Replies to post #102981 on Biotech Values

[jbog]

Dew,

I guess where I'm confused is in your cash flow/ profit model as explained in msg# 101267, you are suggesting that Momenta is responsible for 100% of Sandoz's total development costs.

I could understand if Momenta was responsible for 45% (profit percentage) of the costs, but it makes no sense for them to be responsible for 100% of them. Please keep the 10-K statement in mind.

Keep in mind, that while Momenta pays off their share (at an 50% cash flow rate) that Sandoz will also be collecting their 55% profit.

Would you think that if 6 months from now that if Teva is approved that some credits would flow back to Momenta?

[iwfal]

Dew - Although I haven't even spent 30 seconds trying to understand this before, I'll just point out that there is something at least unclear about the post you reference as an explanation of the repayment of development expenses. You appear to define R=pR when p=0.45. Which makes no sense of course.

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.