Fiscal Twenty Fo-Yeah

[ktim]

May 7, 2024 20:24:22 GMT -5 prcgorman2 said:

May 7, 2024 18:14:41 GMT -5 cretin11 said:

Well said. “$50 in 5 years” for example. Some of the “rationale” given can also fall into the hopium category.

It is a fair criticism that I did not offer a rationale for my $50/share in 5 years.  What I was thinking of is what I normally talk about which is Earnings Per Share multiplied by Price-to-Earnings Ratio.

To get over $50/share, and assuming a conservative P/E of 17, MannKind would need an EPS of $2.97/share on ~270M shares which implies ~$802M in profit.

NYU, however, estimates the current (Jan 2024) P/E for drugs (pharmaceutical) is 38.84 which reduces the EPS required to $1.29 per share (or $346M in profit). 

pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html

If I remember correctly, the revenue projection on Clofazimine alone was over $1B, so $50/share in 5 years doesn’t feel like hopium.  It feels like something reasonable to hope for.

Appreciate having some rationale for your thinking.  Though I'll comment on a few points.

IBB is at PE of 17.38, and that even factors in companies that are still merely pipeline companies with losses factored into that average that have market caps solely based on the pipeline prospects.  Don't know what other companies NYU is factoring into their pool to arrive at nearly double that number... too small to be in IBB, private companies ??

You need to look at companies in comparable stages of development, and factor in the pipeline.  If 5 years from now we have two additional approved drugs making progress in the market place AND have an exciting pipeline beyond that, it is certainly possible we could have a P/E of 38.  But, you don't magically get a high multiple like that merely for being in a particular sector... that's given to companies with technologies that justify amazing growth prospects.  To have a PE of 38 for a pharma implies the pipeline has even more prospect than the current approved drugs.  If one were basing things on averages you'd take the semiconductor average and then say that NVDA needs to be much cheaper and On Semi much higher... so that they then have the same PE multiple.   And someone pointed out MNKD may be at point of being TTM profitable as of tomorrow with 200+ PE, so right now we'd be helping to inflate the average biotech number (because MNKD is given a lot of credit for its current pipeline).  The value being attached to our pipeline doesn't accrue to other pharma companies simply because they are also developing a drug.

Looking at the graph presented by management it appears Clofazimine is something like $200M rev in 5 years and $400M by 2032. 

We are likely to have an additional 65M shares outstanding 5 years from now.

[prcgorman2]

Thanks ktim. I agree that the “current P/E” from the NYU data is debatable, and I appreciate your additional comments. I don’t know which graph from management you’re referring to. Can you provide me a link?

I got the distinct impression from the last earnings call that the cash raised with Sagard is earmarked for paying off the $230M in convertible bond debt so I don’t assume as much dilution as you, and remain “hopeful” that there will be no dilution.  I agree with castlerockchris that dilution which raises the market cap is kind of a wash but as I’ve said before, I’d prefer an all-cash retirement of the convertible bond debt.