Replies to post #111869 on Biotech Values

[DewDiligence]

4-Jan-2011 Wedbush Report on MNTA

[The guts of the report are shown below, but I uploaded the entire document in pdf format (see link). (Thanks to an anonymous participant of this board for making this report available.)]

click here

›Rating: Outperform

Fair Value Estimate: $27

Analysts:
Duane Nash, MD JD MBA
[phone]
[e-mail]

Akiva Felt
[phone]
[e-mail]

Teva Fails to Secure Approval of Generic Enoxaparin Before End of 2010; Expect M-Enox to Maintain Exclusivity

• M-Enox remains the sole approved generic five-months following launch; ultimate exclusivity likely longer than the street expects. We believe that the overhang in MTNA shares related to a near-term approval of a generic Enoxaparin from Teva should begin to diminish. Recall that following the launch of M-Enox in late July, 2010, Teva was assuredly vocal that its generic version would be approved in the near-term. Indeed, Teva’s CEO of North America stated in early November that he would be deeply disappointed if the company did not receive approval by the end of the year [see #msg-58308206 for further information about the context]. With 2010 now in the past, we believe the street may begin to recognize that M-Enox could remain the sole approved generic for some time. That said, we do expect Teva to eventually secure approval, although we believe M-Enox will maintain exclusivity until at least Q4:2011. Moreover, we note that Teva may provide an update during an investor presentation on Jan 10, 2011 [#msg-58394496]. Should Teva announce a meaningful setback here, we would expect MNTA shares to move above $20. [This is silly, IMO; why does Wedbush think Teva will be honest with investors about setbacks to the Lovenox ANDA?]

• We estimate that MTNA will record between $60-70 million in M-Enox revenues [per quarter] until a second generic is approved. Recall that MNTA currently receives a 45% share of M-Enox profits from partner Sandoz, yet MNTA will be entitled to merely a 9-15% royalty should a second generic Enoxaparin be approved. Our model currently suggests that MNTA will receive between $60-70 million per quarter in M-Enox revenues (Q4:10 estimate of $64.0 million) as long as M-Enox remains the sole generic.

• Potential near term partnerships could provide additional cash. We expect MTNA to sign one or more lucrative partnerships for M-118 and/or follow-on- biologics in the near term, which would likely provide the company with additional cash in the form of an up-front milestone payment. Other potential near-term milestones include progress in the ongoing Copaxone lawsuit and potential updates from Teva regarding its generic Enoxaparin.

• We reiterate our OUTERFORM rating fair value of $27. We continue to believe MNTA remains significantly undervalued and that the current share price presents a very attractive opportunity for investors to acquire shares in a company positioned to benefit immensely from the encroachment of generic drugs and biologics.‹