What happened

After the company reported third-quarter financials and updated investors on the progress of its biosimilars pipeline, shares of Momenta Pharmaceuticals (NASDAQ:MNTA) lost 12.6% of their value earlier today.

So what

Momenta Pharmaceuticals recorded $10.9 million in product revenue from sales of it and Sandoz's Glatopa 20 mg, a sharp decline from the $23.3 million reported in Q3 2016. Glatopa is a biosimilar to 20 mg Copaxone, a blockbuster multiple sclerosis drug.

A man holds his head in his hands as he stands in front of a chart showing a declining share price.


The 53% decrease in Glatopa revenues was due mostly to price discounts associated with Medicaid and inventory price adjustments tied to the FDA's approval of Mylan's (NASDAQ:MYL) 20 mg and 40 mg Copaxone biosimilar in early October. Additionally, a $10 million commercial milestone payment made by Sandoz to Momenta was subtracted from Glatopa's net profit prior to calculating Momenta's 50% share of Glatopa's profit. 

The company also updated investors on its pipeline progress. It's still awaiting a decision from the FDA on its 40 mg long-lasting Copaxone, but it hopes to hear from the regulator either this quarter or early in 2018. 

It plans on submitting its Humira biosimilar for approval soon; however, it conceded in its press release that it doesn't expect Humira biosimilars to launch in the U.S. until 2022 because of Humira patents. Momenta Pharmaceuticals and other biosimilar drugmakers have been litigating for a faster launch schedule, but this admission suggests that's less likely.

Additionally, the company reported that a collaboration with Mylan on a biosimilar to Orencia hit a roadblock. Their formulation failed to meet its primary pharmacokinetic endpoints in a Phase 1 study, an event that will cause development delays. 

Now what

Momenta Pharmaceuticals revenue could continue lower until the FDA approves its 40 mg Copaxone. The 40 mg variation has become much more widely prescribed than the 20 mg version, and that trend is going to accelerate now that Mylan has a 40 mg formulation on the market. 

The Humira hiccup is disappointing because Humira is the world's best-selling drug with $18 billion in annual sales. Ultimately, a launch will open up a big market for Momenta Pharmaceuticals, but it could be years before that materializes in the U.S.

As for Orencia, Mylan and Momenta Pharmaceuticals plan to study the data to determine where they went wrong. The two companies have plenty of resources to get this program back on track, but again, it could take some time.

Overall, Momenta Pharmaceuticals' GAAP operating expenses of $58.6 million in the third quarter significantly exceeded the company's $24 million in profit-sharing and milestones, so investors should expect losses to continue as the company continues to spend heavily on biosimilars R&D. 

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