Replies to post #103236 on Biotech Values

[biomaven0]

I agree with your sales figures, but I think the royalty is worth more than 6X. No patent cliff, although I suppose there is some chance of another entrant down the line. If you figure that the "earnings quality" is comparable to that of the rest of Novartis, then they should be willing to buy it at 10x and it would still be accretive for them.

So I think I'm more bullish on this than you, although I'm guessing I'm less bullish on 118 and copaxone.

Peter

[DewDiligence]

I agree with biomaven: a 6x multiplier is unduly conservative for a revenue stream with no patent expiration, especially in a low-interest-rate environment.

[stockbettor]

>>I assume that SNY launches an AG<<

If SNY comes out with an AG in the US, can an EU member seek to compel SNY to sell the AG in that country? Since the AG is Lovenox, the clinical trials required to show comparable efficacy and safety (see FDA extract below) for EMA approval would not seem necessary. Even if sale cannot be compelled, is it not likely that the Europeans would negotiate for Lovenox price cuts based on the US AG price? Obviously, if non-US Lovenox sales/pricing would be placed in jeopardy by an AG, the chances of an AG should go down substantially, perhaps even in a multiple generic scenario (at least until competitors obtain EMEA approvals).

From FDA Q&As on generic enoxaparin:

14. The European Union issued guidelines for generic LMWH that require clinical studies for approval. Why is FDA allowing generic LMWHs without requiring clinical studies?

Although FDA regularly takes note of the actions of other national or international regulatory authorities, those actions do not constrain our decision-making. Different regulatory authorities, such as the European Medicines Agency (EMA), have different standards and procedures for the review and approval of drugs and biological products. The differences in the regulatory standards and procedures between EMA and FDA have resulted in different requirements for approval of generic versions of LMWH products (e.g., enoxaparin), as explained below.

The EMA has set guidelines for LMWH products such as enoxaparin that only require the products to contain a similar (as opposed to the same) active ingredient to that contained in another already marketed LMWH product. Because the proposed LMWH product in Europe will contain an active ingredient that is similar to (as opposed to the same as) the brand name product, there might be uncertainties as to whether the two products are the same with regard to safety and effectiveness. Thus, sponsors of a similar enoxaparin product under the EMA framework are expected to provide clinical studies showing comparable effectiveness to the proposed similar LMWH product as well as clinical data showing comparable safety (including with respect to Heparin Induced Thrombocytopenia).

In contrast, FDA requires a generic enoxaparin product to contain the same active ingredient as Lovenox. Based upon the FDA’s scientific experience and expertise, and relevant scientific information, FDA has concluded that the five criteria (see response to Q#8) are sufficient to ensure that the generic enoxaparin product has the same active ingredient as Lovenox. FDA also evaluates impurities in the generic enoxaparin product, particularly with respect to their effect on immunogenicity. With the FDA approach, there is no scientific need to perform additional clinical studies to demonstrate equivalence of clinical effectiveness and safety of generic enoxaparin to Lovenox.

Although the EMA Guideline requires clinical studies to demonstrate comparable effectiveness to a similar LMWH, FDA notes that its approach (i.e., the five criteria) is more sensitive to differences between two enoxaparin products than the clinical studies recommended in the EMA guideline.

http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/ucm220037.htm