Replies to post #84515 on Biotech Values

[DewDiligence]

MNTA:

You just hit on a pet peeve of mine. You are calculating "diluted shares" ignoring the dollars the company gets for the option exercise, which exaggerates the dilutive impact.

I’m aware of the cash intake from option exercises; however, if you run the numbers, you’ll see that such cash would be tantamount to round-off error in my valuation arithmetic.

At best, cash from option exercises would change my $6/sh figure for the non-Lovenox component of MNTA’s value to $7/sh, which would raise the bottom-line NPV figure for the single-generic case from $55-87 to $56-88. This is hardly enough of a difference to get peeved about! :- )

…the dilutive effect of an option that is only barely in-the-money is minimal…

There are no such options in the scenario in question. Inasmuch as the highest exercise price for any of MNTA’s options held in a material quantity is $23.62 (#msg-42163809), essentially all of MNTA’s options would be solidly in-the-money at the lower bound of my NPV range for the single-generic case.