Biotech Values

[DewDiligence]

Re: Today’s Oppenheimer report on MNTA

The early feedback on the Copaxone Markman hearing is quite bullish and unexpected, IMO. Teva’s lawyers must find it odd to be arguing the “innovator” side of a patent case, and I wonder if this might subtly undermine their credibility with the judge. (Oppenheimer cited favorable “body language” of the judge toward NVS/MNTA’s viewpoint.)

Let me comment on some of the specifics in the “Investment Thesis” section of Oppenheimer’s report:

We believe an M-enoxaparin regulatory decision is drawing near.

I don’t think Oppenheimer knows anything we don’t. It’s reasonable to infer that a Lovenox decision is near because Craig Wheeler said several months ago that MNTA had given the FDA everything that’s been requested and there were no major issues outstanding that MNTA was aware of.

We see the most likely scenario as both MNTA/Sandoz and TEVA gain approval.

This seemingly contradicts the flyonthewall blurb in #msg-45511006, which says, “Oppenheimer believes that the [MNTA’s] M-enoxaparin may be the sole generic treatment approved.” Most people would interpret the flyonthewall statement to mean that Oppenheimer thought a sole generic approval was the most likely outcome, but Oppenheimer never actually said that. I think Oppenheimer is sleazily playing word games to make it look like they were right regardless of what the FDA decides to do.

Back to today’s report:

While this [multiple Lovenox generics] would lead to a royalty to MNTA vs. a profit-split, we believe approval would validate MNTA's technology…

I don’t agree. To the contrary, I think multiple generic-Lovenox approvals would imply that: i) MNTA’s technology is not unique and indispensible; or ii) the FDA is setting the bar relatively low for the “sameness” of a complex generic, making MNTA’s technology less consequential.

…and [would validate] the approach of gaining approval of biologics via the 505(j) pathway.

The 505(j) pathway is another name for the ANDA pathway that’s used for generic-drug approvals under the Hatch-Waxman act. The only biologics the FDA regulates in this manner are small non-glycosylated proteins such as insulin and hGH. To my knowledge, MNTA has no plans to develop any such products, which renders Oppenheimer’s point moot.

Although Copaxone is not a biologic, Oppenheimer may be trying to argue that FDA approval of generic Lovenox makes eventual FDA approval of generic Copaxone more likely. As previously posted, I think this is a weak thesis.

We believe [FDA approval of multiple Lovenox generics] would lead to appreciation, and believe sole approval of M-enoxaparin, which would drive even more substantial upside, is also possible.

Opinions are all over the map on whether FDA approval of multiple Lovenox generics would make MNTA’s share price go up or go down in the short run, but I don’t consider it a bullish scenario in the long run. Oppenheimer’s saying that approval of a sole generic is “possible” adds no information and is part of the word games I referred to above, IMO.

Additionally, we believe M356's [generic Copaxone] potential is under-recognized at MNTA's current valuation. We believe MNTA is attractive ahead of FDA's M-enoxaparin decision, and based on our expectation for growing clarity on M356's path forward.

At last, something in the report I can agree with wholeheartedly!