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<<< What is the $2.7 billion figure? Perhaps U.S. and non-U.S., non-Europe revenue? If so, with two generics won't price and total revenue decline? >>>
$2.7 billion is the U.S. market for Lovenox... I assumed a 35% price decline for the lower end of the range. The point of my message was not to get into particular assumptions but to quickly show how MNTA's current share price already fully discounts TEVA obtaining approval.
10nis
<< Given mnta was trading at about $12 before approval and even if Teva is approved they should earn $25-30M/year (wild guess on my part) in royalties, you'd think the landing spot would be something higher than $12. >>
Royalties of $25-30M/yr?? Wild guess for sure...
Let's just say SNY, TEVA and Sandoz split the market equally (33% of $2.7 billion). MNTA would net annual royalties of approximately $71 million using a 10% net royalty and 20% cost of sales (i.e, 8% of Sandoz's Lovenox sales). If you assume the market shrinks (35%) as a result of lower prices to $2.0 billion from $2.7 billion, MNTA would still net annual royalties of approximately $53 million. Splitting the difference MNTA earns $60 million in annual royalties.
If you apply a 10-15x multiple on annual royalties you arrive at $600-900 million or $12-18 per share. MNTA has a NOL of $250 million tax effected is worth $2 per share and over $1/share of cash on its balance sheet. M356, M118 and any further developments worth another $6 per share.
Adding the above amounts and you arrive at a conservative fully discounted MNTA share price between $21-27 per share or a 20+% discount to the current share price.
10nis
<<< Quote:
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Most of the members think the market needs time to digest the news and "study up" on MNTA ... i don't think that is true because markets are extremely efficient and get to "true value" sooner rather than later...
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Although I would like the price to be higher, I agree. I think the $19-21 range is going to be the new "normal" for MNTA. >>>
Markets are extremely efficient? Are we watching, trading, investing in the same markets? If markets were extremely efficient as you say there would little reason to invest in anything other than low-cost index funds. I think you've taken the "new normal" talk to a whole new level thinking MNTA is going to be range bound between $19-21.
I would really like to see the new board participants and MNTA shareholders spend more time trying to understand and determine a proper valuation for MNTA vs. thinking they know where the share price is going based on their intuition.
10nis
<<< MNTA was $16 a few weeks before it got the approval - its $20 now - so obviously much of the upside was built in. >>>
Prior to FDA approval, MNTA last traded at $16 or higher during the week of January 19, 2010, not a few weeks before obtaining approval.
10nis
<< I agree 100% with you, but MNTA wasn't that "cheap" of a market cap - it had a large % of approval already bult in - the only real question was timing - next week or next year has been the question (IMO) for the last 2 years. >>
MNTA wasn't that "cheap" of a market cap prior to approval???
It had a market capitalization of approximately $440 million upon approval (excluding cash). But, I guess that's expensive for the potential of obtaining approval to serve a $2.7 billion Lovenox market as well as the potential of M356 (Copaxone - $2.5 billion market), M118, etc.. How did that short position work out for you?
10nis
MNTA
ThomasS - Amen brother.... MNTA currently is one of the best risk-return investments in the entire market (I cannot think of a better one as I type). Upside potential is huge (200%+) and downside is maybe 15-20%. Insider tax selling is complete, MNTA will get favorable news August 17th, potential positive Copaxone news could take place anyday and in the mean-time Sandoz is seeing very good uptake in selling Lovenox.
Investors can try and wait to acquire MNTA shares at lower levels, however, there's a number of people that thought the same thing on July 22/23rd and they missed some serious gains. Roll the dice if you want, however, if you have a longer time horizon (6+ months) I think its foolish not to be long MNTA at current levels.
10nis
P.S. Does anyone believe WallStarb will post again on this board?
MDCO...
=DJ Medicines Co Shares Soar On Favorable Patent Ruling >MDCO
By Jennifer Cummings
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Shares of Medicines Co. (MDCO) soared Tuesday afternoon after a U.S. District Court ruling raised hopes a patent on the drug company's lead product will get a crucial extension.
The ruling is the latest in an ongoing saga surrounding the company's patent on its blood-thinning drug Angiomax. The U.S. Patent and Trademark Office has repeatedly said it won't extend Medicines Co.'s Angiomax patent, saying the application for that patent had been filed a day late.
In the latest development, a U.S. District Court judge said in an order dated Tuesday that the patent office should consider Medicines Co.'s patent-term extension application timely filed.
Medicines Co. and the patent office declined to immediately comment.
Shares of Medicines Co. closed 34% higher at $12.47 after earlier jumping as high as $15.43.
