Biotech Values

[DewDiligence]

MNTA/TEVA: This post is an adjunct to the discussion in #msg-56487255
where I said that Teva was behaving like a baseball manager. The chart below
shows the guidance Teva presented to the investment community in Jan 2010,
which calls for Teva’s sales and profits to roughly double between now and
2015 and for the net (after-tax) profit margin to remain level in the low 20s.



If NVS/MNTA obtain FDA approval for generic Copaxone in the next couple
of years, Teva might still meet its 2015 sales goal through acquisitions;
however, because US Copaxone has a sky-high profit margin and contributes
a disproportionate share of Teva’s overall profits, there is no realistic way
Teva can meet its 2015 profit and EPS goals with a generic Copaxone
in the US market.

When Teva made its aggressive 2015 sales and profits forecasts in Jan 12010,
there was no indication that the FDA would soon validate MNTA’s technology
by approving generic Lovenox. Now that the FDA has validated MNTA’s
technology, Teva’s executives probably wish they could retract the 2015
guidance and start over. Since they can’t do that, Teva’s plan B is to behave
like a baseball manager.