Replies to post #108845 on Biotech Values

[mcbio]

If MNTA is serious about spending a non-trivial amount of its own money to take M118 through phase-2b/phase-3, MNTA ought to consider a transaction to monetize its future cash flows from Lovenox, similar to what VRTX did with JNJ/ Mitsubishi on the ex-US milestone payments for Telaprevir. I think NVS would pay well north of $1B up-front for MNTA’s cash flows from Lovenox.

Are you taking "co-fund" to mean a literal 50/50 split of development costs? I just took his comment more generally to confirm our suspicion that MNTA may be considering funding a portion of the development costs of the next M118 trial along with a partner. I.e., I think there's still the possibility that MTNA could be considering funding, say, no more than 25% of the costs of the next trial. I think I'd prefer that MNTA not monetize their generic Lovenox royalty stream.

[10nisman]

If MNTA is serious about spending a non-trivial amount of its own money to take M118 through phase-2b/phase-3, MNTA ought to consider a transaction to monetize its future cash flows from Lovenox, similar to what VRTX did with JNJ/ Mitsubishi on the ex-US milestone payments for Telaprevir. I think NVS would pay well north of $1B up-front for MNTA’s cash flows from Lovenox.

Dew, have you spoken to CW or RS about potentially doing a transaction to monetize mLovenox cash flows? Just curious to know their potential interest or if its even something on their radar.

10nis

[dewophile]

re monetizing lovenox asset

to fully monetize the asset you would have to make the difficult assumption (closer to wild guess if you asked me) on probability of another generic entrant entering the market over a specified period of time. if NVS and MNTA don't see eye to eye on these probabilities, the cleanest way to monetize some of the asset is to sell 5% of the profit share and then reduce the royalty by a comparable or slightly greater amount (sales would be lower with another generic, but 5% of net sales is > 5% of profit so i don't think it would be much more than a 5% adjustment to royalty). this way that 5% can be valued as an ongoing stream in perpetuity and the proper multiple applied.

imo 5% should sell for 300M (300M earnings with no risk generic equates to value of asset of about 3B and they would be selling 5% of the 45% profit share or 1/9th of the asset)

if you take whatever up front money they get from a deal for M118, add 300M to the pie, that should cover their portion of development of the product and then some