Replies to post #62196 on Biotech Values

[DewDiligence]

Musings on MNTA’s Valuation

ThomasS, zipjet, JR, and I have assigned probabilities
to the four mutually-exclusive cases described below
to arrive at the fair value figures shown in the
following table. The market caps and share prices
corresponding to each case pertain to the time interval
9-12 months from today (i.e. Feb-Apr 2009).

All posters are welcome to submit their own
probabilities or alternative analyses.

 
           ($57)  ($24)  ($11) ($5.5)  Fair  
          Case-1 Case-2 Case-3 Case-4  Value 
 ThomasS    70%    10%    20%     0%  $44.50 
 zipjet     50%    40%     0%    10%  $38.65 
 Dew        54%    28%    12%     6%  $39.15 
 JR*        20%    40%    25%    15%  $18.10

*JR assigns prices of $35, $20, $10, $4 to the
four cases in lieu of the prices specified below.


Description of four cases:

The following background assumptions apply: MNTA continues to make steady, but not spectacular, progress on M118 and other non-Lovenox programs; the US passes legislation enabling follow-on biologics during 2008 or 2009; MNTA does not sell shares before the status of the Lovenox ANDA is cemented; Sanofi fails to reinstate its US Lovenox patent;
MNTA does not receive a buyout offer.

Case 1: MNTA/Sandoz obtains approval for generic Lovenox and neither Teva nor Amphastar obtain approval within the next 9-12 months. (Sanofi may decide to launch an authorized generic, but it would be the only generic in the market other than the one from MNTA/Sandoz.) Market cap: $2.1B; share price: $57.

Case 2: MNTA/Sandoz obtains approval for generic Lovenox and Teva or Amphastar do also. Market cap: $900M; share price: $24.

Case 3: Nobody obtains approval for generic Lovenox within the next 9-12 months, but the ANDA from MNTA/Sandoz remains under consideration by the FDA pending resolution of certain issues. Market cap: $400M; share price: $11.

Case 4: FDA rejects MNTA/Sandoz’s Lovenox ANDA with no possibility of a resubmission. Market cap: $200M; share price: $5.50.

[DewDiligence]

Thanks, Jon. Your numbers have been added to the table.