Momenta Posts Narrower Q2 Loss, Revenues Up Y/Y, Shares Gain - Analyst Blog


Momenta Pharmaceuticals Inc. 's ( MNTA ) shares were up slightly (0.7%) following the release of second-quarter 2014 results with the company reporting a loss of 51 cents per share, narrower than the year-ago loss of 57 cents. However, second quarter loss was wider than the Zacks Consensus Estimate of a loss of 49 cents.

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Second-quarter revenues surged 151.1% to $10.9 million from the year-ago period. Revenues were well above the Zacks Consensus Estimate of $5 million. Total revenue comprised product revenues ($5.7 million) and research and development revenues ($5.3 million).

The Quarter in Detail

Research and development (R&D) expenses were $26.1 million, up 18.6% from the year-ago quarter. The increase was due to biosimilars process development and research costs, personnel expenses, facility-related expenses and laboratory supplies and increased headcount.

General and administrative (G&A) expenses decreased 2.6% to $11.2 million from the year-ago quarter primarily driven by a decrease in legal fees.

Pipeline Update

Necuparanib, Momenta's lead candidate, is in a phase I/II study, in combination with Abraxane and Gemzar for advanced metastatic pancreatic cancer. Data from part A of the study should be out in the second half of 2014. The company intends to initiate part B by year end.

M356, Momenta's generic version of Teva's (TEVA) Copaxone is currently under FDA review and is being reviewed as a high priority abbreviated new drug application (ANDA). Momenta and partner, Sandoz (the generics arm of Novartis ( NVS )) intend to launch the generic version of Copaxone in 2014, on approval.

Momenta stated that it will reserve any revenue earned from the launch of the generic version of Copaxone until the U.S. Supreme Court's decision is declared, provided it is approved by the FDA. We remind investors that the U.S. Supreme Court agreed to hear Teva's request for certiorari in the generic Copaxone patent litigation. The Supreme Court will hear the case on Oct 15.

Meanwhile, Momenta and Baxter ( BAX ) are jointly developing M923 and M834 for autoimmune and other inflammatory indications. Momenta expects to achieve milestone payments of $19 million from Baxter under the collaboration agreement for M923 and M834.

Momenta announced that it will discontinue the development of an oncology candidate, M511. In Dec 2013, Baxter withdrew from the development process of the candidate following an internal portfolio review.

2014 Guidance

Momenta continues to expect total operating expenses, excluding stock-based compensation and net of collaborative revenues, in the range of $28 million - $30 million per quarter. Momenta expects average net cash usage (excluding revenue from the potential launch of M356) to be approximately $26 million per quarter (previously forecasted at $28 million per quarter).

Our Take

The latest development on the Copaxone case will deter the company from launching its generic version. To get the generic version of Copaxone approved is an important development milestone for Momenta. We expect investors to focus on the hearing by the Supreme Court on Oct 15.

Meanwhile, we are pleased with the company's decision to reallocate resources from the development of M511 to other early-stage biosimilar programs with the aim of broadening its base.

Momenta carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Actelion Ltd. ( ALIOF ), sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: TEVA , BAX , ALIOF , NVS , MNTA

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