What happened

After jumping 18% on Friday following its successful raise of $200 million, Momenta Pharmaceuticals (NASDAQ:MNTA) proceeded to fall 9.5% yesterday and 10.4% today, giving up all of its gains and then some.

Welcome to volatile biotech investing in a company with clinical data that's largely years away.

So what

Momenta's lead novel asset, M281, isn't scheduled to read out phase 2 data until 2020 and 2021 for the two immunological diseases that Momenta is targeting. A proof-of-concept study for an autoimmune disease drug, M254, is scheduled to start later this year or early in 2019, putting a readout in 2020.

Investors might get to see clinical data in 2019 from a phase 1 study for M230, which is partnered with CSL, but that's very early-stage.

Since biotech valuation can often be more art than science, a dearth of valuation-changing data can result in substantial volatility as investor sentiment changes.

Man in front of monitors displaying stock charts, clenching fists to his head

Image source: Getty Images.

Now what

In addition to its novel pipeline, Momenta also has a couple of biosimilar drugs: M923, a biosimilar to Humira that's wholly owned, and M710, a biosimilar to Eylea that's in phase 3 development being run by partner Mylan.

M923 is ready to be submitted to regulators, and Momenta has signaled that it would like to find a partner to take over the commercialization, so that news could drop at any point.

Until then, long-term investors can just ignore the double-digit stock price changes on no news, and wait for clinical trial data that will change the biotech's valuation fundamentally.

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool recommends Momenta Pharmaceuticals and Mylan. The Motley Fool has a disclosure policy.