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Wider-Than-Expected Loss at Momenta

Zacks Equity Research

Momenta Pharmaceuticals Inc. (MNTA) reported second quarter 2013 net loss per share of 57 cents, wider than the Zacks Consensus Estimate of a loss of 47 cents and the year-ago loss of 20 cents.

Second quarter revenues of $4.4 million were down 79.9% year over year. Revenues missed the Zacks Consensus Estimate of $9 million. Product revenue in the reported quarter was $1.6 million, down 91.6% year over year. Product revenues represent royalty received from Novartis AG’s (NVS) generic unit, Sandoz Inc., after the adjustment of Momenta’s share of pre-marketing development expenses under its collaboration with Sandoz. The downtrend was due to competitive pressure resulting from the entry of additional generic versions of Lovenox.

We note that Momenta and Sandoz had inked a deal in Nov 2003 to jointly develop and commercialize a generic version of Lovenox.

Research and development expenses were $22 million, up from $20 million in the year-ago quarter. The increase was attributable to personnel costs, biosimilar program costs and contract manufacturing expenses. General and administrative expenses declined to $11.5 million from $12.4 million in the year-ago quarter mainly due to lower legal fees.

2013 Guidance

Total operating expenses, excluding stock-based compensation and net of collaborative revenue, are expected to be around $30 million per quarter in 2013. Momenta expects average net cash usage in the range of $20 million to $24 million per quarter for a total operating cash usage of roughly $80 to $90 million.


Apart from reporting second quarter earnings, Momenta provided an update on its pipeline. In Jul 2013, Momenta received a favorable ruling from the U.S. Court of Appeals for the Federal Circuit which may allow the company to launch its generic version of Teva Pharmaceutical Industries Ltd.’s (TEVA) Copaxone after May 2014 subject to U.S. Food and Drug Administration (:FDA) approval. Momenta's generic version of Copaxone is currently under FDA review.

Three biosimilar products are currently under development, namely, M923 and M834 for autoimmune and other inflammatory indications, and M511 for the treatment of cancer. Momenta intends to submit an Investigational New Drug (IND) application for M923 in 2014. In addition, Momenta is working towards the achievement of development criteria for milestone payments in 2014 for M511 and M834.

Momenta's second quarter results were disappointing with shares declining 4.3%. However, the favorable ruling for generic Copaxone makes Momenta’s stock attractive.  Momenta carries a Zacks Rank #2 (Buy). Right now, Questcor Pharmaceuticals Inc. (QCOR) looks more attractive with a Zacks Rank #1 (Strong Buy).

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