Biotech Values

[jb_118]

Assuming the PI is not overturned via an emergency appeal, on any rational basis MNTA’s business is now worth more than it was before Amphastar’s FDA approval.

I'm a little more muted on this and I expect the street to be also. Yes it gives an independent preliminary read to the FDA IP estate, and gives some confidence the value of MNTA IP with respect to enox. One would think that MNTA would get a higher multiple on the EPS, but I'm not sure it offsets the points below:

The launch of the AG bites, and not a little bit. The new hybrid royalty/profit sharing terms terms are going to cost MNTA between $30-$40M per year. Add the economic damage to the mL franchise from price erosion and reduced market share. These I haven't tried to model yet, but they could be another $0-$100M. That combination would reduce the EPS by 25-50%.

A less important point is that it's also true that amphastar got FDA approval without violating the 466 patent, so that removes one potential barrier for future competitors. CW has said he expects people to eventually find a way around the IP estate given the size of the prize on the other side. This leaves just the 886 hurdle. I don't have the expertise to judge how high the 886 hurdle is for future entrants, or for amphastar to design around.

Before Amphastar's FDA approval MNTA was trading at 17.75. I'll be surprised if it gets back there by EOY, and that's ignoring the fact that the market is up 20% since that fateful day.

I hope I'm wrong, but I think this Amphastar cheat is going to stay a costly one to MNTA shareholders due to the EPS blow.