The nearly decade-long battle over the patent comes down to a debate over what date Angiomax was technically approved.
Medicines Co. received approval for the drug Friday, Dec. 15, 2000, after the close of business. The company's lawyers believed the 60-day window to file the extension application began the following business day, Monday, Dec. 18, 2000, and filed that application within 60 days from that date, on Feb. 14, 2001. But the patent office rejected the application, saying the window for filing the extension already expired by Feb. 14, since 60 days had passed from when the approval had been granted on Dec. 15.
The lack of a patent extension could be disastrous for Medicines Co.'s finances. U.S. sales of Angiomax generated $382 million, or 95%, of the company's revenue for 2009. U.S. sales in that range could likely continue for the next few years if generics are prevented from coming on the market, Chief Executive Clive Meanwell said in an interview in March.
Without the patent protection, the company may have to reduce research investments and possibly cut jobs, Meanwell said in March.
MNTA...
Amen Dew!!! I wish I could recommend posts on IHub because I would strongly recommend your last post among many, many others. There's so much moronic talk (let's call it severe noise) out of so many want-a-be analysts its pathetic. Thanks again for the great post and all of your efforts!!
10nis
<< Anyone who posts on here worried about a hostile takeover. >>
Nobody posting on this board should be worried about a hostile takeover of MNTA even if Mr. Wheeler himself is posting on here. We're shareholders looking to make great/decent investment returns that's it. I know I'd be more than happy to sell my MNTA for $50/share (I'd even settle for $40 today). Hell, I'd do the transaction in a dark alley in Compton if they really wanted to, considering it is a drug deal and all.
10nis
<< Mpower, if you believe MNTA will only get more expensive, why would manageemant want to sell out?
Its called risk and return. Guaranteed 150% return tomorrow (i.e., millions in share price returns) along with a high paying contract/consulting job for a few years or a potential return of 0-450% over the next 5 years... Which one would you take?
Normally you need management to want to sell out, espeically with a biotech that has a lot of it's value tied up with experts working for the company. >>
If NVS or anyone else for that matter offers enough (say $50+/share tomorrow) MNTA management has virtual no say in whether a deal gets done or not as they don't control a large enough interest to stop a deal. MNTA BOD's would have essentially no choice in accepting the $50/share offer unless a competing offer was on the table, as I would imagine 90+% of shareholders would tender their shares instantly at that offer price.
I would not be surprised if NVS made a move for MNTA once more clarity regarding M356/Copaxone is known even though it could likely cost them another $10/share in purchase price.
10nis
<< MNTA...Looks to me MNTA may need to reduce its initial pricing as SFY is utilizing the time until Aug 17th to garner secure supply contracts...at equally competitive pricing to MNTA's. >>
What are you talking about? Sandoz(MNTA) is selling Lovenox as we speak and has been since receiving approval last Friday.
10nis
<< SNY/MNTA from yahoo boards FWIW: July 28, 2010
Enoxaparin award
Effective July 27 2010, Premier is pleased to announce the sole award of enoxaparin sodium (Lovenox) to Sanofi-Aventis. Sanofi-Aventis has provided Premier aggressive pricing as well as market leading Auto-sub and DSH pricing. Premier current estimated annual spend on brand Lovenox is more than $325 million. The new Sanofi-Aventis agreement for Lovenox will provide Premier members an estimated annual savings over the current base price of up to 40 percent, translating to approximately $46.3 million. How does this effect us when Premier and Novation are the two biggest hospital suppliers. >>
Not a huge surprise. I've estimated in my model a 40% U.S. market share for Sandoz and the above statement doesn't change that.
10nis
<< That's at least arguable. It's not simply the market share and pricing pressure if Teva gets approved too, it's the changed profit split with Novartis that is the driver in that scenario. >>
Understood. Under my model, MNTA is worth approximately $22 at the lower profit split (not factoring in non-Lovenox programs).
10nis
MNTA
Let me try and summarize what's going on....
1.) SNY reported earnings today and essentially said there will be no AG. SNY is also talking about cutting U.S. sales force thus giving up share of the U.S. Lovenox market to focus on the no competition rest of the world market. Does this get any more bullish for MNTA?
2.) SNY's lawsuit resulted in No TRO and the court date pushed out 3 weeks to August 17 while Sandoz is selling Lovenox like a hungry fat kid in a candy store. The lawsuit is a hail-mary by SNY providing MNTA shareholders an opportunity to purchase cheap shares.
3.) TEVA is trading at close to a 52 week low... Fears over Copaxone or does someone have knowledge of Markman hearings?
