Biotech Values

[DewDiligence]

Re: Net present value of MNTA’s Lovenox royalties

As a corollary of #msg-81499060, the NPV of MNTA’s Lovenox royalty stream—assuming no help whatsoever from the legal system—ought to be about $200M on a pre-tax basis (the same number as NVS’ expected annual sales) by applying a 10x multiple to MNTA’s 10% royalty.

One could debate whether a multiple as high as 10x is appropriate for this royalty stream; I think it is because: i) oral anticoagulants will have only a modest effect on Lovenox sales (#msg-76857091); ii) I don’t expect further significant price erosion in the Lovenox market because there has already been a lot; and iii) the $200M of assumed annual sales for NVS is only a 15-17% market share (#msg-81499060).

On a fully-taxed basis, $200M pre-tax is worth about $125M.

When you deduct $125M from MNTA’s current enterprise value of about $175M, the current share price has only $50M baked in for all other components of MNTA’s business.