Replies to post #110320 on Biotech Values

[DewDiligence]

I can't think of any circumstances under which they need that much cash upfront - e.g. the upfront cash even on a entirely new building would seem substantially less than that.

They don’t need to spend that much money at the outset, but they want a reasonable assurance up-front that they have access to enough cash to bring the FoB program(s) to fruition.

[10nisman]

By end of next quarter they would have >$200M in cash or receivables that would quickly turn to cash (assuming sole generic).

The only issue with MNTA's Lovenox cash flow is Sandoz has 45 days after quarter end to pay A/R (per Rick Shea on the Q3 CC). If those A/R terms remain this way (vs. 45 days after the end of each month), MNTA will not receive any cash flow from Q4 (~$50-60 million) until mid-February 2011. This could be a reason why MNTA has decided to raise some additional cash now (to use to develop FOB's, etc.) versus spend down some of the $110 million on the balance sheet.

10nis

[mouton29]

Perhaps this is naive, but if they really had a specific purpose for a large portion of the cash, possibly they might even disclose that in their prospectus supplement dated December 7, 2010. http://www.sec.gov/Archives/edgar/data/1235010/000104746910010194/a2199632z424b5.htm#uop



But they just have generic disclosure:

Use of proceeds

We estimate that the net proceeds we will receive from this offering will be approximately $ million (or $ million if the underwriter exercises its option to purchase additional shares in full), assuming a public offering price of $ and after deducting the underwriting discount and estimated offering expenses.

We intend to use the net proceeds of this offering for general corporate and working capital purposes. Although we have not yet identified any specific uses for these proceeds, we currently anticipate using the proceeds for some or all of the following purposes: research and development expenses, manufacturing expenses, clinical trial costs, general and administrative expenses and potential acquisitions of, or investments in, companies, products and technologies that complement our business. Pending the application of the net proceeds, we intend to invest the net proceeds in investment grade, interest bearing securities.

[bladerunner1717]

iwfal,

I have to agree with you, but, more importantly, I think Mr. Market might look at this the exact same way, and that would hurt the share price.


Bladerunner

[Mpower]

You could be wrong.

Craig Wheeler stated on multiple occasions that he was frustrated by M118 partnering negotiations, because of relatively unfavorable terms potential partners were proposing. This raise provides MNTA a sizeable war-chest, which would allow them far more flexibility in securing favorable terms for a M118 partnership. (They may need the cash upfront, to posture in negotiations/to secure the deal)

Time will tell....

[ThomasS]

MNTA:"I can't think of any circumstances under which they need that much cash upfront..."
You can't but perhaps Momenta can, right? I suspect management is in a better position to weigh all of the circumstances.

[tekcor_atnm]

So, I would suggest that this is, like it often is in biotech, a sign of some concern about an upcoming binary (in this case the possibility of a second generic).

I agree.

Anyone want to wager $100? I say tEnox is apporved within 6 months.

Also, FWIW, if PPS declines on substantial volume tomorrow then technical indicators (short and long term) will enter a downtrend. MNTA closed below the 50 day moving average today and the 200 day moving average is sitting at $14.80. A close below both of these would be very bearish.