4.) TEVA could get news on Lovenox approval however they could also not receive approval for months/years/if ever. Each passing day that TEVA hears nothing the greater likelihood MNTA will stand alone as Sandoz fat kid salesmen eat up the candy store.
5.) MNTA is trading at an extremely cheap valuation even if TEVA obtains Lovenox approval.
6.) MNTA volume has all but dried up setting the share price up for a significant move.
Am I missing anything?
10nis
<< Are you adding in nothing at all for the non-Lovenox programs? >>
In my worst case scenario I have included no additional value for non-Lovenox programs. Thus, its really a worst case scenario. If I factor in $6-8 for non-Lovenox programs my low-end valuation turns into $28-30 share.
I'm somewhat surprised more analysts have not come out with upgrades or comments regarding Friday's outstanding news.
10nis
<< Something appears to be wrong with your calculations. You should not get twice as much revenue for MNTA with a 65% market share (of generics) than with a 50% market share. >>
I believe tinker was using a 65% (best case) and 40% market share (50/50% of 80%) for worst case.
Under my Worst case analysis, MNTA is worth essentially the current market price (~$22) using annual revenue of approximately $65 million and taking into account MNTA's payback of development costs and its $229 million of NOL's. This does not factor in any upside from M356 (Copaxone), M118 or any value for potential new partnerships/developments, etc..
10nis
<< 10nis If TEVA were close, why would the FDA wait to approve both at the same time? Does this save them paper work?
Maybe they are doing MNTA a favor by approving them first and allowing them to be able to raise money in the market. Maybe that logic applies. If they approved both at the same time, MNTA's stock wouldn't have gone up much.
I am not sure why the FDA would care if they approved one on one month and another the next month VS both at the same time. What is your logic about that? >>
FDA doing MNTA a favor? Are you a conspiracy theorist? Why would they do MNTA a favor over TEVA or any other company?
My logic equals the common sense approach which would be not to give approval one day for MNTA and give TEVA approval a few days later. Both companies and the FDA have spent many years on this and if both companies were essentially approval worthy the FDA would wait and do it at the same time. Otherwise, its likely there could be a significant period of time (months to years, if ever) between approvals.
10nis
<< Teva has publicly stated that it thinks it has also met the 5 criteria for approvability. As stated in the 45 page response to the CP, those criteria are pretty detailed and specific; not much wiggle room, IMO, you either meet them or you don't. The FDA has latitude, but once it decides what the rules are, it's got be black & white, and to my eyes the FDA has done that. >>
TEVA can think all it wants... However, its the FDA that makes the final decision whether they have met the criteria or not. Its kind of like looking in the mirror and thinking you're hot stuff before you get opinions of people that can actually determine whether your hot or completely not.
As of right now, MNTA has received approval and had TEVA been close the FDA would have waited to approve both at the same time.
10nis
<< A fair amount of sales by MNTA insiders these last few days... Just got the Form 4s. >>
Fair amount of sales? A Co-founder and two VP's sold some shares under a Section 10b5-1 plan. Not a huge surprise nor a negative for the share price. They just took some chips off the table just like a number of people on this board have. Insiders still have the vast majority of their holdings.
10nis
MNTA / IDIX
Are under attack... Time to strike back by putting some money to work. Looks like stops are being taken out on MNTA.
10nis
MNTA / Sanofi
<< Sanofi asked the U.S. District Court for the District of Columbia for a temporary restraining order and a preliminary injunction that would require the FDA to withdraw its approval, arguing the decision was arbitrary and capricious. >>
Does anyone know how long it approximately takes a U.S. District Court to respond to a matter like this? Days, weeks, etc.?
TIA,
10nis
IDIX halted...
<< wonder why...a buyout?
hope not, as i don't have much shares left.. !>>
Earnings announcement.
GILD
<< The tax rate on LT capital gains will likely be higher next year.>>
They most definitely are however that isn't a great reason to get out of a position. If you see no upside or long-term potential than definitely sell it and move on however if he thinks its worth substantially more he could do a number of things...
Sell the shares now (taking a smaller taxable capital gain at a lower tax rate this year) and buy the shares back giving himself a higher tax basis in the future (higher tax years)...
Never sell the shares and just sell out-of-the-month covered call options over the life of the investment raking in $2-5 dollars of income each year plus benefit in any upside to the strike price.
etc...
10nis
GILD
<< Thanks for your response. Does anyone have anything "lukewarm" to say about Gilead? LOL.>>
You can trade one share of Gilead for slightly more than one share of MNTA.
<<I'm just having a really hard time dumping shares at close to a 52-week low. Particularly since it will cost me in LTCG tax (my cost basis is under $2 per share). It was my first investment and I'm emotionally attached. >>
With such a low cost basis why do you want to sell your GILD shares? Afraid it may go a lot lower?
