Biotech Values

[tinkershaw]

Aren't you forgetting to subtract Momenta's $60 million dollars/yr expenses from the Lovenox cash flow?

No. I am calculating what the earnings stream would be worth as a separate asset to an arm's length buyer. It is a lot like buying a perpetual bond, but with a 10% discount rate, with the principal growing at 4% a year on average for 10 years, and 1% terminal growth rate.

So this valuation excludes all other assets and expenses. What MNTA could sell it for, worse case. And it also excludes any of the cash that MNTA is currently making as the sole generic, which is MNTA gets 1 full year will equal nearly $300 million, and if they get 2 years will equal $600 million.

I did it this way because a company could just shut everything else down and buy MNTA for just this asset. Since veryone, including myself, are trying to figure out what is the rational downside should Teva gain approval in the near future. That is it, if you just value the company based on the asset value of MNTA's financial interest in mlovenox following a tlovenox approval and an authorized generic launched.

Tinker