Replies to post #102862 on Biotech Values

[DewDiligence]

…initial [Lovenox] sales at time of FDA approval may have a much higher margin as the product costs, not including shipping, would already have been incurred and expensed.

This would be a consequential distinction if MNTA were booking Lovenox sales and COGS on its own income statement, but that’s not how the NVS-MNTA Lovenox collaboration works. Rather, MNTA books as revenue its contractual share of the collaboration’s net profits, adjusted for NVS’ recouping its development costs.

To the extent that near-term shipments of Lovenox had their production cost previously charged to R&D by NVS, the profit margin on these units is increased, but so is the cumulative development cost that NVS is entitled to recoup. The net effect ends up being a wash when all is said and done.