Biotech Values

[DewDiligence]

Re: MNTA’s income taxes

At this rate (nearly 1B annualized Lovenox revenue), MNTA will be paying taxes in Q4

What determines when MNTA starts paying taxes according to GAAP (as opposed to when MNTA actually write checks to the IRS and Massachusetts D.O.R.) is when MNTA decides to reverse the $99M “valuation allowance,” which is a tax liability on the balance sheet that offsets the cumulative tax-loss carryforwards.

MNTA’s NOL’s as of 12/31/10 will shield $219 in cumulative net profit. (See the table on page 94 of MNTA’s 2010 10K: http://sec.gov/Archives/edgar/data/1235010/000104746911001964/a2202508z10-k.htm .)

Hence, if the valuation allowance is not reversed, MNTA will probably not pay GAAP taxes during 2011 unless generic Copaxone launches or there is a new source of license/development revenue from one of the other programs.