Micromet Misses Expectations

Micromet's (MITI: 7.87 -0.15 -1.87%) fourth quarter loss per share came in at 34 cents, wider than the Zacks Consensus Estimate of 18 cents and a loss of 12 cents reported in the prior-year period. For 2009, the company reported a loss per share of 98 cents compared to a loss of 77 cents in 2008.
 
Micromet reported revenues of $4.6 million compared to $5.8 million in the fourth quarter of 2008. The company records revenues primarily in the form of reimbursement of expenses incurred by it under different collaborative agreements. For the full year, revenues came in at $21 million, down 23% from $27.3 million in 2008.

Operating expenses during the reported quarter increased 130% year-over-year to $28.3 million primarily due to $13.3 million as one-time charges. The charges relate to the reacquisition of the North American rights of blinatumomab and settlement of certain other issues.

Micromet exited 2009 with $113.4 million in cash and cash equivalents, up from $46 million at the end of December 2008.

There were many significant developments during the quarter. Micromet presented encouraging data from a phase II trial of blinatumomab, its lead candidate, in patients with acute lymphoblastic leukemia (ALL). About 80% of the patients achieved primary endpoint of the trial within the first treatment cycle. Additionally, blinatumomab is also being studied in patients with B-cell non-Hodgkin lymphoma (NHL).
 
Micromet entered into a collaboration agreement during the quarter with Sanofi-Aventis (SNY: 38.14 +0.91 +2.44%) to develop a new solid tumor bispecific T-cell engager (BiTE) antibody against an undisclosed target. In addition, Bayer (BAYRY: 0.00 N/A N/A) exercised its option to develop a new BiTE antibody for the treatment of solid tumors with Micromet. Bayer has exercised its option under the terms of the collaboration and license agreement entered in January 2009.

We are encouraged to see the development of the product portfolio at Micromet. However, we remain concerned since the pipeline is yet to deliver. The company is heavily dependent on blinatumomab � any hiccup in any of its clinical development programs will weigh heavily on the stock. We have an "Underperform" recommendation on the stock.