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Post by Deleted on Feb 6, 2016 14:45:24 GMT -5
Biotech is not for the faint of heart. The problem, in most cases, is that the people looking at a technology don't understand enough about the science, and the implications of the science, to make an intelligent investment decision. When new technology arrives that is truly breakthrough technology, instead of just claimed breakthroughs, the big pharmas will throw BILLIONS at it immediately. Anavex is a good case in point. They claim to have a new Alzheimer's drug but the balance sheet is a joke. To get a new metabolic drug to market if absolutely everything goes right the first time is on the order of $400 million, and nothing ever goes right the first time, which is why big pharma has an advantage in bringing drugs to market. However, Anavex is not working on a metabolic drug, they are working on a neurological drug that is likely to be orders of magnitude more expensive to get through the trial process. As of the last 10-Q they had just $15 million. There is a reason people are throwing the BS flag on this company. If they really had something credible they would be in a lucrative partnership already. I have been in the industry since the late 1970's and I have never once seen a single promising new drug or device get sandbagged. Pharma executives are not as evil as Hollywood makes them out to be. We have children and spouses and parents and grandparents who get disease and die just like you do. Even if the evil executives were that evil, you can make more money for yourself by launching a truly new technology than you can by sitting on it. I have done due diligence on lots of potential deals, and the warts only became evident after spending a month of more of investigating the opportunity. I normally worked with a diligence team that included regulatory, scientific, clinical, legal, finance, and marketing talent. We looked at everything. We paid to convene private focus groups of practicing physicians (many of them experts in their field) to get their opinions on the potential product and ask a lot of questions about what it would take to get them to prescribe. A lot of times we heard "yeah, that looks good but save your investment capital because here are all the problems with that approach . . ." When that happened we usually sold the patents to a willing buyer who then formed a small biotech company to develop the idea further while we moved onto the next thing. Even with decades of experience in the industry and years of doing due diligence, I got surprised by the due diligence team more often than not. It was often some esoteric little point that I could not possibly have known about, but somebody on the team caught it and stopped the deal because it was a failure waiting to happen. If I could not spot all the pitfalls despite years of deal making, what is the chance of a retail investor truly understanding a biotech. There are many 10-15 biotechs in the entire world that I understand completely (maybe even half that amount), and for most of those I have run them myself or run one of their competitors in the past so I know where all the warts and soft spots are. It is not so much that the game is rigged against retail investors, it is that you are playing a different game than the financial funds. Anavex smells like scam (this my personal opinion from someone who has done zero due diligence on that particular company) so the predatory funds will crush them and the retail investors who have invested. Afrezza was a clever idea, but I suspect that the focus groups turned thumbs down on an inhaled version of a hormone and that was validated by the slow sales after launch. If there was really pent up demand for inhaled insulin, Sanofi could have done zero marketing and still made a go of it. In pharma, if the idea is really good then there is a 99% chance that leading healthcare VCs hold a controlling interest, but if the drug is already in retail hands via a public company then it probably won't be a blockbuster. Afrezza is not too early to be gobbled up, it is too late. Look for companies where a group of healthcare VCs (not just any funds, known healthcare funds) have provided the cash to get through Phase II and well into Phase III, and where those same funds and insiders hold maybe 40% of the stock (Al Mann is an individual and does not count as a VC). The big healthcare funds perform due diligence on opportunities that is nearly as brutal as corporate buyers. If the healthcare VCs have already exited their position in a public company, then take the hint and stay away. If the VCs are still hanging in there, they are expecting a bigger payday. Learn which funds are fundamental investors that pick and choose investments versus index funds that have to own the stock just because it is 0.005% of the NASDAQ index (ask the folks at TASE how buying the biotech index worked out). A lot of institutional money is passively invested (i.e. stupid money), and you need to follow the smart money not just any random institution. Matt, I appreciate your comments and perspective. Your premise is reasoned and seems valid. I have to ask though, if Mannkind were likely not to succeed based on your healthcare VC model then why are companies like Blackrock and Vanguard so heavily invested? I'm not saying these fit the model of your healthcare VC's but they are no slouches when it comes to investing. The other question I have for you is, I suspect you own shares of Mannkind otherwise you wouldn't be here. So is this a case of "Do as I say, not as I do"? How do you reconcile your position here? Thank you. I had the cost basis some where but i cannot find it but lets use $7 even though i know its lower Vanguard assets under management ------- 3 trillion owns 15 million shares x $7 105,000,000 divided by 3 trillion is an investment .000035 % of their portfolio Blackrock assets under management ------ 4.5 trillion owns 19 million MNKD shares x $7 $133,000,000 divided by 4.5 trillion is and investment .000029% of their portfolio GSCO assets under management --- 1 trillion owns 2.5 million shares x $7 = $17,500,000 divided by 1 trillion is an investment .000017% of their portfolio I have only been investing a couple of years but I have family in finance that have helped me with this god