Replies to post #101378 on Biotech Values

[DewDiligence]

Here’s a slide I saved from Sandoz’s 3-Sep-2008 webcast mentioned in the previous post:



This slide is less than two years old, but there’s something about the content that makes it feel like it was written half a lifetime ago.

p.s. Although MNTA is not cited explicitly in this slide, MNTA received all due credit in other slides from the same webcast.

[DewDiligence]

Re: Share of NVS’ Lovenox developments costs effectively shouldered by MNTA

…Wheeler also made a statement to the effect that the program costs would end up being shared proportionally in the same ballpark as the revenue split.

You meant to say that the sharing of development costs will be proportional to the explicit or implicit Lovenox profit split. This is easy to see if we consider the general case without getting hung up on the actual numbers:

• Let R be the cumulative amount of Lovenox development expenses NVS will reclaim via deductions from its payments to MNTA of MNTA’s Lovenox profit share or royalty.

• Let p be MNTA’s explicit or implicit share of Lovenox net profits. (If there is only one FDA-approved generic, p is known to be approximately 45%; if there are multiple FDA-approved generics, p is whatever share of Lovenox net profits the royalty payments work out to, which can be estimated but has not been disclosed.)

The cumulative amount of net profits from Lovenox that MNTA will forgo in order for allow NVS to reclaim its development costs is the product of R and p, which is (trivially) proportional to p.

I think my own posts on this subject may have made this discussion more confusing than it should be. Where I posted that MNTA would effectively pay half of the Lovenox development costs, I should have said the % was the same as MNTA’s explicit or implicit Lovenox profit share, which is roughly 45% in the case of a sole generic.