Replies to post #107120 on Biotech Values

[zipjet]

Well my reason for rejecting "never" is not based on the science as much as on the economics.

Yep.

Understand.

My reaction is to reject "never" intuitively or just because I will not last that long. :-)

But I do not really care about "never".

What if it takes them 5 years? This debate will have ended years before that. :-)

On your economic argument. Assume for the moment that Teva is splitting the pie with another company. The question becomes a closer one. Assume further that they have other promising targets. What will have the highest ROE?

ij

[Mpower]

Biomaven,

If that were true Watson Labs and their partner Amphastar would have invested the funds to obtain approval. Technology differentiation is not always about $'s, it's also about talent and innovation. (money can help recruit talent, but innovation ....). TEVA may not be able to get there without significantly more time, or they may decide they have a major technological gap and no idea how to proceed to overcome the gap.

[go seek]

That means it would be worthwhile for them to spend $500m to get it approved.

one could argue that w/ m-enox approval Teva may decide not to make the investment required... certainly now there is less incentive to do so. Agree w/ Mpower that $ are not all that is needed to make the equation work here (@ least in the short run).

[DewDiligence]

Teva can see a $250m/yr [Lovenox] product if they get approval. That means it would be worthwhile for them to spend $500m to get it approved. I have to believe that given Teva's overall resources, $500m and the FDA roadmap can achieve approval.

Time is also a factor; indeed, for a company as affluent as Teva, time is the main factor, IMO.

If Teva were to start from scratch, which is what I believe they would have to do to produce a serious Lovenox candidate for the US market, it would likely be 2016 or later before they could have a marketed product—if they could even do it at all. When you discount the potential cash flows back to the present and adjust them for the probability of failure, the economic impetus for the project is not nearly as compelling as you make it seem.