Biotech Values

[DewDiligence]

>MNTA – Will [Bayer’s Rivaroxaban] have bearing on your holding?<

Let’s broaden the discussion to all of the new oral anticoagulants that inhibit FXa or FIIa; these include not only Rivaroxaban but also such drugs as Apixaban and Pradaxa. Further, for the sake of discussion, let’s assume that the FDA approves MNTA’s generic Lovenox because this is the case where MNTA has the most to lose from competition.

The answer to your question is twofold: i) What effect will the new oral anticoagulants have on generic Lovenox in the US? and ii) What effect will the new oral anticoagulants have on the potential sales of MNTA’s proprietary anticoagulant, M118, which is currently in phase-2?

The new oral anticoagulants—if approved by the FDA––will slow the volume growth of Lovenox to some degree because oral administration will be an advantage in chronic indications. However, much of the market-share gain of the new anticoagulants in chronic settings will come at the expense of warfarin rather than Lovenox. Still, Lovenox will be affected and its Rx volume in chronic settings will likely plateau or decline slightly.

In acute indications such as ACS, the value of oral administration is much less than in chronic settings. Moreover, hospitals tend to be price-sensitive and can be expected to be receptive to the idea of staying with a workhorse available as a generic rather than switching to a new drug that comes with a premium price. Hence, in acute settings, I expect that incremental demand from lower pricing will outweigh market-share losses and allow Lovenox Rx volume to continue to grow.

All told––taking into account both chronic and acute settings––I have no doubt that a sole generic Lovenox in the US market will quickly become the largest-selling generic drug of all time, whether or not the FDA approves any of the new oral anticoagulants.

Now, let’s turn to MNTA’s M118 program. Here, the answer to your question is harder because M118 is in phase-2 and the probability-weighted discounted present value of the program could change markedly during the next few years. What I can say is that M118 has positive attributes that the new oral anticoagulants lack: i) it inhibits both FXa and FIIa; and ii) it is reversible, which it a major advantage in acute settings.

If M118 works as advertised, it should have a clear edge versus any of the orals in the very large ACS indication. Among Rivaroxaban, Apixaban, and Pradaxa, only Pradaxa will IMO have any hope to be a serious competitor in ACS because Rivaroxaban and Apixaban do not even inhibit FIIa. But Pradaxa still loses out to M118 by not being reversible.

In summary, the answer to your question is that the investment thesis for owning MNTA is barely, if at all, impacted by the new oral anticoagulants. Regards, Dew

p.s. Please see #msg-29649766 for background info on all of the drugs mentioned above.



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