10nis
MNTA
<< with such a high percentage of stock held by institutions - who keeps acquiring at these levels? >>
Smart money is acquiring at these levels. Some institutions will take their profit and run with longer-term shareholders buying up their shares. I think the heavy selling of short term owners is about done and we could see some significant appreciation in the near-term.
We should see more sell-side analyst upgrades announced throughout this week with increased price target's in the mid-to-upper 30's.
Also, there are plenty of institutions that never heard of MNTA until Friday. After some DD I'm sure a good number of them will realize MNTA has an exceptional risk-return profile and will start bidding up the shares.
10nis
MNTA
MNTA's Q2 earnings call should be right around the corner (early to mid August) and could be rather interesting as Management should have some color on the launch and additional discussion regarding Copaxone related hearings, etc.
Based on a scenario based calculation that I put together, I would expect sell-side analyst price targets to fall in the mid-to-upper $30's with an upper band (best case scenario) of $50-60.
10nis
<< 10nisman, I think it's way to early to even think about a buyout. >>
Never said MNTA was getting acquired any time soon. Just made the point that a MNTA takeover will take place based on price not management's willingess to sell. Show us the money Big Pharma ($50-60/share) and you can have MNTA.
10nis
<< I think the answer is simple: What does Momenta think of this? Unless there is the will to be acquired, it probably won't happen, and there usually isn't such a will in a company flush with success as Momenta is right now. >>
It's not about will but the potential take-out price. MNTA will get acquired if NVS or another player offers enough. What that price is nobody knows... However, I'm fairly confident that if NVS offered to buy MNTA for $50-60 a share this weekend, we would likely see a PR Monday morning saying MNTA's BOD approved the buyout.
10nis
TEVA now down 9.5%... Would like to see TEVA sellers move their proceeds into MNTA.
MNTA CC in 5 minutes.
10nis
MNTA: Conference call details
http://finance.yahoo.com/news/Momenta-Pharmaceuticals-pz-1232222942.html?x=0&.v=1
Momenta Pharmaceuticals Announces Conference Call Details Regarding Approval for Generic Lovenox(R)
Press Release Source: Momenta Pharmaceuticals On Friday July 23, 2010, 12:05 pm
CAMBRIDGE, Mass., July 23, 2010 (GLOBE NEWSWIRE) -- Momenta Pharmaceuticals, Inc. (Nasdaq:MNTA - News), a biotechnology company specializing in the characterization and engineering of complex drugs, today announced that it will conduct a conference call to discuss the approval of generic Lovenox.
Management will host a conference call today at 1:00 pm ET. To access the call, please dial (877) 224-9084 (domestic) or (720) 545-0022 (international) prior to the scheduled conference call time and provide the access code 90417134. A replay of the call will be available approximately two hours after the conclusion of the call and will be accessible through August 7, 2010. To access the replay, please dial (800) 642-1687 (domestic) or (706) 645-9291 (international) and provide the access code 90417134.
A live audio webcast of the call will be available on the "Investors" section of the Company's website, www.momentapharma.com. Please go to the site at least 15 minutes prior to the call in order to register, download, and install any necessary software. An archived version of the webcast will be posted on the Momenta website approximately two hours after the call and will be available through August 23, 2010.
MNTA ---
Who is selling at these levels? Under $20.... Anyone else buying more? Any news on TEVA?
Thanks again DD on your great work!!
10nis
MNTA....
Any news on whether TEVA will get approval? I just added to my MNTA position.
TIA,
10nis
MNTA...
TIA DD. MNTA opens up 80%. I think its time to buy some more.
10nis
MNTA....
AWESOME NEWS!! I'm glad I bought a few options yesterday. Anybody know if trading will resume today after the conference call or not until Monday? Also, anyone know if Wallstarb is jumping out of a window with his short position?
TIA,
10nis
<< DO declares Cash Dividend of $0.75 Per Share?
What? .... $.75/year divy / 4qtrs = $.1875/Qtr.
PR's flawed and/or? Whatever....???....>>>
What are you talking about? DO has announced Special Quarterly Cash Dividends in addition to its normal dividend for a couple of years now. They are paying a Special Quarterly Dividend of 75 cents in addition to a normal 12.5 cent dividend, thus this quarter a DO shareholder is going to receive an 87.5 cent dividend.
10nis
You mean NOT GUILTY!! GS do not break any laws. They got screwed by an overzealous SEC and Obama administration that should be focused on doing their real job of stopping illegal activity like ponzi schemes.
