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Post by mannmade on Sept 1, 2016 11:55:03 GMT -5
Don't Buy The MannKind EpiPen Hype Sep. 1, 2016 9:30 AM ET|27 comments | About: MannKind Corporation (MNKD), Includes: MYL Orange Peel Investments Orange Peel InvestmentsFollow(4,042 followers) Long/short equity Send Message Summary
MNKD is the carcass of a failed venture with a share structure constantly being blown out and no future cash flush profit generation prospects on the horizon.
It was recently announced they could be looking at producing a generic version of EpiPen via an inhaler, an idea we can only see as a total disaster.
We're not buying the hype and we're certainly not buying MNKD.
By Parke Shall
MannKind (NASDAQ:MNKD) is a cash burning company that we have been skeptical about for years. We haven't written about it as much as we would like, but the company has had a long strange journey, most recently culminating with the unfortunate death of the company founder and what some are also considering to be the unfortunate death of the company's flagship product, Afrezza, an inhalable device for administering insulin.
MNKD is a company with an enterprise value of $541.2M at its current share price of $0.80. The company currently has $63M in cash versus a hefty $222M debt load and the company had an operating cash flow burn for the last 12-month period of an astounding ($84.71M). This pins the company with less than 4 quarters of cash to survive, should it continue to burn cash at the same rate as it has over the ttm period.
Here's what the wild strange trip has looked like for the company in terms of market cap and share issuance.
MNKD Market Cap Chart
MNKD Market Cap data by YCharts
The short history of MNKD was that it was a company that was striving to make an inhalable insulin device for use by diabetics. The company developed its product in house and got it approved by the FDA in early 2013. From that point, however, things slowed down drastically and the company was unable to find a long standing partner to help it sell and market. Reception was tepid from the onset, and MNKD had a lot of trouble filling out its valuation. Hence, the stock basically crashed over the last two-year period, as you can see in the chart above.
Much of the difficulty was in the inhalable method of delivery. Rather than scrap it and move into an(y) other business, MNKD has stayed with the inhalable product they have and are trying to pair it with other medicines, including epinephrine.
Since then, MNKD has been a company that has struggled with vision. There is no more telling of an example of this than the company's emotional attachment to its broken model by trying to further other inhaled drugs. Lately, MNKD stock has gotten a bump from recent press that they are going to try and develop a generic EpiPen. Since the Mylan (NASDAQ:MYL)/EpiPen pricing controversy is everywhere, it's been a great way for MNKD to get into the news, like this writeup on Yahoo Finance,
We view that as our lead program at this point," News Times quoted MannKind's CEO and CFO Matthew Pfeffer as saying. "Not because of what's going on in the news today, but because it just makes sense. It's been in development for some time."
Pfeffer also acknowledged that the company expects to meet with the U.S. Food and Drug Administration (FDA) later this year and hopes to file for an Investigational New Drug designation in early 2017. Should the product be approved, he has "every reason to believe" it will be "much cheaper" than the EpiPen.
While MYL (a company mainly focused on generic drugs) has already come out and said they are developing a generic, MNKD continues to throw its name in the hat despite:
1. The inhaler already seemingly being a failure due to difficulty of administration.
2. No previous experience in developing generics.
3. A long timeline to approval in a market that already has several competitors on market for MYL's EpiPen.
The reason that MYL is able to raise the price on EpiPen so much is because the patent is in the auto injection device. It's the perfect method of quick delivery for someone suffering from anaphylactic shock. There are other competitors out there, but the EpiPen brand and method of delivery is clearly the preference in the anaphylactic shock market. With MYL having the patent and the knowledge already, this puts them in a perfect spot to develop the generic.
A great article from early January of this year lays out other reasons an inhaled EpiPen isn't likely to work,
The current injected forms of epinephrine have proven to be cost effective and fast acting when it comes to treating a patient for their anaphylactic events. Should MannKind proceed with their attempts to get FDA approval, they would be entering a market already crowded where companies have a history and a cost effective product. As with Afrezza, the creation of a dry powder formulation would erode the ability for MannKind's product being cost effective. Pfeffer and Dr. Urbanski, surely know the history of Afrezza and the pricing issue they are facing.
