Replies to post #129728 on Biotech Values

[DewDiligence]

As you pointed out, the rationale for [Teva’s FDA approval] was never that strong anyway.

But most investors—and nearly all sell-side analysts—disagreed with my thesis that Teva’s Lovenox program was inept. Had they agreed with my thesis, MNTA’s share price would have been trading in the 30s or 40s (or higher) prior to Amphastar’s FDA approval.

It would all hang on ‘886. There's an unpatented way around ‘466.

So what? MNTA needs only one blocking patent to prevent a generic Lovenox from launching. This is not an instance where 1+1=2, but rather where 1+1=1.15 or maybe 1.2.

[zipjet]

But even if removing the overhang means a doubling of the EPS multiple you only break even if the AG chops the EPS in half. This is my concern.

This brings us back to profit maximization.

How will SNY price the AG, assuming aL is blocked?

SNY was apparently content not to disturb the market split until aL was approved. IF they want that to continue they could withdraw the AG, price it at or above mL, or provide little of it to the distribution channels. If they decide to undercut mL pricing, they will degrade the whole market and risk mL responding with their own cut further degrading the whole. The only way that SNY comes out ahead is if they can take AND maintain a higher market share than they would have without the AG launch and sufficiently greater to make up for the competitive price degeneration caused by the additional competition. In the short run this seems easily doable to me. But in a longer term I doubt that they can sustain the additional market share in the face of more aggressive competition from MNTA/Sandoz.

So the determining factor may be how long SNY thinks that the MNTA patents will prevail in keeping aL and tL off the market. If I were making the call, and I thought the patents could keep the other generics off the market for some years, I would back off on the AG. But if I judged that the other generics would come on the market within a year, I would go for market share now.

ij

[iwfal]

MNTA -

It would all hang on 886. There's an unpatented way around 466.

1) There is no particular reason to believe that Teva has worked around 466. (e.g. it is possible that 466 and 886 work in conjunction - either/or/and to prove that your batch is equivalent to gLovenox. I'd have to look a little closer, but in a quick read (on that topic) that looks like a valid read of the pair of patents)

2) Momenta may have chosen not to assert 886 in part to keep some powder dry for the Teva suit (vs airing all of their arguments and allowing Teva time to prepare.).

3) Virtually certain that there is a way to work around each of the patents - and one particular case (Amphastar) wouldn't seem to me to be enough to say it was inherently the easier to bypass.