Biotech Values

[DewDiligence]

Based on the table in #msg-56379861, we can surmise what Brugger is likely doing. He recently exercised approximately 1/3 of his total vested options and will presumably hold off on exercising the remaining 2/3 until calendar 2011. It made sense for Brugger to exercise 1/3 of his options immediately because:

• the minuscule exercise price of $0.23 on the exercised options made it impossible for them to fall out-of-the-money;

• the exercised options had the biggest ordinary-income tax hit of any of Brugger’s options, and the tax rate on ordinary income may be higher in 2011;

• he started the one-year capital-gains clock on the exercised options as soon as possible;

• he eliminated additional ordinary-income tax on the exercised options from increases in MNTA’s share price.

All of the above bullets except the first one apply to the 97,648 options Brugger has yet to exercise. On these options, however, the ability to defer the payment of taxes until Apr 2012 combined with the slim but non-zero chance for the options to fall out-of-the-money presumably outweighed the combined effects of the second, third, and fourth bullets above.