awful pick in MNKD stock that I made. When I first bought MNKD I was totally caught up in the social media GSCO mnkd manipulation. I then went rabid about GSCO increased position (like everyone else did) and that is when my family started breaking down the numbers for me. They are not heavily invested in MNKD in their world. Those dollar amounts are heavily invested to us. Not to mention institutional ownership is not black and white as them owning the stock. It could be forced through an index or trackers. Their positions are "chump change" So it was explained to me anyone who repeats institutions are adding and so am I have no clue what they are talking about. Obviously there are institutions that did add and got it wrong as that happens. FWIW both my family members think MNKD is being manipulated. Its not uncommon for small bio companies to be manipulated and when I showed them the FTD list they were shocked MNKD was on the list. Ive unfortunately gotten a grade A education on the market from repeating what other longs, seeking alpha authors have spouted and being told I was wrong and then explained why I was wrong. I will say this. I have no idea if Matt is telling the truth but if he is a short (and I have to wonder why someone of his stature would post on a message board in a stock he has no position in) he is the worst kind of FUD because his the information he participates in sharing is well written and he sounds very experienced and educated.
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Post by Deleted on Feb 6, 2016 14:56:46 GMT -5
I have to wonder why Matt spends so much time and effort bashing Afrezza and MannKind when he owns no shares in the company. He has said that he's an options trader. Guess that explains it. I've been an options trader for almost three decades and have had various bullish positions on MNKD, including being short deep-in-the-money puts and being long (edited to add "long") both deep-in-the-money calls and vertical spreads. It's extremely tough to play options with penny stocks, however, and I have no option positions now. Certainly makes very little sense to buy puts, not much upside potential without taking large positions. May make a little more sense taking bullish positions, be it naked calls or vertical spreads, but, again, not an attractive proposition with low priced stocks. And obviously, if i did have a bullish position, I wouldn't spend so much time trying to inject fear and uncertainty. I have no interest in impugning or questioning Matt's motivations, but my history with MNKD has made me very suspicious. Beyond the obvious high profile characters that have been trashing the company, there are many others who spend a lot of time trying to undermine investor confidence, some blatantly and others far more subtle. Read the comments on any SA article and you'll see the same folks spending so much time doing their dirty deed. WHY? ? And, unfortunately, some are very good. WHY do they spend so much time bashing a penny stock? Greg you and I obviously butt heads and I am fine with that. I know I complain a lot about MNKD lately. You obviously know the market much better then I do with your decade longs experience. I dont understand why someone like you would even read the comments section of seeking alpha article written by a college kid looking for clicks for his beer money for the weekend. It blows my mind that people pay and subscribe to Nate Piles investment letter when the guy fights with these mutant shorts on stock twits. Those shorts are IMO the ones that just piled on. They are not the same shorts that were licking their chops once this was approved by the FDA because their research reflected this would have a hard time gaining traction.
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Post by falconquest on Feb 6, 2016 17:31:09 GMT -5
I've been an options trader for almost three decades and have had various bullish positions on MNKD, including being short deep-in-the-money puts and being long (edited to add "long") both deep-in-the-money calls and vertical spreads. It's extremely tough to play options with penny stocks, however, and I have no option positions now. Certainly makes very little sense to buy puts, not much upside potential without taking large positions. May make a little more sense taking bullish positions, be it naked calls or vertical spreads, but, again, not an attractive proposition with low priced stocks. And obviously, if i did have a bullish position, I wouldn't spend so much time trying to inject fear and uncertainty. I have no interest in impugning or questioning Matt's motivations, but my history with MNKD has made me very suspicious. Beyond the obvious high profile characters that have been trashing the company, there are many others who spend a lot of time trying to undermine investor confidence, some blatantly and others far more subtle. Read the comments on any SA article and you'll see the same folks spending so much time doing their dirty deed. WHY? ? And, unfortunately, some are very good. WHY do they spend so much time bashing a penny stock? Greg you and I obviously butt heads and I am fine with that. I know I complain a lot about MNKD lately. You obviously know the market much better then I do with your decade longs experience. I dont understand why someone like you would even read the comments section of seeking alpha article written by a college kid looking for clicks for his beer money for the weekend. It blows my mind that people pay and subscribe to Nate Piles investment letter when the guy fights with these mutant shorts on stock twits. Those shorts are IMO the ones that just piled on. They are not the same shorts that were licking their chops once this was approved by the FDA because their research reflected this would have a hard time gaining traction. We can argue the validity of an investment in Mannkind forever. Everyone has an opinion and we all know that hindsight is 20-20. I wonder if we can get back to the main thesis of disruptive technology in biotech? To the point of outside source data, I personally do not accept anything written by anyone on Seeking Alpha or any similar source. I prefer to follow the efforts of a man with a 172 IQ that was at one time a billionaire. Tell me why Afrezza has not been embraced by the BP community or make a case that it will be.
