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Momenta (MNTA) Up 5.8% Since Earnings Report: Can It Continue?

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About a month has gone by since the last earnings report for Momenta Pharmaceuticals, Inc. (MNTA - Free Report) . Shares have added about 5.8% in that time frame, outperforming the market.

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

Momenta Second-Quarter Loss in Line With Estimates, Sales Beat

Momenta reported a loss of $0.50 per share in the second quarter of 2017, in line with the Zacks Consensus Estimate. The reported loss was however wider than the year-ago loss of $0.31.

Revenues in the quarter improved 10.8% to $23.6 million and topped the Zacks Consensus Estimate of $22.9 million.

Quarter in Detail

Momenta’s top line comprises product revenues of $19.1 million earned from Sandoz’s sales of Glatopa, a generic version of Copaxone (20 mg), compared with $20.7 million in the year-ago quarter. The decrease was primarily due to lower sales deductions in the second quarter of 2016, as well as legal reimbursement in the second quarter of 2017.

Collaborative research and development revenues came in at $4.4 million, down from $5.8 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 to $39.1 million from $33.2 million, general and administrative expenses increased 52% to $22.6 million.

Outlook Updated

Momenta now expects operating expenses (excluding stock-based compensation and net of collaborative revenues) in the range of $210–$230 million, compared with the previous guidance of $200–$240 million in 2017. The guidance also includes approximately $55 million of capital expenditure on M923. Operating expenses in the third quarter of 2017 are projected around $50–$60 million.

Momenta expect to generate revenues of $45 million from Mylan N.V. as upfront payment on a quarterly basis. In Jul 2017, Momenta earned a $10 million milestone payment from Sandoz as Glatopa 20 mg continues to be the sole FDA-approved generic of Copaxone 20 mg.

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 in Feb 2017, which is Sandoz’s contracted fill/finish manufacturing partner for Glatopa. Pfizer has submitted a comprehensive response to the observations cited in the warning letter. The ANDA approval is now contingent on the satisfactory resolution of the compliance observations stated in the warning letter issued to Pfizer.

Meanwhile, Momenta continues to progress with its other pipeline candidates. Currently, Momenta’s M923, a biosimilar version of Humira, is being evaluated in a phase III study in patients suffering from moderate-to-severe chronic plaque psoriasis. Moving ahead, the company plans to submit the candidate for approval to regulatory bodies in the fourth quarter of 2017. Also, it expects first commercial launch of M923 to be as early as the 2020 timeframe.

The company completed enrolment in the phase I study on M834, a biosimilar version of Orencia (abatacept) in Apr 2017 under its collaboration with Mylan. Top-line data from the study are expected in the second half of 2017.

Furthermore, Momenta’s novel autoimmune portfolio includes: 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.

Momenta 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 (expected to be completed in Aug 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 past month as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Momenta's stock has a subpar Growth Score of D, a grade with the same score on the momentum front. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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