Replies to post #111138 on Biotech Values

[dink00]

Thanks for the report.

1.8B total revenue for Lovenox seems quite a bit off no?

[Mpower]

Absolutely bizarre price target by GS, in light of the research report from their analyst... The price target and their commentary are completely out of sync.

Maybe they meant to set a $51 price target and inadvertently typed $15 on the keyboard.... see below???

"We see MNTA’s proprietary technology as the basis of approval
Momenta’s technology, exclusively in-licensed from Massachusetts Institute of Technology, enables it to sequence complex mixtures. This technology has been shown to sequence complex sugars (published in leading journals Science and Nature), and we
believe it can be extended to other complex mixtures as well. To our knowledge, no other technology can so thoroughly characterize sugars, making Momenta unique in its ability to fully characterize Lovenox (a mixture of polysaccharides, also known as sugar chains) to demonstrate sameness. We believe that competitors do not have this technology and will therefore be unable to gain approval for the next several years. Moreover, Momenta recently sued Teva for infringement of two patents covering the company’s proprietary methods of producing enoxaparin. If Teva is found to infringe these patents, we believe it is less likely that Teva will be able to demonstrate the interchangeability of its generic version with branded Lovenox"

[mcbio]

Here’s the 12/20/10 Goldman Sachs report on MNTA

I'm sorry but I'm having a hard time equating "low probability of a competitor approval in the next few years" (with respect to mLovenox) and "high probability of generic Copaxone approval" (without even considering the rest of the pipeline) to a $15 12-month price target.

[ghmm]

Thanks as well Dew and Rocky!

If my math is right using their valuation (DCF) and going out 5 years and subtracting cash (I am going by the $4/share figure others have posted) that puts basically $3-$4/share for everything but M-Enox. Although my read is no generic every in their approach so using 10 years that places no value on the rest of the company :-).

[DragonBits]

thanks rocky and dew for the pdf, interesting to read the logic behind their price target for MNTA.

[pcrutch]

Dew, you should write your own report and sell it. It would at least be worth the money spent.

Goldman should stick to their usual corrupt practices, as I don't think they know much about biotech. This is frankly embarrassing and that price target is just a slap in the face.

Happy Holidays

[DewDiligence]

The authors of the Goldman Sachs report on MNTA appear to be junior analysts who have succumbed to rookie mistakes. For instance, the report includes this misstatement that experienced biotech analysts would be unlikely to make:

We believe a tentative FDA approval [for generic Copaxone] is very unlikely before the litigation outcome is known, as the agency has little incentive to act on applications that are not actionable.

Actually, NVS/MNTA’s Copaxone ANDA becomes actionable in about three weeks, when the Hatch-Waxman 30-month stay expires. From that point on, the FDA can issue a final approval for the ANDA, not just a tentative approval.

[zipjet]

From the GS report on MNTA, Investment Profile:

(This is a neat chart. Ranks via interpolation with MNTA then industry ranks by percent.)

Growth 73,26
Returns 98,67
Multiple 4,38
Volatility 100,25

So MNTA is growing faster, with higher ROE-like returns, a very low PE and is very volatile.

I'll buy that. :-)

ij



The legend for the chart:

Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and
market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites
of several methodologies to determine the stocks percentile ranking within the region's coverage universe.
The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate
of various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend
yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month volatility adjusted for dividends.