Biotech Values

[zipjet]

MNTA: "They will have to mark down the value for the risk they assign to multiple generic approvals."

... why would they do that?

Perhaps, I do not understand correctly.

But here is what I think you are asking, Why would the analysts reduce the value they assign MNTA, call it a target price, for the risk of multiple generic approvals?

The fact that ONLY mL has been approved does not eliminate the risk that TEVA or even Amphastar could get approval. There is some risk of that. DD has accounted for that in his lower bound of the best case scenario by marking down the value by 40%. The analysts will also discount the value for the possibility of another generic approval.

DD's assessment of a 40% discount for an AG is even more interesting in light of the recent CC explanation that in the case that the ONLY additional "generic" is an AG, that the payments to MNTA become a hybrid of profit sharing and royalty. Just what that may be is speculative. But I would take a guess that all sales of the AG result in a royalty to MNTA and the sales over that level carry the profit split. Thinking of it this way, I think it likely that the appropriate discount would be less than 40%, perhaps a lot less.

So why would SNY want to take an AG to market? Wheeler did say he thought it was not in SNY's best interest. I agree with him. But if they did chose to do it, the bigger the discount to L-pricing, the greater the discount that Sandoz would make. For SNY, both the AG and the lower Sandoz pricing degrade their revenue/income. Still, they may be willing to do it with a small discount to establish the generic IF they thought it probable that other generics were to be approved in the near term.

JMO - certainly not suggesting I know what will happen.


ij