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Momenta (MNTA) Down 6.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Momenta Pharmaceuticals (MNTA). Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Momenta 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 drivers.

Momenta Q4 Loss Narrower Than Expected, Revenues Beat

The company reported loss per share of 7 cents in the quarter (excluding restructuring charges), narrower than the Zacks Consensus Estimate of 46 cents and the year-ago loss of 18 cents.

Revenues in the quarter came in at $42.8 million, which declined from $64.6 million in the year-ago quarter but beat the Zacks Consensus Estimate of $21.1 million.

Quarter in Detail

Momenta’s top line comprises product revenues of $10.8 million earned from Sandoz’s sales of Glatopa, a generic version of Copaxone (20 mg), compared with $13.4 million in the year-ago quarter due to increasing competition from Mylan’s entry into the Copaxone market.

Research and development revenues came in at $32.1 million compared with $51.2 million in the year-ago quarter.

Research and development expenses decreased to $28.7 million from $36.1 million in the year-ago quarter, due to decrease in spending on biosimilars program. As a result of its strategic review (results announced in October 2018), Momenta concluded to advance two late-stage biosimilar assets — M923, which is its wholly-owned proposed biosimilar to Humira, and M710, which is a proposed biosimilar to Regeneron’s Eylea being developed in collaboration with Mylan. The company decided to exit participation in the development of its five other biosimilar programs, including M834, a proposed biosimilar to Orencia.

General and administrative expenses were $21.5 million, up 36.1% year over year due to increased legal costs and depreciation.

Pipeline Update

Momenta entered into a settlement agreement with AbbVie in November 2018, providing worldwide rights to launch M923. Under the terms of the agreements and subject to approval by health regulatory authorities, Momenta may launch M923 worldwide based on agreed-to launch dates, including in the United States in November 2023. In August 2018, Mylan initiated a clinical trial in patients with diabetic macular edema to compare safety, efficacy and immunogenicity of M710 with Eylea.

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

Momenta initiated two phase II proof of concept clinical trials on M281, one in generalized myasthenia gravis (gMG) and the other in hemolytic disease of the fetus and newborn (HDFN), with top-line results anticipated in 2020 and 2021, respectively.  Momenta also plans to initiate a third study of M281 in an additional autoimmune indication in 2019.

In January 2019, Momenta announced that the first subject was dosed in the phase I/II clinical trial of M254 in immune thrombocytopenia  (ITP). The multi-part study will first enroll healthy volunteers, and includes single and multiple dose studies, and a randomized cross-over study comparing M254 to IVIg. Preliminary clinical data is expected in 2020.

The phase I trial on M230 in healthy volunteers to evaluate the safety and tolerability of the candidate is ongoing. Momenta’s partner, CSL expects to complete the phase I study by the end of 2019.

2018 Results

Momenta generated revenues of $75.6 million in 2018, significantly down from $138.8 million in 2017.

2019 Guidance

Momenta expects 2019 expenses to be $45-$55 million.  The company completed a $230-million equity financing in December and ended the year with a cash balance of $449 million.
 

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted 22.22% due to these changes.

VGM Scores

At this time, Momenta has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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.

Outlook

Momenta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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