Assume that MannKind moves ahead with this project. Let me ask one simple question? Anaphylaxis events need quick remediation and often a follow-up check by their attending physician. If you experience a sudden attack and you go into anaphylaxis shock, would you want the EMTs, your friend, or work associates having epinephrine available as an EpiPen injector, or where you will have the inhaled form of epinephrine. Remember, anaphylaxis shock can render you into an unconscious state. With the Epi-pen the dose can be given directly through your clothing---as quick as one pulls the protecting cover from the injector. With an inhaler you would have to load the dosage and then possibly be placing the inhaler in the mouth of an unconscious patient. Which would you choose to carry with you, at all times, if you suffer from this condition? Never forget! With Afrezza, MannKind is admitting that it has been a hard task trying to train physicians and diabetic patients how to use their inhaler.
MNKD, we believe, will see this be another failed project and another venture that costs shareholders cash and continues to expand the share structure. Although it is nice in the sense that it capitalizes on the EpiPen headlines for the company, potentially drawing more attention to the name, we don't think it will ever develop into a tangible segment of MNKD's business, with respectable margins or actually even with a final developed product.
This brings us back to square one on MNKD. We have a company that is burning over $80M in cash from operations over the last year and has only $60M in the bank. Without a product, and without a vision, MNKD does not seem like somewhere we would like to have our capital invested. Despite the stock price moving lower over the last two years, it is the valuation we need to look at.
MNKD is still valued at an EV over $500M, an absurd figure that we believe the company has no chance of filling out based on its past history of sales and failed product launches. We are not even sure that MNKD is worth 1/10 of that figure, and we are certain that a few new EpiPen headlines devoid of real paths to cash generation are not reason enough to go diving into an in investment in MNKD stock.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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Post by mannmade on Aug 31, 2016 20:27:51 GMT -5
I had great teachers!!!
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Post by mannmade on Aug 31, 2016 20:21:00 GMT -5
No reason to buy $1 calls for 2018. If 2018 comes around and the company is still alive, will be much higher than $1. You can multiply more buying $2 and up. Good luck friend! Previous to the past month I have owned all my shares but now have a very significant position with calls in addition to shares I hold. I bought at strikes of $1.00 and $1.50. I considered $2.00 very briefly but while I agree with you, that if Mnkd does not go BK between now and then (which I have previously stated I do not think it will in my current snapshot of the company) the share price should be significantly higher than $1 to $1.5. However, there is a middle ground I decided to consider in my decision. If the company should be sold for some reason, again I doubt it, but if it should be sold, it might be for $2.00 to say 3.50 pps in it's current state, or less as is all but a guess on my part. So I went with what I did as they seemed quite a bargain recently and seemed like a good offensive move with a prevent defense to me for all but a BK. Just my 2 cents... er dollars...
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Post by mannmade on Aug 31, 2016 18:59:36 GMT -5
As I recall Al mentioned that AFREZZA reduces insulin resistance...
Study Reveals a Promising New Target to Treat Type 2 Diabetes August 31, 2016Health Yale Study Reveals Protein to Target in Type 2 Diabetes
Scientists at Yale University reveal promising new target for drugs to treat type 2 diabetes.
When the body’s cells don’t respond normally to insulin — a condition known as insulin resistance — blood glucose levels can increase, resulting in type 2 diabetes. Researchers have long known that insulin resistance is linked to defects in the insulin receptor (which controls glucose uptake) in multiple organs, including the liver.
To study the underlying mechanism, a team of researchers led by Narendra Wajapeyee, assistant professor of pathology, and Gerald Shulman, professor of cellular and molecular physiology and internal medicine, used a genomic technique to screen more than 600 proteins. They found that one of the proteins, MARCH1, impairs insulin by promoting the breakdown of the insulin receptor on the cell surface. MARCH1, which is increased in obese individuals, could be a promising new target for drugs to treat type 2 diabetes, they said. Lead authors on the study were Arvind Nagarajan and Max Petersen.
Abstract
Insulin resistance is a key driver of type 2 diabetes (T2D) and is characterized by defective insulin receptor (INSR) signalling. Although surface INSR downregulation is a well-established contributor to insulin resistance, the underlying molecular mechanisms remain obscure. Here we show that the E3 ubiquitin ligase MARCH1 impairs cellular insulin action by degrading cell surface INSR. Using a large-scale RNA interference screen, we identify MARCH1 as a negative regulator of INSR signalling. March1 loss-of-function enhances, and March1 overexpression impairs, hepatic insulin sensitivity in mice. MARCH1 ubiquitinates INSR to decrease cell surface INSR levels, but unlike other INSR ubiquitin ligases, MARCH1 acts in the basal state rather than after insulin stimulation. Thus, MARCH1 may help set the basal gain of insulin signalling. MARCH1 expression is increased in white adipose tissue of obese humans, suggesting that MARCH1 contributes to the pathophysiology of T2D and could be a new therapeutic target.
