Momenta Pharmaceuticals Inc.
(MNTA - Analyst Report
sees ever higher earnings expectations and fights a legal battle to protect its sales and earnings.
Momenta Pharmaceuticals, Inc., a biotechnology company,
specializes in complex molecules including proteins,
polypeptides and cell surface polysaccharides. The company
applies its technology for the development and
commercialization of generic versions of complex drug
products, as well as new drugs.
Estimates Move ... all over
2012 is not an easy year for analysts to get a handle on, and
as a result, the projected earnings for the company have seen
significant drops and even larger increases. In July of
2011, the Zacks Consensus Estimate called for the company to
earn $1.03 per share, but by November of the estimate had
swung lower to $0.49 per share. That decrease of 50% was
then trumped by an increase of 300% to $1.53 in December and
is currently at $1.90.
On September 21, 2011 Momenta announced that it was suing
Amphastar Pharmaceuticals, Watson Pharmaceuticals and
International Medical Systems for infringement of two
A temporary injunction was issued on October 28, 2011 which
prevents Amphastar from selling a generic version of
enoxaparin pending outcome of the litigation.
At the time of writing of this article, there was no clear
indication as to the outcome of the court hearing scheduled
for January 24, 2012. This hearing was originally
scheduled for December 6, 2011. An analyst noted that this
hearing was not likely to carry a final ruling, an even that
is likely to be one to three months away.
MNTA didn't let the legal proceedings slow it down and moved
to acquire the Sialic Switch assets of Virdante
Pharmaceuticals. Momenta made an upfront payment of $4.5
million and may make additional contingent milestone
payments that could total $51.5 million. This early December
acquisition was likely the catalyst for the recent increase
in analyst estimates.
Valuations for bio techs, and those that make generic drugs
entail more art than science. Looking at PE, MNTA is
trading at a substantial discount to the industry average on
a trailing twelve month basis, but is more or less in line
with the industry on a forward basis. Price to book, a more
conservative measure, has the company trading at 2.4x
compared to the industry average of 1.8x, so a slight
premium is given there as well as in price to sales. The
outcome of the legal proceedings will undoubtedly change the
valuation landscape for this stock.
The chart below shows what happens to a bio tech company
that focuses on generic drugs and sees competition in one of
its main products. That drop off in September was quickly
gotten back and the legal outcome will determine what
happens next. Be advised, that an unfavorable outcome to the
legal proceedings will likely move the stock back to the
lower teens, but few expect that. MNTA is a
Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
is also the Editor in charge of the Zacks
Run Investor service