Replies to post #9228 on Momenta Pharmaceuticals, Inc. (MNTA)

[urche]

Dew,
Thanks for your candid response to Biopearl's pointed questions. My sense is similar to yours, that no matter what happens to the share price tomorrow, the effect is likely to be short-lived and the patent trial loss does little to affect long term (2-3 yr) value. So, I think the answer to Biopearl's question about whether to sell MNTA at this point depends entirely on one's time horizon as an investor. Short term traders will sell because of the perception that this stock will flounder for many months, and long term traders are likely to see a buying opportunity if they think the market overreacts. I say this adverse legal outcome was priced in.

Urche

[biopearl]

Dew, thank you for sharing your thoughts. Regards, bp

[jbog]

Because of the long time horizon involved you have to reduce the future cash balances. Over the next 3/4 years we'll be lucky if they don't go through 50% of their cash.

[wallstarb]

The issue at hand that people are now baking into the valuation is an expect cash burn of $25m +/- a qtr for the next few years based on the following from the CC - essentially ramping up expenses and at the same time decreasing revenues - the possible outcome of the Amphastar - is the only near term upside potential to the cash flow issues.

"As we discussed in our guidance for 2012, we expect our ongoing operating expense as a net of collaborative revenue to exceed the Enoxaparin royalty stream. Going forward, our Enoxaparin product revenue is expected to decline from the first quarter’s level due to the impact of the competitive product launch in January by Amphastar and Watson and potential for the pricing pressure from the authorized generic. So the $5 million net loss we recorded this quarter could possibly increase to the $10 million to $50 million range per quarter.

Our return to profitability will most likely come from the launch of our generic Copaxone, which if we’re not successful on our patent litigation, could be delayed until the expiration of the patent in the third quarter of 2015. During that time, over the next 3.5 years, our operating expenses will likely increase as we move up to six biosimilar product candidates through development and could further increase if we expand the number of products and our Baxter biosimilar collaboration or if we choose to develop biosimilars outside that collaboration. Our operating expenses are also likely to increase as M402 and potentially our (inaudible) or some other novel drug candidate advances in the clinic."

[jmkobers]

<<Do these items sum to more than $410M? I think the answer is that they do by a wide margin, which is why I intend that MNTA will continue to be one of my largest holdings.>>

What a joke, I am simply not buying the vast majority of this. I would be amazed (but not surprised) if any of the long term holders continue to do so. All the things on your list could have been said over the prior 2+ years and the stock has done basically nothing. Longs, are you happy with MNTA's stock performance over that time period? Really??? If no, ask yourself, how is that going to change over the next 2+ years?

To help answer that, let's examine some of the valuation points a bit more closely:

1 ) The Copaxone program, which could be a major profit contributor in a few years even if MNTA loses the patent appeal and has to wait for Teva’s patents to expire;

- there is value here, but the mCopax allure is no longer nearly as strong as it was last week because absent a win on appeal an approval will not generate revenue until 2015. One of the things that kept longs hanging on despite the dismal stock performance was the hope that approval could come any day, a settlement with Teva would be reached, the stock would instantly double, and they could somehow escape this debacle with a profit. Those days are now gone for the foreseeable future

2) The FoB partnership with BAX

- how much valuation do you get for a product with a very murky pathway that is at least 5 years away from clarity? Not much. Dew has suggested that if they are able to get approval for a fully substitutable FOB it would be the greatest accomplishment in biotech history. Wow! Sounds like a long shot to me. As far as valuation goes, for those longs who recall, when the partnership was announced the stock went up that day 13 cents. Yep. 13 cents. Does that give you some indication how the market values it currently?

3) The M402, IVIG programs && the ever-present buyout vig.

- you are reaching with these if you think any of it amounts to anything of substance at this point. To suggest otherwise is disingenuous at best

So I guess that leaves:

4) The Lovenox franchise—including potential damage awards and royalties from Amphastar/WPI for infringing MNTA’s patents;

- yes there is value here, and what it amounts to is a company that burns 50-60 million dollars more than it earns annually, and hope that the infringement eventually leads to a big payday (that and a quarter will get you a shiny gumball).

Those that are able to see things objectively know I am speaking the truth. To those who cannot, good luck to you. Lord knows your are going to need it.