Micromet Inc.’s (MITI) first quarter 2011 loss per share came in at 9 cents (including special items), much narrower than the year-ago loss of 26 cents per share. After adjusting for the change in fair value of warrants, the company reported a loss per share of 20 cents, less than the year-ago post adjustment loss of 34 cents per share. The loss was, however, wider than the Zacks Consensus Estimate of a loss of 17 cents due to lower revenues. The narrower loss from the prior year was due to increase in the number of shares outstanding.
Quarterly Details
Revenues at Micromet were down 12% to $5.4 million in the first quarter of 2011 due to lower collaboration revenue in the reported quarter. Revenues also missed the Zacks Consensus Estimate of $6 million.
Operating expenses during the reported quarter climbed approximately 45% over the prior-year period to $25.3 million. Both research and development (up 53% year over year) and selling, general and administrative (up 28%) expenses increased in the quarter. Higher R&D expenses resulted from a ramp in blinatumomab studies.
Pipeline Update
Micromet’s lead pipeline candidate is blinatumomab, which is being studied for the treatment of acute lymphoblastic leukemia (ALL) and non-Hodgkin’s lymphoma (NHL). Enrollment in a mid-stage study (n=20) of blinatumomab in adults suffering from relapsed or refractory B-precursor ALL is expected to complete in the second half of 2011. Preliminary data from the trial is expected to be presented in June 2011 at the Annual European Hematology Association Congress.
The company plans to initiate a mid-stage trial in pediatric and adolescent patients with ALL in both the US and EU in mid 2011.
Micromet’s another promising pipeline candidate, MT111 (MEDI-565), being developed to treat patients suffering from advanced gastrointestinal cancers, in collaboration with AstraZeneca (AZN), moved into phase I studies in January 2011.
Our Recommendation
We have a Neutral recommendation on Micromet in the long run. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
We believe that investor focus will be more on the development of lead candidate blinatumomab rather than the earnings report. Blinatumomab holds tremendous potential in the treatment of ALL. We are pleased with Micromet’s re-acquisition of its blinatumomab rights, which will enable the company to re-license the drug at more attractive terms.
We believe that Micromet requires the strength of a large established player to accelerate blinatumomab’s development in order to gain a head-start over potential competitors on approval. We are also concerned about its early stage pipeline. Accordingly, we prefer to remain on the sidelines.
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