Post by prcgorman2 on Dec 21, 2022 11:25:24 GMT -5
I doubt it, but I tend to be skeptical. So why ask the question? One answer is because we were chatting about it a lot in a Tyvaso DPI waiver thread, and I thought the moderators would appreciate an effort to stop polluting that thread with off-topic comments.
As background for context, sayhey24 and hellodolly made the following observations in the thread on "FDA Awards PRV - Tyvaso DPI - Rare Pediatric Disease Product":
sayhey24:
"Dolly - they were given the thumbs up by the FDA to use the voucher for a "forthcoming New Drug Application" for Tyvaso DPI which will be used for a Rare Pediatric Disease. What the time line is for "forthcoming" IDK. This could be the reason for the recent pps rise but I have a feeling we have a new interested party with their eye on MNKD. Just a feeling with no solid evidence.""
To which hellodolly replied:
"The volume for the last few weeks has been closing above their 10D avg. I looked back and out of the last 36 trading sessions, 22 were above average volume days, nearly 66% of the sessions. Many of those had large volumes flowing during the last 30 minutes of the trading session. One of the threads on PB, I made a comment that I've been watching this pattern and thought it was quiet accumulation."
Those two posts triggered me to agree with their observations that the SP move up and the daily volume and uptick patterns looked like "quiet accumulation" which could just be institutional investment or some other reasons we're not aware of, but one of the reasons could be accumulating 5% of outstanding shares on the "cheap" privately with an intent to gain another 46% of shares (at least) in a public buyout move. This then led to the predictable discussion speculating how much would it take to buyout MNKD, et cetera.
The last question posed on this topic was "Why would MNKD want to sell?" The obvious answer is, "To benefit the shareholders." The reason is because the purchase price is typically a premium on the existing valuation of the company such that purchase and ownership in the merged company (because typically the purchase is based on some exchange of shares) is more attractive than a go-it-alone strategy.
Interestingly, although the share price for the acquisition target typically rises, the share price for the acquirer often declines, increasing the premium paid by the acquiring company (which is another reason to accumulate shares "on the cheap").
I suggested MNKD's target price at current valuation might be as high as $10 or even $15 which is a 2x to 3x valuation. That touched a nerve. Plenty of response why that is not realistic mostly based on the history of valuation in acquisitions historically.
I've no argument with those facts or that logic. But I did mention why valuation based on a simple Assets + Goodwill + Future Cash Flow (FCF) sort of valuation was maybe not adequate for Mannkind and that in my mind the "wildcard" is Afrezza.
Here's what I said (with edits):
"As mentioned before, buyouts tend to increase the share price of the acquisition target, sometimes dramatically. So an offer to buy at $15 on a $12 stock might be a naive(?) attempt to [prevent] the purchase price [from exceeding] $18 to $20. Is MNKD worth a $5 to $6B market cap? I think the wildcard is Afrezza.
If Afrezza can have even 10% market share of prandial insulin, the answer is obvious. Afrezza is human insulin in inhalable form. It exhibits ultrarapid action, just like, um, well human insulin. If the question is whether the product quality is worthy of 10% of the market, again, the answer is obvious. So the questions that remain are, can prescribers be convinced of it’s superiority and SAFETY (SAFETY, SAFETY), and can Pharmacy Branch Managers be convinced to provide Tier 1 coverage? And on this last question, the recent Inflation Reduction Act language supporting inhalable insulin for Medicare patients might have a significant bearing.
The Tyvaso DPI news is very good and seems to be getting better with the news that started [the "FDA Awards PRV..."] thread, and for those of us who hoped Tyvaso DPI might be the “shot” in the arm MNKD needed to get over the breakeven hump and become profitable to get access to operating capital on better terms and to be able to do more development and marketing, it finally seems to be materializing. If I was a business development director looking to potentially buy an undervalued company before it became very expensive, now might be the right time."
If Afrezza can have even 10% market share of prandial insulin, the answer is obvious. Afrezza is human insulin in inhalable form. It exhibits ultrarapid action, just like, um, well human insulin. If the question is whether the product quality is worthy of 10% of the market, again, the answer is obvious. So the questions that remain are, can prescribers be convinced of it’s superiority and SAFETY (SAFETY, SAFETY), and can Pharmacy Branch Managers be convinced to provide Tier 1 coverage? And on this last question, the recent Inflation Reduction Act language supporting inhalable insulin for Medicare patients might have a significant bearing.
The Tyvaso DPI news is very good and seems to be getting better with the news that started [the "FDA Awards PRV..."] thread, and for those of us who hoped Tyvaso DPI might be the “shot” in the arm MNKD needed to get over the breakeven hump and become profitable to get access to operating capital on better terms and to be able to do more development and marketing, it finally seems to be materializing. If I was a business development director looking to potentially buy an undervalued company before it became very expensive, now might be the right time."
Carry on my wayward son(s and daughters)...
