A Compelling Risk/Reward Seen In Momenta Pharmaceuticals

Barclays sees a compelling risk/reward in Momenta Pharmaceuticals, Inc. MNTA citing the Copaxone 40mg trial. The firm sees little risk in owning the stock pointing out successful IPR decisions, although no one could guarantee whether the company could win a District Court case.

However, Barclays analyst Morgan Williams sees that a win in the case could likely result in Momenta partner, Sandoz, launching the product in February next year once the regulator accords its approval following the 30-month stay expiry.

In a note, the brokerage said, "Even with conservative assumptions on market penetration for the 40mg and currently marketed 20mg, the upside potential - above $35/share if generic exclusivity persists for MNTA and Sandoz - is too great to ignore. We expect better adoption of generics in 40mg since TEVA won't have exclusivity on the preferred dosing regimen which has allowed restrictive contracting for the branded products."

Williams indicated that he spent last week to study the trial of Copaxone 40mg and convinced by the arguments placed by the defendants. He came out with a feeling that defendants made a strong case that would result in a risky launch next year.

The brokerage believes the market discounts a worse scenario for Momenta shares currently reflecting the delayed approval and number of rivals hitting the market with 40mg version. Therefore, the firm upgraded the stock from Equal-Weight to Overweight rating and lifted the target price from $13 to $19 implying more than 40 percent upside potentials.

The stock gained $1.31, or 11.18 percent, to $13.11.