Biotech Values

[mcbio]

The expectation of low GMs strongly implies significant sharing of the market - e.g. that mBios get perhaps 20% of the total market (e.g. non-subs get 45% of market, and mBio shares subs market with branded plus authorized generic). So, take a biologic currently getting $2.5B in US in 2010, and in 2016, just before generics enter, it is getting $3.3B. Due to competition with generics total $ value of market shrinks to $2.5B (more scripts - but at much lower price). mBio gets 20% of that market (i.e. $500M). Royalty to MNTA is 20% - or $100M/Yr.

Not much compared to Copaxone or even Lovenox.

Even with 6 of these generics, some with higher royalty and/or higher sales, the total will be, perhaps, $1.5B - in 10 years or so. On any kind of reasonable risk adjusted NPV basis I think it is clear that Lovenox and Copaxone is where the value is.

You can tweak the numbers in either direction and get a meaningful difference either way. Hard to predict exactly how the numbers will pan out. But what if the MNTA/BAX FoB actually gets 30% of the market for a substitutable version of, as Dew alludes to, a $5B/year Humira? And what if that actually comes to market in 7 years, as opposed to your 10 year number? That's going to require a bit of an adjustment in your NPV.

In any case, more important to me than the importance of the FoBs relative to mL and mC is what all of this collectively means for MNTA's valuation. If the AH pop holds true, it appears we'll be looking at about a $900M market cap for MNTA with the FoB deal now inked to go along with mL, the prospect of mC, cash, and the rest of the pipeline/technology. Curious if you have any thoughts on MNTA's risk-reward at current valuation in light of the now finalized FoB deal to go along with the rest of MNTA's assets.