Morningstar | Momenta's Strategic Review Offers an Uncertain Future
Momenta's conclusion to its strategic review has created new uncertainty, in our view. We think the company's announcements of executive departures, a 50% workforce reduction, and cutting five biosimilar products under development call into question its future research and development capability. We also urge caution to investors as the company signaled plans for a future capital raise to occur during the next two years, which will prove to be potentially dilutive. We may lower our fair value estimate for this no-moat company as we re-evaluate assumptions in our model.The majority of the workforce reduction will take place in its biosimilar program, along with several high-level executive departures, including Ganesh Kaundinya (COO, CSO and founder) and Scott Storer (CFO). We think previously discussed competition for its generic Copaxone product has mostly prompted these decisions, and while we understand the need for operational cuts, we think anything that constrains Momenta's ability to develop pipeline products is a net-negative for the company's future. With a biosimilars pipeline largely behind the curve of larger peers, Momenta now plans to shift its focus toward novel drug candidates, which is largely unproven territory for the firm.
Momenta announced several updates to its drug development itinerary. The company expects to file a U.S. application for its biosimilar Humira candidate by the end of the year, with a European filing in the first half of 2019. Meanwhile, the company continues to anticipate a 2023 launch for its Eylea biosimilar, currently in phase 3 development. Finally, the company has entered talks with partner Mylan to exit its participation for its remaining five biosimilar programs, including its Orencia biosimilar. This will help the company realize approximately $250 million in cost reductions, to be spread evenly during the next five years. We expect more clarity around the company's strategy during its R&D day on Oct. 11.
Momenta Pharmaceuticals is a biotechnology company focused on the discovery and development of biologic therapies for the treatment of rare immune-mediated diseases. The company's programs include: M281, which is a fully-human anti-neonatal Fc receptor (FcRn), aglycosylated immunoglobulin G (IgG1), monoclonal antibody, designed to reduce circulating human immunoglobulin G (IgG) antibodies by completely blocking endogenous IgG recycling via FcRn; M230, which is a recombinant trivalent human IgG1 Fc multimer; and M254, which is a hyper-sialylated immunoglobulin designed as a high potency alternative to IVIg, a therapeutic drug product that contains pooled, IgG antibodies purified from blood plasma.
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