Replies to post #111454 on Biotech Values

[jq1234]

While Novartis AG's oral treatment, Gilenya could gain market share during 2011, Teva could file a new drug application (NDA) with the FDA for its own oral treatment, Laquinimod, in the first half of the year.

How could they file NDA for Laquinimod in the first half of the year when the second phase 3 result won't be known until 3rd qtr 2011?

From Teva's own press release:

Laquinimod received Fast Track designation from the U.S. Food and Drug Administration (FDA) in February 2009. The second phase III study, BRAVO is still ongoing with results anticipated in the third quarter of 2011. Regulatory submissions in the U.S. and the EU will then follow.

[zipjet]

The analysts say that their "base case" of limited US generic competition in 2014 give Copaxone's contribution a net present value of $14 per share; a generic rival in 2011 could result in $5 of downside risk; and if there is no generic competition until 2020, this could result in a $11 net present value upside potential.

That gives an interesting indication of the value these analysts attribute to Copaxone. TEVA has about 0.9B shares.

The "limited [one generic by MNTA, my interpretation] US generic competition in 2014 case. Copaxone is worth $12.6B to TEVA. That drops to $8.1B if in mC is approved in 2011.

The statement is not clear but to be conservative assume that ONLY US generic sales are at risk and mC is the generic.

Thus, the PV difference in $12.6B and 8.1B of $4.5B (0.9B*$5) is attributable to just 3 years of mC.

That represents about $90 per MNTA share**. Again that is just for 3 years PV.

I would argue that the market for C in duopoly should split 50:50 by revenue. If the entire c-market PV is $25 (14+11) per TEVA share the value of that is $22.5B. Assume further that the US represents 70%* of worldwide C sales and that mC is brought to market at a 15% discount. Thus, the PV of a 2011 approval on $22.5B becomes $13.3B for the US (to be split equally) or about $133 MNTA ps.

That would make for a Merry next year. Ho ho ho.

MNTA has a $700M MC - tiny by comparison.

BTW - feel free to correct the assumptions, logic, math or whatever I screwed up. Those calculations look preposterous (had to beat DD to the punch). I did this quickly after reading the post.

ij


* No doubt someone can tell us what that really is - I am guessing.

** Using 50M shares for ease.