Replies to post #128511 on Biotech Values

[iwfal]

However, the kinds of settlement terms outlined in #msg-67801477 would not forfeit as much cumulative economic value as exwannabe suggested in #msg-68017105 because of the horizon issue mentioned in #msg-68017552.

First, let me say I think your settlement scheme is reasonable. But that said, in comparison to an assumption of absolutely no other Lovenox's entering the market the above is simply not true. Your proposed settlement terms are baking in a very substantial risk of other Lovenox's entering the market well before mL patent expiration. See below for an NPV illustration of why your settlement terms cannot be just about loss of overall Lovenox market to other thinners:

1) Ex's discount rate essentially assumes the Lovenox royalty cash flow has dropped to 20% of its current value in a decade. Seems reasonable - probably even a little harsh. (I'd take the over in a bet that total Lovenox market in a decade is 20% of current total Lovenox market). And certainly not ignoring the "horizon issue".

2) Your settlement amount is NPV equivalent to a discount rate in excess of 100% - i.e. you are assuming that in 5 years even if no other generic entered the market the mL profit share to Momenta would be less than 5% of what it is now. Seems highly unlikely (i.e. given the just-described math it is clear that your settlement amount is NOT even close to equivalent to an organic loss of lovenox share to other thinners and the vicissitudes of time - instead it appears to bake in a fairly large risk of patent-suit loss or patent bypassing).

Bottom line - your proposed settlement appears to be assuming the equivalent of a less than 40% chance of complete success in this and other methods of preventing entry of other gLs and this is on top of an assumption of a fairly dramatic loss of Lovenox share to non-Lovenox thinners.

Ok, so all that said, I don't actually think your bottom line is unreasonable - but it is a huge discount if people were assuming that Momenta was going to get $300M+ every year for even 5 years. IMO suits are always riskier than people think and even if Momenta wins every suit I think it is highly likely the other generics will work with the FDA and find acceptable proxies over time. Might take 4 or 5 years - but I'd be surprised if eventually the FDA didn't allow some proxy product checks.

PS Imagine the negotiations with Amphastar - if Momenta tries to drive for, for instance, a 5 year delay I would expect Amphastar to take their chances on getting a different methodology approved by the FDA. But a 2 year? - given the FDA's pace it would seem laughable to assume that Amphastar would try to argue that they could get a different method approved in that time. And a 3 year - ok, maybe they could get a different method approved through the FDA. But the beauty of your (Dew's) settlement proposal is that at the first year that a reasonable company might expect to be able to get a proxy approved by the the FDA you are asking only for a royalty consistent with the risk.

[HattieTheWitch]

In other words, following a favorable settlement with Amphastar, the headwind on MNTA’s share price from worry that a new competitor will destroy MNTA’s lucrative Lovenox franchise will finally be gone.

How sad that the result of stealing another companies IP is that the creator of the IP gets a) their IP stolen and b) less income than they otherwise would have had.

Where's the incentive not to steal? :-(

I disagree with that part of your conclusion - if stealing another company's IP results in nothing more than a settlement, MNTA's IP is not worth nearly as much as has previously been priced into the stock. So... replace uncertainty of competition with a reduction in income. Not a good tradeoff IMHO.

[alertmeipp]

so will the same happen to mC? I seriously doubt MNTA will settle - it will set undesired precedent.

[zipjet]

MNTA - my WAG:

- no settlement (near term - say 3 months);
- TRO dissolved and no PI issues;
- SNY launches AG;

I do hold out the possibility that Amphastar infringes. (This sets up a later royalty settlement possibility.) Given the order for expedited discovery, they better be very careful what they withhold. Withhold the wrong documents and they create the predicate for treble damages.

ij