On some levels, Rigel Pharmaceuticals (RIGL -5.41%) and Momenta Pharmaceuticals (MNTA) are complete opposites. Rigel, based in South San Francisco, focuses on small molecule drugs while Momenta, headquartered in Cambridge, Massachusetts, tackles disease using large molecules called biologics.
Rigel, with a drug approved in the U.S. and Europe, sports a market cap of roughly $475 million compared to Momenta's $2.6 billion valuation. Momenta updated investors this week that it should end 2019 with $545.1 million in cash, an amount greater than Rigel's entire market cap. Rigel expects to end 2019 with $98 million in cash.
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Why the disparity?
From their inceptions, both companies set off down different paths. Rigel, formed in 1996, focuses on small molecule drugs. You may recognize these as traditional pharmaceuticals, including oral medicines. Momenta, incorporated in 2001, leveraged new protein engineering technologies to pursue the research and development of large, injectable biologic therapies, like proteins and antibodies.
It has not been smooth sailing. Rigel spent its early years developing several drugs that didn't pan out, including an asthma drug that both Pfizer and AstraZeneca took turns developing before it ultimately failed in clinical trials. Tavalisse, Rigel's approved drug, was returned to Rigel from AstraZeneca following a phase 2b clinical trial that did not show superiority to AbbVie's Humira.
Momenta originally set out to make improved versions of existing biologic drugs and biosimilars, which are biologic drugs that can be substituted for the original but are not true generic versions due to the nature of biologics. A 2018 restructuring pivoted the R&D focus away from biosimilars to novel therapies for immune-related diseases. The company axed 110 people, including one of its founders, in the shakeup.
Rigel and Momenta tackle rare immune diseases
Despite hailing from opposite coasts and using different R&D approaches, the two companies overlap when it comes to which diseases they are trying to attack.
Immune thrombocytopenia purpura (ITP), a potential $1 billion global opportunity according to Rigel, causes the immune system to destroy blood platelets. This results in severe bleeding, bruising, and, in severe cases, can even cause brain hemorrhages. More than 68,000 ITP U.S. patients cycle on and off drugs throughout their lives, often jumping from one drug to the next to get the disease under control.
Rigel markets the oral drug Tavalisse for adult ITP. Meanwhile, ITP is the lead indication for Momenta's M254 program. A phase 1/2 clinical trial is ongoing with additional data expected next quarter. Both face several formidable competitors with entrenched ITP drugs, including NPlate from Amgen and Novartis' Promacta.
A second key indication for both companies is warm autoimmune hemolytic anemia, a disease where the body destroys its own blood cells. Currently, the Food and Drug Administration has not approved any therapy for the 45,000 patients in the U.S. with wAIHA. Rigel commenced a pivotal clinical trial last year with Tavalisse and expects to complete enrollment by mid-2020. Similarly, Momenta started its phase 3 clinical trial in wAIHA in the third quarter of 2019. It expects to present top-line results from the trial testing of the therapeutic antibody nipocalimab toward the end of 2021.
Biotech investors should keep an eye on this race to develop the first FDA-approved drug for wAIHA patients. Following close behind lurks competitor ALXN1830, a drug in phase 1/2 clinical trial that Alexion picked up in its 2018 acquisition of Syntimmune.
Each company has other products in development. Rigel has two oral treatments in early human testing in addition to several early-stage programs in oncology, dermatology, and asthma where the research is being conducted by strategic partners. Momenta plans to seek more than one indication for its lead molecules. Besides wAIHA, nipocalimab is entering late-stage clinical trials as a treatment for myasthenia gravis (an autoimmune disease that weakens the skeletal muscles) and hemolytic disease of fetus and newborn, which occurs when a baby's red blood cells break down too fast. For M254, Momenta plans to expand the program beyond ITP by kicking off a clinical trial in the fourth quarter of 2020 in chronic inflammatory demyelinating polyneuropathy, which is a neurological disorder characterized by weakness and impaired limb function and feeling. Momenta has earlier stage programs that should start clinical trials in 2020 and 2021.
What about sales?
Following decades of R&D, the FDA approved Rigel's first product, Tavalisse, for adult immune thrombocytopenia, in April 2018. Tavalisse revenues continue to ramp up. It racked up $57.8 million in sales over the first seven quarters on the market, with $43.8 million coming in 2019.
Rigel markets Tavalisse in the U.S. and is partnered in other geographies. Following European regulatory approval, Rigel expects to receive a $20 million milestones payment from its partner Grifols (GRFS -0.61%) this quarter, with royalties starting in the second half of 2020. Kissei Pharmaceuticals, Rigel's partner in Asia, is currently running a phase 3 clinical trial in Japan. Lastly, Rigel licensed the rights to Tavalisse in Canada and Israel to Medison Pharmaceuticals. Medison filed its submission for approval in Canada at the end of 2019.
Momenta expects to earn $20 million in 2019 revenues from a legacy program marketed by Sandoz, a division of Novartis. That's nearly a 50% haircut from $39.7 million it generated for Momenta in 2018. Separately, Momenta's partner Mylan (MYL) took over the development duties on a biosimilar version of the blockbuster drug Eylea from Regeneron Pharmaceuticals and Bayer. The companies will split costs and profits and expect to file for approval in 2021. Any additional revenues for Momenta will need to come from licensing or partnership deals.
The verdict
Risk-tolerant biotech investors should dig deeper into Rigel. Tavalisse's commercial launch in the U.S. continues to gain steam, and the drug just received European approval. While not making hand-over-fist amounts of money yet, Tavalisse appears to be gaining market share, particularly with its convenience for patients as an oral treatment option. Institutional investors own 92% of the stock, so you'll be in good company.
Momenta still needs to prove itself. Updated ITP data in the second quarter and results from nipocalimab's phase 3 trial in myasthenia gravis in the third quarter can bolster the stock. Even so, Momenta's latest presentation puts commercialization in myasthenia gravis in 2023. Projecting to spend $220 million to $240 million in 2020, Momenta will likely need additional capital before that or any other potential drug launch.
