Replies to post #133639 on Biotech Values

[DewDiligence]

…I was as pessimistic as anyone about the amount of competition - since I assumed the non-subs biosimilars hit the market well before MNTAs generic and take market that cannot be easily recovered just because it is fully subs.

I don’t get your point. A single substitutable FoB is guaranteed to make good money as long as the corresponding branded drug continues to sell well.

[poorgradstudent]

I think this set of royalties implies that Big Pharma assumes more than one fully replaceable - or that Momenta's drugs are NOT allowed to be fully substitutible and thus have full competition. And Momenta couldn't convince them otherwise.

Unless the explanation is that the technology, resolution and analyses methods that MNTA mastered early on are slowly becoming commoditized through the advances made by equipment manufacturers and software programmers. Not so much yet that other companies will unhesitatingly develop the processes themselves, but enough to give MNTA pause regarding the amount of rent they feel they can extract from those seeking the service.

[10nisman]

First thoughts: I am surprised by the boards general response that 'these terms look ok'. I doubt anyone yesterday would have predicted substantially lower terms than MNTA is getting on Copaxone - and they are a lot lower unless you assume that the competition will be very fierce (i.e. price is driven so low that GM is well under 50%).

Please explain how you see today's terms substantially lower than MNTA's terms for Copaxone.

Clearly we need more information on the financial terms however from what is described in the 8K. I read the financial terms as the following:

First 2 FoB's - if MNTA reaches fully interchangeability it receives ~20% of net sales vs. 50% of net profits on mC. With respect to the cost and profit share arrangement, MNTA could receive 30% of net profits + 10% of net sales as royalties.

If you do the math the current deal terms under the cost & profit share arrangement are in the same ballpark with mCopaxone.