Please ensure Javascript is enabled for purposes of website accessibility

Why Momenta Pharmaceuticals, Inc. Shares Got Crushed Today

By Brian Orelli, PhD - Feb 21, 2017 at 12:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The drugmaker announced a delay to approval of its three-times-weekly version of Glatopa.

What happened

Momenta Pharmaceuticals (MNTA) stock is down 15.4% at 11:50 a.m. EST Tuesday after the company announced on Friday after the closing bell that its three-times-weekly version of Glatopa is unlikely to be approved this quarter due to a manufacturing issue that's out of the company's control.

The drugmaker also announced earnings this morning, but the delay is clearly the reason for the valuation reset today.

Freeway sign that says, "Expect delays"

Image source: Getty Images.

So what

Investors have been anxiously awaiting an approval of the three-times-weekly version of Glatopa, Momenta's generic version of Teva Pharmaceutical Industries(TEVA 0.36%) Copaxone, after the courts invalidated Teva Pharmaceutical's patents on the three-times-weekly version. Momenta and its partner Novartis (NVS 1.11%) have been marketing the lower-dose daily version of the drug for a while, but the three-times-weekly version offers a larger potential market.

Momenta believes the application could theoretically be approved soon, but the contract manufacturing plant that Novartis uses to fill the syringes with the drug, which is owned and run by Pfizer, received a warning letter from the Food and Drug Administration. Pfizer will have to fix the problems cited in the warning letter before Momenta and Novartis can receive FDA approval for the three-times-weekly version of Glatopa.

Now what

Fortunately, the daily version of Glatopa can still be sold, but Momenta only recorded $15.8 million in product revenue from the lower-dose version in the fourth quarter, so it's not exactly paying the bills.

Momenta isn't going to go broke because of a delay of a quarter or two -- it ended the year with $353 million in the bank -- but it does give rival Mylan, which is also working on a generic version of Teva's Copaxone, time to potentially catch up. In addition to having to compete for patients, having two generics on the market will likely reduce the price Momenta and Novartis can charge for Glatopa.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Momenta Pharmaceuticals, Inc. Stock Quote
Momenta Pharmaceuticals, Inc.
Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
$8.31 (0.36%) $0.03
Novartis AG Stock Quote
Novartis AG
$88.65 (1.11%) $0.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.