Replies to post #99453 on Biotech Values

[DewDiligence]

Re: MNTA CC post-mortem

Here is what surprised me---the lack of clarity on how much of the development costs MNTA will need to repay to Sandoz from profits. That, plus the 40-50% profit sharing and uncertain royalty makes for difficult modeling. How did you deal with these uncertainties in your valuation model, Dew?

Use 45% for the single-generic profit split and 10% for the multiple-generic royalty rate (net of the small royalty MNTA owes to MIT) and you won’t be far off, IMO.

The Lovenox development costs to be repaid to NVS can be calculated from MNTA’s financial statements during the past few years. (It’s a lot of grunt work, but conceptually easy.) Note that no cash will flow from MNTA to NVS; rather, NVS will repay itself by making deductions from MNTA’s profit split or royalties.