Replies to post #9997 on Momenta Pharmaceuticals, Inc. (MNTA)

[pollyvonwog]

MNTA has essentially lost $200m in market cap because of that 34m ($2.5m to MNTA) number for q3. If Rick Shea is accurate about the market (and I've never known MNTA to overstate things), then that # will not be repeated again (assuming no other generic entrant obviously), and will more likely be double that (With 6-8m going to MNTA).

[jbog]

Inasmuch as cash on hand is approximately $7/share, shareholders are currently paying essentially zero for the rest of the company.

And a year from now they'll have $5/share and two years from now they'll have $3/share..........

[Rocky3]

Re: Valuation arithmetic

If the arithmetic in #msg-81550668 is valid, MNTA’s Lovenox royalties—assuming no help whatsoever from the legal system—are worth about $3/share. Inasmuch as cash on hand is approximately $7/share, shareholders are currently paying essentially zero for the rest of the company.

I find this rationale quite misleading. The use of present valuation of cash flows which are as uncertain as these is next to impossible. Just look at the changes over the last couple quarters which have been very significant. Management has been very wrong about the future "run-rate" so far and there is no reason to think they have any better insight as to the future now.

Plus how does one value the debit for future costs? It is clear that there is no chance (other than a Amstar appellate reversal and decision/settlement) of net income in '13. So cash is not cash in this case. And since the market is future discounting mechanism, it is much more certain of future costs than future income. Those of us that are long are willing to bet on the future income, but is what it is - a bet. Just don't think that it is a riskless one (as has been very true so far, even for those that thought that 14 was a safe price).

JMO.

[io_io]

Dew:

If the arithmetic in #msg-81550668 is valid ....

Meaning perhaps you are well aware that it is invalid, because you conveniently omitted that MNTA itself has to pay royalties on mlov?

And that of course the royalty revenue will continue to fall as gross margin declines further.

... MNTA’s Lovenox royalties—assuming no help whatsoever from the legal system—are worth about $3/share

The valuation is incorrect, and the legal help is looking more remote.