Biotech Values

[DewDiligence]

MNTA – Pricing/market share and NPV of generic Lovenox:

If MNTA's product becomes the only approved generic I would tend to think they might price it a little higher than DDs estimate, intentionally leaving some market share on the table. The logic is that by allowing the branded drug to maintain a more respectable market share they would "force" Sanofi-Aventis to NOT launch an authorized generic.

This scenario has been noted by dewophile and zipjet, among others. Clearly, the single-generic case comprises a wide array of possible pricing and market-share outcomes.

Rather than argue for a specific outcome, my approach to assessing the economics of the single-generic case has been to ascertain the upper and lower bounds of the range of outcomes in terms of the net present value (NPV) to MNTA. For the upper bound, my calculation as given in #msg-37875396 yields an NPV of $93/sh. No one on this board has argued for an even higher upper bound :- )

For the lower bound of the single-generic case, my calculation yields an NPV 40% less than the NPV at the upper bound, which comes to $56/sh (#msg-33892399). Interestingly, dewophile’s analysis (#msg-37877823, #msg-37882121) yields almost exactly the same number. If anyone has made a plausible case for an even lower lower bound, I’m not aware of it.

Thus, the NPV to MNTA of the single-generic case may be presumed to lie within a range of $56-93/sh. Assigning probabilities to the various outcomes within this range is a whole other exercise, and it appears that such an exercise would likely produce wide differences of opinion among the readers of this board.