From MNTA's 10K notes section:
In addition, Sandoz will,
in the event there are no third party competitors marketing a Lovenox-Equivalent
Product (as defined in the agreement) share profits with the Company.
Alternatively, in certain circumstances, if there are third party competitors
marketing a Lovenox-Equivalent Product, Sandoz will pay royalties to the Company
on net sales of injectable M-Enoxaparin. If certain milestones are achieved with
respect to injectable M-Enoxaparin under certain circumstances, Sandoz will make
certain milestone payments to the Company, which would reach $55 million if all
such milestones are achieved. A portion of the development expenses and certain
legal expenses, which in the aggregate have exceeded a specified amount will be
offset against profit-sharing amounts, royalties and milestone payments. Sandoz
also may offset a portion of any product liability costs and certain other
expenses arising from patent litigation against any profit-sharing amounts,
royalties and milestone payments.
Dew, you mentioned that you thought profit share would be around 50% of profits if no third party competition, and a mid teens percentage (if I recall) royalty if there were third party competitors.
Is this accurate? Or is this prognostication?
I figure profits could be calculated at around 20% of gross sales, so give MNTA 10% of gross revenues as their share if they are the only generic Lovenox.
Say the generic product brings in $1.5 billion (no other generic on the market) that would be $150 million per year to MNTA, maybe up to $200 million if the profit margin is higher.
That alone should put the share price at $750 million to $1.5 billion, on this revenue alone at 5-10x revenues).
Is that about what you are calculating?
Clearly MNTA has other generics coming down the line over the next 5 to 6 years, and they have a potential billion dollar blockbuster in phase II, but just trying to get a grasp for this one drug as this is the big point that will move the stock in the next 6-12 months (yes partnership news as well, but probably not until mid 2009 next year, and less important for big price movement).
Tinker
