Biotech Values

[iwfal]

MNTA Dilution

i still think their degree of concern is on the order of 10% or less. if they want to move a program forward taking a 10% risk of hurting their business development plans was not worth avoiding 9% dilution in their opinion. i happen to disagree with this because they already will have 170M in cash/receivables on hand, so what does the extra 60M now really do for them? i will give them the benefit of the doubt and hope we find out at next week's cc

Here is a scenario where I could understand and agree with MNTA's dilutive offering right now:

a) They think that in the next 2 or 3 months there is a moderately good chance that tL is approved. Say, they assess a 35% chance of approval in the next 3 months.

b) MNTA also thinks there is a 95% chance that they will prevail in the lawsuit but knows it will cost SUBSTANTIAL $.

c) TEVA is known to be aggressive. Therefore a reasonable TEVA strategy would be to go at risk on a launch with the knowledge that doing so deprives MNTA of cash - and then drag out the lawsuit making it as expensive as possible for MNTA.

Under these circumstances it would be in Momenta's interest to get the cash now to remove this TEVA strategy.