Replies to post #87794 on Biotech Values

[DewDiligence]

MNTA: The potential milestones from NVS attributable to M178 comprised only 8% ($15M) of the $178M of potential milestones payable by NVS under the companies’ amended 2006 collaboration:

http://sec.gov/Archives/edgar/data/1235010/000110465909070614/a09-35662_18k.htm

Although today’s SEC filing says that some of the $15M attributable to M178 could still be received, I don’t think investors should count on it. Thus, the realistic milestone figure from the 2006 NVS collaboration is now $163M, which consists of milestones pertaining to Lovenox and Copaxone.

[DewDiligence]

Why was M178 dropped? It’s hard to say for sure because NVS/MNTA never disclosed what M178 was other than to say that:

• it was a compound NVS was already working on when the companies inked their 2006 collaboration; and

• it was a glycoprotein.

That M178 was a glycoprotein—rather than a polypeptide such as Copaxone or a sugar mixture such as Lovenox—had a lot to do with NVS’ decision, IMO.

Because Copaxone and Lovenox are regulated by the FDA as small molecules, they have the potential to be launched in the US as fully substitutable generics with negligible sales and marketing expenses.

But M178, as a glycoprotein, did not qualify for FDA approval under the ANDA pathway and hence its approvability would have been subject to Congress’ passing enabling FoB legislation. Moreover, an eventual FDA approval of M178 would have required an aggressive marketing commitment to produce meaningful sales if the FDA had designated it as non-substitutable for the branded counterpart.

The need for an aggressive marketing commitment kills the attractiveness of the FoB business model for all but the largest-selling biologics, and M178 may not have had sufficient upside to be worth the trouble.