Biotech Values

[DewDiligence]

Projecting Lovenox cash flow from the reimbursement liability:

[The $50-70M figure] gives us some idea of part of the cost that MNTA will have to repay. I would assume that "developing" does not include legal costs but I cannot be sure.

Legal costs that NVS incurred pertaining to the Lovenox patent litigation and related maters are considered “development” costs and are reimbursable by MNTA, but legal costs incurred by NVS incident to Lovenox commercialization (e.g. responding to SNY’s lawsuit against the FDA) are NVS’ sole responsibility. Thus, the $50-70M range cited by NVS in the latest Court pleadings is indeed the amount for which MNTA will eventually have to reimburse NVS from MNTA’s Lovenox cash flow.

Based on:

1. $60M (the midpoint of the above range) of reimbursement liability;

2. the fact that MNTA’s reimbursement is capped at 50% of MNTA’s net cash flow from Lovenox; and

3. MNTA’s assertion that it can meet the full reimbursement liability in three quarters or less of post-launch time…

…it follows that MNTA’s net cash flow from Lovenox during the first three quarters post-launch will be a minimum of $60M/0.50 = $120M, which is an annualized rate of $160M.

Note that the $160M figure above represents MNTA’s cash flow from Lovenox net of all expenses except taxes*, and it is a rock-bottom, minimum amount. In all likelihood, MNTA’s net cash flow from Lovenox during the first year will be larger than $160M.

*MNTA will not owe income taxes until it has exhausted its NOL’s, so we may ignore taxes for the time being.