Why Momenta Pharmaceuticals, Inc. Jumped Higher Today

By Markets Fool.com

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What happened

Momenta Pharmaceuticals (NASDAQ: MNTA) ended Tuesday up 12.5% after an analyst at Barclays upgraded the biotech and increased the price target.

So what

The next big event for Momenta Pharmaceuticals is likely to be the launch of its three-times-weekly version of Teva Pharmaceuticals' (NYSE: TEVA) Copaxone by Momenta's partner Novartis (NYSE: NVS). The 30-month stay that the Food and Drug Administration puts on generic drugs ends in February, but unless the patent dispute between Momenta/Novartis and Teva is resolved by then, the launch would be considered "at risk" because the duo would have to pay damages if Teva eventually wins the dispute.

Momenta and Novartis already sell a copycat of the daily version of Copaxone, but Teva has better negotiating power with payers because it can offer discounts on the three-times-weekly version if payers also cover the branded daily version. So launching the three-times-weekly version should increase Momenta and Novartis' sales of the daily version as well.

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Also on the calendar of upcoming events, investors will get data later this year from the phase 3 trial for M923, Momenta's biosimilar version of Humira. While that's a necessary step, the launch of the biosimilar won't happen until 2018, so the clinical trial data won't be too exciting.

Before then, it seems likely Momenta will try and partner M923 (again). Last month, Momenta announced that it will regain rights to the drug from Shire. Having a partner abandon a company is usually bad news, but Shire got the rights to M923 through its acquisition of Baxalta, but clearly wasn't after Baxalta for M923 and might not even want to be in the biosimilar business. Shire will pay for development for the next 12 months, so Momenta has plenty of time to find a new suitor.

Now what

Upgrades by analysts aren't necessarily a good reason to buy, but with potential to increase revenue substantially, it's understandable why investors are buying Momenta now.

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Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Momenta Pharmaceuticals and Teva Pharmaceutical Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.