Replies to post #2423 on Momenta Pharmaceuticals, Inc. (MNTA)

[investorgold2002]

" I think its easier to understand MNTA's value by using a sum-of-the-parts calculation (mL + mC + FOB's + M118 + M402 + Net cash/AR's + IP) versus applying some multiple to EPS. "

well said. If you get it right on the outcome of mL or mC, you could easily make 10 times your investment. This ignoring FOB and M118 and M402.

[Double_Bagel]

Quote:
I am no financial analyst, so this might look like a novice's calculations.
You could say that again. If you haven't done so already, I would recommend you spend some time with the ReadMeFirst file. You failed to adjust your mL sales lower to take into consideration sales lost to other approved products in your scenarios. In addition, you're assuming that no matter what MNTA earns in EPS it deserves a 12 or 15 multiple. In addition, your estimated EPS for MNTA is too high for 2012 and beyond as you failed to factor in taxes (MNTA will likely start paying federal/state income taxes sometime in Q1 2012 as it burns thru its NOL's). I think its easier to understand MNTA's value by using a sum-of-the-parts calculation (mL + mC + FOB's + M118 + M402 + Net cash/AR's + IP) versus applying some multiple to EPS.

Yes, I am guilty of making hasty calculations. However, I have read the read-me-first. I may have to re-read it :-)

Nowehere in the read-me-first are projected calculations like I was trying to do. Yes, let us ignore the multiples. Because those multiples are only useful if the FDA outright rejects T-Enox and we know that it is going to be years before it is approved. So, in that case MNTA has a steady income from M-Enox.

There is still some value in this exercise. Since you have a financial background, maybe you can help with correcting any incorrect assumptions / calculations.

So, strictly for this year based on the following assumptions:

1. No tax implications for 2011
2. Approximately $18 million expense / quarter
3. Approximately 68% profit margin and 45/55 profit sharing between MNTA and NVS
4. Approximately 53 million shares
5. Approximately $200 million sales / quarter as sole generic -- gives us about $0.82 EPS / quarter ((200 * 0.68 * 0.45) - 18) / 53
6. Approximately 10% royalties once there is a second generic.
7. Approximately $100 million sales / quarter with T-Enox. (simply assuming it is halved, even after considering that the price might come down a little as MNTA/NVS may have an edge over TEVA as the first generic) -- Gives us a loss of about $0.15 / quarter (18 - 100 * 0.10) / 53.
8. Approximately $2.5 million milestone payment from NVS to MNTA in July of 2011 if M-Enox is still the sole generic. This adds about 5 cents to the 3rd quarter.
9. No additional income from Copaxone and partnerships in 2011

Using the following assumptions let us look at the following scenarios:

Scenario 1: Sole generic until July 1st.
EPS for the year = 0.82 + .82 - 0.15 - 0.15 = $1.34

Scenario 2: Sole generic until Oct 1st.
EPS for the year = 0.82 + .82 + .82 + .05 - 0.15 = $2.36

Scenario 2: Sole generic until Jan 1st 2012.
EPS for the year = 0.82 + .82 + .82 + 0.82 + .05 = $3.33

Now, does that look correct to you?

I would appreciate it if you could help me figure out what the earnings for 2012 would be after taking taxes into question for 2012 and keeping the rest of the assumptions the same?

I think this will help people greatly trying to figure out how much new money to put into MNTA on a monthly / quarterly basis as long as M-Enox is the sole generic. I know it will certainly help me. That was the purpose behind this exercise for me.

When you have corrected the above calculations and then added the calculations for 2012, you can add your post to the read-me-first so people don't have to spend the time doing these calculations.

Thanks