Momenta (MNTA) Q3 Loss Narrower Than Expected, Sales Up

Momenta Pharmaceuticals Inc. (NASDAQ:MNTA) reported a loss of 26 cents per share in the third quarter of 2016, narrower than both the Zacks Consensus Estimate of a loss of 29 cents and the year-ago loss of 44 cents.

Moreover, revenues in the quarter surged 110.9% to $29.1 million and beat the Zacks Consensus Estimate of $26.6 million.

Quarter in Detail

Momenta’s top line comprised product revenues of $23.3 million earned from Novartis AG (NYSE:NVS) Sandoz’s sales of Glatopa, a generic version of Copaxone (20 mg).

Note that Sandoz’s abbreviated New Drug Application (ANDA) for the 40-mg thrice-weekly formulation of Copaxone is currently under FDA review. A tentative approval is expected in the upcoming months.

Collaborative research and development revenues came in at $5.8 million, up 13.7% primarily driven by revenues recognized from the amortization of an upfront payment under the collaboration agreement with Mylan N.V. (NASDAQ:MYL) .

While research and development expenses were down 0.3% to $31.6 million, general and administrative expenses increased 26.4% to $15.6 million.

Outlook

Momenta expects operating expenses (excluding stock-based compensation and net of collaborative revenues) in the range of $40–$45 million for the fourth quarter of 2016.

Collaboration revenues, under its agreement with Mylan are anticipated to be $1.8 million per quarter.

Pipeline Update

Momenta continues to progress with its pipeline candidates. Under its collaboration with Mylan, the company initiated a phase I study on M834, a biosimilar version of Orencia (abatacept). Top-line data from the study are expected by the end of 2017.

In the third quarter, Momenta regained global development and commercialization rights to M923, a biosimilar version of Humira (adalimumab). M923 is currently being evaluated in a phase III study. Top-line results from the study should be out by late 2016, with the first regulatory submission for marketing approval planned for mid 2017.

Our Take

Momenta reported encouraging results for the third quarter of 2016, wherein loss was narrower than expectations and revenues beat estimates.

We note that Glatopa sales have rebounded since the third quarter of 2015 as inventories were worked through. However, Teva has already switched approximately 75% of once-daily Copaxone 20 mg patients to thrice-weekly Copaxone 40 mg. Nevertheless, we are encouraged by the company’s progress with the biosimilars in its pipeline.

Zacks Rank & Key Picks

Momenta carries a Zacks Rank #2 (Buy). Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) is another favorably placed stock in the healthcare sector, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss estimates narrowed from $3.84 to $3.79 for 2016 but remained unchanged for 2017 over the last 60 days. The company has posted a positive surprise in all of the four trailing quarters with an average beat of 67.62%.

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