Biotech Values

[DewDiligence]

Re: MNTA valuation in a year

>Where do you see MNTA in the 3 mos - 6 mos - 9 mos timeframes?<

I’ll restrict my opinions to the share price at the end of 2008, i.e. 12 months from now. If you like my numbers, you can tweak them as you see fit to arrive at opinions about where the share price will be during the interim.

The valuation numbers below are based on several assumptions including these:

a) MNTA continues to make steady, but not spectacular, progress on M118 and its other non-Lovenox programs.

b) The US passes legislation enabling follow-on biologics during 2008.

c) MNTA does not sell shares during 2008 before the status of the Lovenox ANDA is cemented.

d) SNY is unable to reinstate its US Lovenox patent during the appeal be heard in early 2008.

e) MNTA does not receive a buyout offer.

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There are currently about 37M shares outstanding, fully diluted. MNTA expects to have $132M in cash at the end of 2007, but I expect a lot of it will be used up in 2008 and hence I’m not adjusting the market-cap figures below by the amount of cash on hand.

I see four cases according to the status of the Lovenox ANDA:

Case 1 – MNTA/Sandoz obtains approval for generic Lovenox and neither Teva nor Amphastar obtain approval: $57 ($2.1B MC). I would have an even higher valuation for this case were it not for the possibility of SNY’s launching a Lovenox “authorized” generic.

Case 2 – MNTA/Sandoz obtains approval for generic Lovenox and Teva or Amphastar do also: $24 ($900M MC).

Case 3 – Nobody obtains approval for generic Lovenox but the application from MNTA/Sandoz remains under consideration by the FDA pending resolution of certain issues: $11 ($400M MC). This case is essentially the status quo with some “regression to the mean” vis-à-vis the unduly negative sentiment toward the stock that is currently suppressing the valuation, IMO.

Case 4 – MNTA/Sandoz receives an FDA rejection of the Lovenox ANDA with no likelihood of a resubmission: $5.50 ($200M MC).

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The next step in this exercise is to assign probabilities to each of the four cases above. But before I post an opinion about that, I’ll wait for feedback to what is posted above. Regards, Dew