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Momenta (MNTA) Earnings and Revenues Lag Estimates in Q2

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Shares of Momenta Pharmaceuticals Inc. (MNTA - Free Report) declined 7.8% after the company reported disappointing second-quarter results, wherein both earnings and revenues lagged estimates.

 

Momenta’s stock has gained 85.6% in the year so far as against the industry’s decline of 4.2%.

The company reported a loss per share of 91 cents in the quarter, significantly wider than the Zacks Consensus Estimate of 46 cents and the year-ago loss of 50 cents. 

Revenues in the quarter came in at $13.0 million, significantly down from $23.6 million in the year-ago quarter and below the Zacks Consensus Estimate of $18.3 million.

Quarter in Detail

Momenta’s top line comprises product revenues of $11.8 million earned from Sandoz’s sales of Glatopa, a generic version of Copaxone (20 mg), compared with $19.1 million in the year-ago quarter. The decrease was a result of lower sales due to market decline and Mylan’s (MYL - Free Report) entry into the Copaxone market.

Research and development revenues came in at $1.3 million compared with $4.4 million in the year-ago quarter. The decrease was primarily due to lower revenues recognized from the upfront payment from Mylan compared with the amount recognized in the 2017 period and lower reimbursable expenses for the complex generic programs.

Research and development expenses decreased to $31.3 million from $39.1 million in the year-ago quarter due to a decrease in external R&D expenses for M923. General and administrative expenses were roughly flat at $22.5 million.

During the second quarter, Momenta entered into a contract amendment to an agreement with Human Genome Sciences, Inc., the supplier of product for M923. Per the terms of the agreement, Momenta will pay the latter $30.0 million for the purchase of product batches for M923 through 2022.

Pipeline Updates

In June 2018, Momenta’s partner, Sandoz informed its customers and the FDA that it will be discontinuing the supply of the generic version of Lovenox injection, for the prevention and treatment of deep vein thrombosis, developed in collaboration with Sandoz.

Meanwhile, Momenta and Mylan plan to initiate a patient clinical trial of M710, a proposed biosimilar of Regeneron’s (REGN - Free Report) Eylea, shortly.

The Biologics License Application (“BLA”) for Momenta’s M923, a biosimilar version of Humira, is also ready to be filed with the FDA.  However, the filing of the BLA is dependent on the outcome of the company’s ongoing strategic review.

Momenta’s novel auto-immune portfolio includes M230, a Selective Immunomodulator of Fc receptors (SIF3); M281, an anti-FcRn monoclonal antibody; and M254.

Momenta successfully completed a phase I single ascending dose study in healthy volunteers for M281. The company is planning two phase II proof of concept clinical trials in the fourth quarter of 2018, pending regulatory feedback.

Meanwhile, Momenta and collaboration partner CSL began dosing healthy volunteers in the phase I trial to evaluate the safety and tolerability of M230. The study is expected to be completed in 2019.

Momenta completed the IND-enabling toxicology study of M254 and is targeting the initiation of a phase I/II proof of concept study in late 2018 or early 2019, pending regulatory feedback.

Our Take

Momenta’s second-quarter results were dismal as the company lost market share for Glatopa 20 mg.  While the FDA approval of Glatopa 40 mg should relieve Momenta, competition will limit market share gains for the company as Mylan has already won the FDA’s approval for a generic version of Teva Pharmaceuticals’ (TEVA - Free Report) Copaxone 40 mg. The company continues to face fierce competition due to growing pricing pressure from Mylan and Teva.

Hence, investors will now mainly focus on the outcome of the strategic review announced earlier this year to address the revenue uncertainty related to the late launch of Glatopa 40 mg and the funding challenges for advancing its broad portfolio. The company is evaluating options for its biosimilars business and might have to sell the business to focus on its novel drug candidates for autoimmune indications.

Zacks Rank

Momenta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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