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Biotech / Medical : CUBIST PHARMACEUTICALS (CBST) -- Ignore unavailable to you. Want to Upgrade?

To: IRWIN JAMES FRANKEL who wrote (249)	4/20/2011 8:35:22 AM
From: kenhott	Respond to of 252

I think the patent situation is pretty well boxed at this point. CBST reported Cubicin sales up like 14% y over y to $600m run rate. To keep it simple so maybe $800m x 7 years of sales. Market cap is like $1.6B. Like most stocks, people will differ on the attractiveness of this at the current price. Skip to at OT - <reply> The idea of a settlement has been around since Momenta sued Teva re: Lovenox which gave the two sides a basic structure for a settlement. There is maybe just a little bit of wishful thinking in the copied post, I don't think that version would happen. As usual, who knows... but the pieces and some reasonable rationale are there for a settlement if they wish. Back of the envelope, to keep out generic Copaxone till expiration of their Orange Book patents is worth about $2.5B to Teva. To Teva, if they get generic Lovenox, with 3 players, TEVA's gets $2.5B in ~6-7 years. With 4 players, TEVA's gets $2.5B in ~10 years. So Teva could trade 8-9 years of generic Lovenox for no generic Copaxone till mid2014 and breakeven. For Sandoz/Mnta, each year as the sole generic equal ~$1B. So if S/M "gives up" generic Copaxone till Mid-2014 (patent expiration) and gets back 3 years of sole generic Lovenox till mid-2014, they should he happy as they get $3B in sales and gives up less than $2B in Copaxone sales (Best case, S/M launches generic Capoxone ~Mid2012). Yes just approximations, yes S/M doesn't launch at risk, yes the non-Orange Book Copaxone patents don't keep out S/M, yes I am not worrying about price increases, changing market dynamics, etc. etc. In general, like most things, the simpler the better. I would guess that the govt would be attracted to nose around a sloppy deal so the deal has to pass the smell test. The more complex, the more smelly. Something "simple" maybe like this... S/M thinks thatsome of the Teva's Copaxone patents are likely to be upheld. Teva thinks that Momenta technology maybe involved in the manufacturing of their Lovenox. So Teva agrees to not launch their generic Lovenox till 202x, y years before the expiration of Momenta's patent(s). Momenta/Sandoz agrees to not launch their generic Copaxone till after expiration of orange book patents, mid2014. Teva licenses to S/M their non-Orange Book patents starting mid2014. Of course if the FDA doesn't approve, you have nothing to launch which is a large part of the attractiveness of the deal. Both sides can keep up their normal chatter about technology, copying, etc. Why do it? Teva would get more certainty. If Teva guesses right that Copaxone can't be copied, no generic. If they are wrong, now there may be a generic Copaxone Mid2012. For certainty, Teva gives up some/most potential generic Lovenox sales. Which is uncertain. If I were Teva, when I get generic Lovenox approval, the first call I would make is to Sandoz, not to the manufacturing plant for a start up. S/M would get more certainty on Lovenox sales. If no one else can copy Lovenox, no other generics. The risk is now there may be one or more more generic Lovenox by Mid2011. S/M gives up some potential generic Copaxone sales. Which is uncertain. Each side has to appear that they are giving up something to the USA. If only Teva and S/M benefit, it may not be good enough. The terms would move around depending on who has the upper hand with time. Of course no deal if the hands are lopsided. Timing wise for a deal, about now would make sense. If the sides wait too long, any FDA approval would at least complicate things and may lopside the hands. Too much certainty about the Copaxone lawsuit which starts Sep2011 may lopside the deal too. And no other Lovenox approval by end of 2011 may convince people that it may not be coming. Who knows what they are going to do. Teva does think that they can get Lovenox approved this year. But they have been thinking that for awhile. Like I wrote before, it doesn't matter what you or I think, only the FDA vote counts.