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Post by kdaddyfresh2000 on Feb 6, 2016 19:47:14 GMT -5
I was told by someone Close to Sanofi that they really did sit on it. Sanofi has a long acting Insulin I see on tv adds. Cost them 200 million it sit on Affrezza bet the made millions maybe billions on there drug. Was kinda smart but not good for mannkind. Must be a good drug for Sanofi to do this!!! Can you provide details re Sanofi sitting on it?
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Post by agedhippie on Feb 6, 2016 20:19:58 GMT -5
Why? Tracker funds. Same reason all those Israeli funds are holding Mannkind stock, it's non-discretionary. The down side is that unless the market cap picks up they have to sell a lot of those holdings at the next rebalancing. Well, it's interesting that they didn't sell off considerably at the end of last year. I would assume that would typically be a time when funds rebalance their portfolios. So the top five fund holders own roughly 58.7 million shares. Are you telling me that all those shares will hit the market at once? I hear people saying things but I certainly don't see the evidence. Can you support your statement? Rebalancing happens periodically. The typical period for the larger indices is 3 or 6 months. There are some monthlies but they tend not to get tracked because of the trading costs to the fund. Rebalancing on the S&P 500 for example is 3rd Friday of March, June, September, December. The current 13F reports predate the last rebalance and reflect a $3 price, and the last rebalance was at $1.5 and those 13F filings (end of December + 45 days) should start to hit soon. All the shares will never hit the market together unless Mannkind goes BK and I don't see that happening. Also shares hit the market within days of a rebalance, but the rebalances don't all happen on the same day so it's more of a rolling event. Funds can transfer shares off to a discretionary fund if they think it makes sense, they just cannot be held by the tracker.
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Post by Deleted on Feb 6, 2016 20:39:41 GMT -5
Well, it's interesting that they didn't sell off considerably at the end of last year. I would assume that would typically be a time when funds rebalance their portfolios. So the top five fund holders own roughly 58.7 million shares. Are you telling me that all those shares will hit the market at once? I hear people saying things but I certainly don't see the evidence. Can you support your statement? Rebalancing happens periodically. The typical period for the larger indices is 3 or 6 months. There are some monthlies but they tend not to get tracked because of the trading costs to the fund. Rebalancing on the S&P 500 for example is 3rd Friday of March, June, September, December. The current 13F reports predate the last rebalance and reflect a $3 price, and the last rebalance was at $1.5 and those 13F filings (end of December + 45 days) should start to hit soon. All the shares will never hit the market together unless Mannkind goes BK and I don't see that happening. Also shares hit the market within days of a rebalance, but the rebalances don't all happen on the same day so it's more of a rolling event. Funds can transfer shares off to a discretionary fund if they think it makes sense, they just cannot be held by the tracker. Does rebalancing include buying too? To maintain certain weight age? And do they would have to buy more shares
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Post by agedhippie on Feb 6, 2016 21:34:00 GMT -5
Rebalancing happens periodically. The typical period for the larger indices is 3 or 6 months. There are some monthlies but they tend not to get tracked because of the trading costs to the fund. Rebalancing on the S&P 500 for example is 3rd Friday of March, June, September, December. The current 13F reports predate the last rebalance and reflect a $3 price, and the last rebalance was at $1.5 and those 13F filings (end of December + 45 days) should start to hit soon. All the shares will never hit the market together unless Mannkind goes BK and I don't see that happening. Also shares hit the market within days of a rebalance, but the rebalances don't all happen on the same day so it's more of a rolling event. Funds can transfer shares off to a discretionary fund if they think it makes sense, they just cannot be held by the tracker. Does rebalancing include buying too? To maintain certain weight age? And do they would have to buy more shares Yes, if the market cap goes up they have to buy more shares. If they don't buy more then their weighting is wrong and they are not a tracker any more. There are a few funds that are equal weighted (RSP is one I hold that is), but they are the exception and almost all the funds are market-cap-weighted.
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