versions of complex biotechnology drugs.

Novartis will invest $75 million initially in exchange for about 4.7 million Momenta shares at $15.93 per share, which reflects a 30 percent premium to the average price of shares over the past 30 days.

Shares of Momenta were up $4.90 to $17.95 in afternoon trading on Nasdaq, after earlier rising as high as $20.98. Shares of Novartis were down 58 cents at $55.39 on the New York Stock Exchange.

THE CHALLENGES OF BIOTECH COPYCATS

The U.S. Food and Drug Administration in May approved Omnitrope, a Sandoz copycat form of Pfizer Inc.'s Genotropin human growth hormone. But the FDA said the approval did not set a precedent for approving other copycat biologics.

Although the FDA has long promised to come up with guidelines for approval of biotech drugs, it has failed to do so. Without guidelines, there is no mechanism to approve such drugs in the United States.

One of the biggest difficulties for the FDA is ascertaining that copycats of biotech drugs are chemically identical to the original branded drug.

Momenta Chief Executive Officer Alan Crane said the company's technology for analyzing the structure of complex drugs -- including ones comprised of sugars instead of proteins -- would help the FDA ascertain that biotech copycats are identical to branded drugs.

"We're not aware of any other companies with the technology that can define these complex chemical mixtures very thoroughly," Crane said in an interview.

Crane said Momenta's technology first breaks apart molecules within a complex mixture into small pieces. It then measures the fragments using specialized equipment, before conceptually reassembling them using mathematical formulas.

Momenta's technology is also used to help develop the actual process for manufacturing a drug, and then later assess the quality of the medicine, he said.

Crane said Novartis is Momenta's only current corporate partner.