Why Is Momenta Pharmaceuticals (MNTA) Down 9.7% Since the Last Earnings Report?

It has been about a month since the last earnings report for Momenta Pharmaceuticals, Inc. MNTA. Shares have lost about 9.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Momenta Q1 Loss Narrower than Expected, Sales Beat

Momenta reported loss of $0.46 per share in the first quarter of 2017, which was narrower than the Zacks Consensus Estimate loss of $1.09. In fact, the company posted a loss of $0.35 in the year-ago quarter as well.

But revenues in the quarter surged 34.1% to $26.6 million and topped the Zacks Consensus Estimate of $22 million.

Quarter in Detail

Momenta’s top line comprises product revenues of $23.4 million earned from Sandoz’s sales of Glatopa, a generic version of Copaxone (20 mg), compared with $14.8 million in the year-ago quarter. The increase was on the back of increased number of Glatopa 20 mg units sold.

Collaborative research and development revenues came in at $3.2 million, down from $5.1 million in the year-ago quarter.  The decline in revenues was mainly due to the termination of the Baxalta Collaboration Agreement, effective Dec 31, 2016.

While, research and development expenses were up 25.5% to $36.1 million, general and administrative expenses increased 47.7% to $23.1 million.

Guidance

Momenta reiterated its guidance for operating expenses for 2017. The company expects operating expenses (excluding stock-based compensation and net of collaborative revenues) in the range of $200–$240 million in 2017. The guidance also includes approximately $55 million of capital expenditure on M923 slated for 2017. Operating expenses in the second quarter of 2017 are projected around $50–$60 million.

Collaboration revenues, under its agreement with Mylan are anticipated to be $1.8 million per quarter. Moreover, the company anticipates to recognize the $50 million upfront payment from CSL as revenues in the second half of 2017.

Pipeline Update

Sandoz’s abbreviated New Drug Application (ANDA) for the 40-mg thrice-weekly formulation of Copaxone (Glatopa 40mg) was under the FDA review. However, Momenta suffered a setback with the FDA issuing a warning letter to Pfizer, which is Sandoz’s contracted fill/finish manufacturing partner for Glatopa.

In fact, the ANDA approval is now contingent on the satisfactory resolution of the compliance observations stated in the warning letter issued to Pfizer. Pfizer submitted a comprehensive response to the observations cited in the warning letterMeanwhile, Momenta continues to progress with its other pipeline candidates. In fact, under its collaboration with Mylan in Apr 2017, the company completed enrolment in the phase I study on M834, a biosimilar version of Orencia (abatacept).

Top-line data from the study are expected in the second half of 2017.

Again, in Dec 2016, the company inked an early termination of the collaboration agreement with Shire to develop and commercialize M923, a biosimilar version of Humira (adalimumab). In lieu, the company received a one-time asset return payment of $51.2 million from Shire in Jan 2017.

Currently, Momenta’s M923 is being evaluated in a phase III study. It announced positive results from a phase III study on M923 in patients suffering from moderate-to-severe chronic plaque psoriasis. Moving ahead, the company plans to submit the candidate for approval to regulatory bodies by mid-2017. Also, it expects first commercial launch of M923 to be as early as the 2020 timeframe.

Furthermore, Momenta’s novel autoimmune portfolio includes two recombinant molecules: M230, a Selective Immunomodulator of Fc receptors (SIF3) and M281, an anti-FcRn monoclonal antibody. In Jan 2017, the company entered into a research collaboration and license agreement with CSL for M230 and potential future Fc multimer programs. The candidate is expected to enter clinic in 2017.

In fact, this company successfully completed a phase I single ascending dose study in healthy volunteers for M281. The multiple ascending dose portion of the study was initiated in Jan 2017 and data from the single and multiple ascending dose portions of the study are projected in the second half of 2017.

M254 is a tetra-Fc-sialylated immunoglobulin with consistent enhanced anti-inflammatory activity. The company continues to progress the M254 program and expects to initiate an investigational new drug (IND)-enabling toxicology study in 2017 and is anticipated to enter a clinical study in 2018.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions. In the past month, the consensus estimate has shifted lower by 66.7%.

Momenta Pharmaceuticals, Inc. Price and Consensus

 

Momenta Pharmaceuticals, Inc. Price and Consensus | Momenta Pharmaceuticals, Inc. Quote

VGM Scores

Currently, Momenta Pharmaceuticals' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. Following the same course, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our style scores.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Click for Free Momenta Pharmaceuticals, Inc. (MNTA) Stock Analysis Report >>
 
To read this article on Zacks.com click here.
 
Zacks Investment Research