@Tuhorangi,It's interesting as my views have changed as I...

@Tuhorangi,
It's interesting as my views have changed as I understand more. As said I am a newbie in this sector. Even in the short 14 months or so I have been holding Mesoblast shares, I have come to realise more and more the risks behind the attempts to develop new drugs and therapies. Generic drugs as I understand it, should only be produced once a patent has expired. So I agree with you the value of the patent portfolio owned by Mesoblast is everything and the cost of maintaining is just a part of doing business. Intellectual property theft is unfortunately here to stay. Harder to get away with with drugs but only in parts of the world where IP can be legally protected. Let's not kid ourselves that should China decide to ignore our patents, they will get away with it in their internal markets. I believe that India and Brazil have a track record of IP theft when it comes to drugs. Happy to be wrong (please correct me if you know different).

There seems to be a growing believe that under the guise of Pandemic and national interest, that it is ok for governments to steal the IP from Biotech companies and allow poorer countries to "produce/receive their own". I am not going to get into any deep philosophical argument over whether this is right or wrong, this is a investment forum and theft takes away from the value of the company we are investing in. Go back to the Aids Crisis in Africa.

Article from 2001
More than 40 pharmaceutical companies, many of them the world's largest and most powerful companies, will be taking the South African government to court to try to stop it enacting legislation aimed at reducing the price of medicines for South Africans.The Medicines and Related Substances Act of 1997 was fought strenuously by the multinational drug companies during its passage through parliament. As it was passed, the industry gave notice of its intention to have the law overturned, and in so doing effectively prevented the act coming into force.Although the law also seeks to regulate the marketing and distribution of medicines in South Africa, it is seen largely as a test case, with international implications, for the use of parallel importing of cheaper drugs and generic substitution for brand name drugs.The South African government is currently exploring changes to its Patents Act as a vehicle to import cheap generic drugs from countries such as Brazil and India. The major issue in the minds of millions watching the trial will be the HIV/AIDS epidemic, with at least 4.2 million people in South Africa carrying the virus. It is common knowledge, and not contested, that the drugs needed for South Africa's HIV/AIDS epidemic—to treat its opportunistic infections, as well as to attack the replication of the virus with antiretrovirals— are too expensive.The issues, however, extend to many other medicines supplied at higher cost to South Africa than to many other countries. The rising demand for cheaper generic drugs—and the refusal of many drug companies to contemplate any major concessions to it—is rising up the international political agenda. Through the forum of the World Trade Organisation, the United States has attacked Brazil's programme of manufacturing generic drugs to treat HIV and AIDS. At the same time, an Indian generics manufacturer, Cipla, has offered to sell a generic version of the triple combination antiretroviral therapy to Médecins Sans Frontiàres and to governments in developing countries with a significant HIV/AIDS problem.

Again I am not getting involved in the moral issue, Aids was at the time, the biggest threat to the Economic stability in many countries, apart from the cost of human life. These drugs were expensive to develop and if I recall many a failure. It was a race against time. Familiar to now, except that it was being past on (other than blood transfusions) by the sexually active, which was the younger generations and hence past on also to the fetus. Therefore because of the cost and the massive demand, simple solution, produce your own generic drugs (India and Brazil have all the capabilities) and then recoup some of the cost by selling to others who don't have the budget or technical ability to produce their own version.


Now let's just take this history and apply it to Covid Ards. Biden is already (and many other governments are joining in) talking about suspending the patent protection for vaccines. Now that is a more nuanced argument as I believe that some drug companies benefited from Government assistance, but how many people who will benefit from Rem-L will it take before the howls of protest start at the cost of the therapy. That cost will come down as the production ramps up and so it should. However this is a risk factor as it will have a knock on effect on the cost of Rem-L for other treatment areas.

Look I am not negative at all about this at all. The vaccine IP is the one that will take the hit (imo) but we need to be aware of this.

Moving forward, to me the key is not Novartis, it is the quality of the data and the meetings with the FDA. If we got EUA for Covid Ards, given the lessons learnt of when to treat (sweet spot) and what else potentially to treat it with (cheap steriod) to enhance it efficacy, the funding of this EUA and the subsequent funding of the additional manufacturing, will not be problem. If you care to go back through posts, @otherperspective wrote about large funds that will step in to fund this sort of investment so will governments. These are guaranteed income streams that are to all intents and purposes inflation proof. There is a lot of money sitting on the sidelines with various risk profiles and it has to be put somewhere to generate a return. Do we really need Novartis? Honestly the more I look at it, the more I am relaxed about their decision.

This is still a high risk investment but as I have said before, the ability to invest and hold while time sorts out the current problems, reduces that risk to me, to an acceptable level. Moving forward as I have said I believe the start of the really good news is imminent. You guys who were in it from the start, well done for staying the course, much kudos to you. It is why I am so against capital gains tax that takes no real account of investment time held and risk. (UK).

My fear it that the potential is so huge, that a big chequebook is flashed now to cut us off before we can really benefit. Fingers crossed those with the holdings that count are "diamond hands"

Novartis, Revenue roughly $50B, Net income about $8B and a value of about $200B. (someone with a better understand of accounts please add some expertise to this)

Well when you look at what is in our pipeline take a stab at what you believe our revenue will be in say 2 to 5 years. Bear in mind that ours will if you believe in the therapies be growing rather quickly. Novartis seem to have been stagnant for a number of years. So what multiple will you apply to the revenue? Novartis prides itself of growing its dividend each year. Well unless you can grow profitability, eventually that has to come to an end. Always painful to a income producing share when that happens. So we might very well be on the cusp of a "takeover sweet spot". If it happens now, I believe it will not be good for us in the medium term, let alone the long term.

Sorry I got carried away again. I was trying to answer your question on the importance of Patents. Really this post should be two words (and much better for it of course)

Very important

Regards
Yelrom