10nis
<< Since the laws are enacted by Congress, you are suggesting that the relevant Congressional tax writing committees (House Ways and Means, Senate Finance) draft complex laws in order to increase the employment of tax professionals. This seems dubious to say the least. I would say that complexity results from the constant tinkering with the tax code, its use to encourage certain behaviors and discourage others. And perhaps most significantly, from the constant battle between the tax writers and taxpayers and their advisors. You can see this last in a recent notorious piece of proposed legislation, the proposal to tax "carried interest" of investment advisors as ordinary income (or now, partly as ordinary income and partly capital gain). THe initial drafts of the legislation were short and simple, and then advisors began suggesting ways around the proposed legislation and the legislation was increased in length, complexity and ambiguity. This has gone through several rounds as Congress has listened to some complaints but not others. I see no evidence that any of this is motivated by a desire to increase the employment of tax professionals, rather it is motivated by a desire to raise revenue, appear fair, while granting some concessions to certain favored groups. >>
The complexity in the tax code has been debated ever since the 1986 tax overall was passed. And every year the tax code gets longer and more complex than less - why? Because we've let lawyers (advisors/tax professors, lobbysists, etc.) write and debate the U.S. and foreign tax codes. You honestly think we couldn't simplify the tax code in a way that would result in fair treatment of companies/individuals as well as encourage them to do certain things (buy homes, hire more employees, spend money on green cars or research and development, etc.). One of the problems with simplify the tax code is it would put a significant amount of white collar workers (mainly lawyers and CPA's) in the unemployment lines... And what are you going to do with these lawyers, professors, and tax/CPA specialists? Tell them to build wind farms? Your talking about a good million plus decently to highly paid people.
The "carried interest" debate is typical of the complex system. Why should Private equity firms get favorable capital gains treatment for their ordinary course of business income? Its a joke... Private equity firms provide no real benefit to society that should allow them to be given special tax treatment. Yet, send some lawyers to lobby to get special tax treatment even though they provide no incremental benefit to society. This is a layer of complexity that is unneeded but is common in the tax law as a result of lawyers.
I spent 10 years as a CPA working for the largest public accounting firms and publicly traded companies, private equity firms, etc. in the world in the wonderful world of taxation. IMO,
the tax code will not be simplified until society cannot bare to have millions of people employed as a result of it.
10nis
<< The transportation energy cost argument for US manufacturing is a sound one. >>
Sound argument? That's only if energy costs go up enough and when will this happen? 10 years, 20 years, 30 years from now? Nobody knows. The longer this takes the greater chance new technologies are developed to transport goods cheaply and additional jobs/technologies are lost to foreign countries.
<< - delivery timing is less precise the further away the production, an increasingly important factor in just-in-time mfg;
- instability in the producing country (in some cases);
- exchange rates in a world where the US consumer stops being the consumer of last resort will tend to raise the cost of producing in other countries;
- control/management difficulties;
- technology transfer will inhibit some off-shoring. >>
Delivery timing is a non-issue. Solid management teams have been and continue to manage JIT inventory/production resources pretty seemlessly across all oceans.
Exchange rates - I don't see how exchange rates are playing a huge role in production costs being lower in foreign lands versus the U.S. with the exception of China/Yuan. And even in China I don't see exchange rates being a material reason for the cost differential.
Control/Management difficulties are a non-issue as most well-run corporations send their own people to help run and manage off-shore production facilities.
<< Higher tax rates, bigger government, more regulation (by the clueless), laws so complex that lawyers cannot predict what they mean, promoting solar and wind over nuclear and carbon, and Presidential threats (jawboning) will not employ our people. >>
More regulation (by the clueless)? Are you saying we don't need more financial regulation or regulation that actually does its job? Financial regulation will end up employing more people than without it. SOX-404 regulation is a clear example of additional layer of costs to businesses but it employed a good deal more people than if it wasn't passed. Definitely not the most effective or efficient use of resources however it employed people.
Lawyers give themselves job security by writing complex laws. Why do you think the tax code gets more complex than less complex (even though every year they say they are going to simplify it)? Because it employs a lot of lawyers, MBA's, CPA's, lobbyists, etc..
10nis
<< Didn't the article say that it was going to be a $20 billion takeover? BMY would cost Sanofi well over $50 billion ....I really really do not thing this is remotely close to ever happening. >>
How many times are these articles correct? Not very often. Speculation/rumors are just that. I'm not banking on any deals happening just discussing the possibility.
10nis
<< Agreed. I was advocating for SNY’s buying BMY (not BIIB). >>
I know... I hope SNY acquires BMY as well. If BMY were to get taken out what is your guestimate on take-out price? $30? $32?
TIA,
10nis