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Momenta Pharmaceuticals Inc. Message Board

  • jostu jostu Oct 30, 2011 6:21 AM Flag

    MNTA remains highly profitable ...

    authorized generic is no big deal for MNTA

    MNTA remains highly profitable. My assumptions are as follows:

    US market size of Lovenox in 2012/13 is about 2,2 billion (perhaps more): 0,7 billion brand (Sanofi) / 0,5 authorized generic / 1,0 billion Sandoz.

    This means that Sandoz will report about 250 million turnover with M-Lovenox each quarter. Gross-Profit will be around 150 million each quarter for sandoz. During (only) one quarter they pay Momenta a royalty of 25 million (10%). During the next three quarters Momenta's share of profit jumps to a 45% profit margin. This means Momenta will get 67,5 million USD for 3 quarters.

    25 + 3 x 67,5 = 227,5 cash-flow from M-Lovenox in 2012+. After internal costs and tax-payments in 2012 and 2013 Momenta will earn 2,50 USD per share at least.

    During the next months Shorts and Longs have to answer the question: what's the fair price for a company that:

    1. has about 50 million shares and 400 million in the bank
    2. earns 2,50+ USD per share
    3. has the best chances to gain approval of Copaxone ANDA during the next 18 months
    4. other positive news (collaboration) could occur at any time

    My opinion: we will see a share-price between 17 and 22 in Nov./Dez. 2011. After staying there for a few weeks share price will advance to the range of 20 to 30 during the next 18 months. In case of M356 approval in 2012 we will see 50+

    good luck to all longs. shorts and short-time-traders will lose money with this stock.

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    • A few comments on the prevailing hybrid profit sharing arrangement.

      Gunner's calculation is not right for the hybrid status. It is right to apply the royalty rate (10%-12%)RR to Sandoz sales once another generic is being sold whether Teva, Amphastar or others. but that is not the current situation.

      Jostu's calculation is close to right for the hybrid status. For practical purposes it is good enough for me. But the point beyond which MNTA earns 45% of profits rather than the royalty is not $135M of sales but of "contractual profits". So that number has to be grossed up. I would suggest dividing the contractual profits number by the gross margin with GM being 80% (100% - RR% - COGS%) or (100% - 10% - 10%).

      So if that is done the 45% profit sharing for the remainder of this fiscal calculation year starts at ~$124M and for following full years at ~$169M.

      Look for the emergency appeal to fail, permanent injunction to issue in a year or so, appeal of the case to fail also.

      MNTA will have to enforce the patents every time another company gets approval.

      Those wanting to get around the patents may have to find another way to assure "sameness". That may or may not be worth the cost and effort.

      zip

    • Your analysis is wrong !!!

      This is from the AP report on Monday:

      "Sandoz, a unit of Novartis AG, will pay Momenta royalties of 10 to 12 percent on sales through June 30, 2012. If Momenta's profits on those sales reach $99.1 million and no other generic versions of the drug have reached the market, Momenta will share 45 percent of profits with Sandoz.

      Every fiscal year, Sandoz will pay royalties of 10 to 12 percent to Momenta until Momenta's annual profit reaches $135 million, and if there are no competing generics on the market, Momenta will get a 45 percent share of the profits. If other generics go on sale, Momenta will continue to get royalties of 10 to 12 percent. "

      It is not Sandoz profits, it's Momenta's.

      The Gunner

      • 4 Replies to thegunnerab
      • I my opinion AP cites the MNTA press release not correctly. Compare AP statement to MNTA's press release!! Stupid reporters.

        In my view it is not supposed to be MNTA's profit. That makes no sense at all. Approval of M-Lovenox would have been nearly worthless.

        Look at MNTA's press release: it is Sandoz's profit which will explode in the first quarter due to the low royality. This means that MNTA turns back to the high profit-share very early each year.

      • Gunner,
        I originally thought the same but now
        I think it's the other way around.
        I don't trust AP...they originally stated that it was Sandoz that announced an AG.
        Can't wait for clarity tomorrow.

      • I am long on MNTA.
        I had the same concerns. The hybrid split model reports are not very well written. Profit on sales is not the same as sales itself. So, if you parse the text, one can get confused, especially if you over analyse.

        I certainly hope it is some thing like
        - assuming 1B in Sandoz/Momenta sale and a 12% initial, 45% later model
        $135M * .12 + $865M * .45 = $405.45 for MNTA

      • you guys did not plug in the scenarios the possibility that Sanofi does not launch its authorized generic, actually, what would be a great marketing stupidity, destroying the branded value.

        popa17

 
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