Why Is Momenta (MNTA) Down 9.6% Since the Last Earnings Report?

A month has gone by since the last earnings report for Momenta Pharmaceuticals, Inc. MNTA. Shares have lost about 9.6% 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 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 Tops Q4 Earnings, Revenues Beat

Momenta reported earnings of $0.60 per share in the fourth quarter of 2016, compared to the Zacks Consensus Estimate of a loss of $0.23 and the year-ago loss of $0.43.

Moreover, revenues in the quarter surged 52.7% to $34.2 million and beat the Zacks Consensus Estimate of $30.5 million.

Quarter in Detail

Momenta’s top line comprised of product revenues of $15.8 million earned from Sandoz’s sales of Glatopa, a generic version of Copaxone (20 mg).

Collaborative research and development revenues came in at $18.4 million, up from $4.6 million in the year-ago quarter. The revenue reported in the quarter represented the remaining unamortized balance of the $40.0 million upfront and license payments from erstwhile Baxalta which is now a part of Shire.

While research and development expenses were down 29.8% to $26.4 million, general and administrative expenses increased 26.4% to $18.2 million.

2016 Results

Revenues came in at $109.6 million, up from $89.6 million in 2015 and beat the Zacks Consensus Estimate of $105.89 million. Loss also narrowed to 31 cents from a  loss of $1.32 per share in 2015.

Outlook

Momenta expects operating expenses (excluding stock-based compensation and net of collaborative revenues) in the range of $200–$240 million in 2017. The guidance includes approximately $55 million of capital expenditure on M923 slated for 2017. Operating expenses in the first quarter of 2017 are projected around $50–$60 million. Collaboration revenues, under its agreement with Mylan are anticipated to be $2 million per quarter.

Pipeline Update

Sandoz’s abbreviated New Drug Application (ANDA) for the 40-mg thrice-weekly formulation of Copaxone (Glatopa 40mg) was under FDA review. However, Momenta suffered a setback with the FDA issuing a warning letter to Pfizer (PFE), Sandoz’s contracted fill/finish manufacturing partner for Glatopa. The ANDA approval is now contingent on the satisfactory resolution of the compliance observations stated in the warning letter issued to Pfizer. The letter, however, does not restrict the production or shipment of Glatopa 20 mg which is currently marketed by Sandoz in the U.S and there were no patient safety concerns raised either.

Meanwhile, Momenta continues to progress with its other pipeline candidates. Under its collaboration with Mylan, the company initiated a phase I study on M834, a biosimilar version of Orencia (abatacept) in Nov 2016. Top-line data from the study are expected in the second half of 2017.
In Dec 2016, Momenta signed 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. Momenta’s M923 is currently being evaluated in a phase III study. The company announced positive results from a phase III study on M923 in patients suffering from moderate-to-severe chronic plaque psoriasis. The company plans to submit the candidate for approval to regulatory bodies by mid-2017.

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. Momenta has successfully completed a phase I single ascending dose study in healthy volunteers. 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.

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 downward by 63.6% due to these changes.

Momenta Pharmaceuticals, Inc. Price and Consensus

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

VGM Scores

At this time, Momenta's stock has a nice Growth score of 'B', though it is lagging a lot on the momentum front with an 'D'. Following the exact same course, the stock was allocated also a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.

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

The stock is suitable solely for growth based on our styles scores.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.

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