Publication: Arvindhan Nagarajan, et al., “MARCH1 regulates insulin sensitivity by controlling cell surface insulin receptor levels,” Nature Communications 7, Article number: 12639; doi:10.1038/ncomms12639
Source: Ziba Kashef, Yale University
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Post by mannmade on Aug 31, 2016 17:33:07 GMT -5
With all due respect, in my opinion, Myaln is potentially a hugely different partner opportunity then anything currently on the horizon for Mnkd. They need a alternative and since Matt is already on record as saying they will be less expensive it is the most immediate positive step Mylan can take with the current PR and financial disaster that is shaping up for them on epipens.
Mnkd is smart enough to learn from SNY deal and has the leverage and not the current need so they can simply walk away if they like at anytime... Just my 2cents .
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Post by mannmade on Aug 31, 2016 15:28:54 GMT -5
Mylan has an awful lot to gain by partnering with Mnkd in their current situation and it is one partnership where Mnkd may actually hold the cards and be able to deal from a postion of strength not weakness, imho.
If a deal could get done it would raise the share price significantly (pending terms of course) and take the money issue off the table for a few months if not more while s/p increases on news of deal.
Mylan shows they are responsible pharma and gets better press... Also competition is now bound to appear, which will trigger loss in profits as market share and price declines, so why not leap ahead? And saves potential for decline in their own stock pps which is to be considered from fall out as well as eventual conclusion to end of this story which is still playing out with press, investors/Wall Street and congress... imo
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Post by mannmade on Aug 31, 2016 15:16:29 GMT -5
It will likely catch fire... However, I think fire departments, due to their reacting to an event will need to stay with injectables, as by the time they arrive on the scene, odds are that the patient may be too far along...
However, if Mylan were smart they would partner with Mnkd now on this and save themselves a lot of grief with the media not to mention Congress... Petrhaps Ray can arrange a sit down...
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Volume
Aug 31, 2016 14:58:31 GMT -5
Post by mannmade on Aug 31, 2016 14:58:31 GMT -5
Not sure it belongs here but since it's rather short and you asked for it above... here it is...
Micro cap MannKind (MNKD +13.4%) tries to regain some ground after its recent sell-off on the news that it is working on a less-costly alternative to Mylan's (MYL -1.1%) EpiPen (epinephrine injection, USP). CEO Matt Pfeffer says his firm is working on an inhalable formulation of the allergic reaction medication that will be "much cheaper" than Mylan's branded product. He adds that the company has been working on the project for some time and it considers it its lead program.MannKind expects to file an IND in early next year. It needs to do something. Inhaled insulin Afrezza has been a complete flop.
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Post by mannmade on Aug 31, 2016 14:57:19 GMT -5
My my... guess it is dark again, although today sure feels fairly sunny, as I see the King Cockroach is out prowling again... Been some time since he was last sighted...
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Post by mannmade on Aug 31, 2016 14:23:35 GMT -5
Home Alzheimer's disease & dementia August 31, 2016 Researchers clarify relationships between diabetes and two cognitive disorders August 31, 2016 by Elizabeth Adams Researchers in the University of Kentucky College of Public Health and UK College of Medicine recently published a landmark study examining the relationships between diabetes and two types of cognitive dysfunction, Alzheimer's disease and cerebrovascular disease.
The results of the study, which appeared in a recent issue of Alzheimer's and Dementia, suggest a correlation between diabetes and cerebrovascular disease, a neurological condition characterized by constricted blood flow to the brain. Cerebrovascular disease is associated with stroke and ruptures that cause brain damage. Contrary to clinical observations indicating a connection between Alzheimer's disease and diabetes, the authors did not find a significant correlation between diabetes and Alzheimer's disease brain pathology. Their research does not support a causal relationship between diabetes and Alzheimer's disease. Erin Abner, an assistant professor in the UK College of Public Health with a joint appointment in the Sanders-Brown Center on Aging, served as the lead investigator of the study. She said the research responds to conflicting research results pointing to a relationship between diabetes and two cognitive diseases. "While diabetes is without question both a major public health issue and a risk factor for cognitive impairment and dementia, our study suggests that cognitive dysfunction related to diabetes is likely to be preventable and underscores the idea that heart health is brain health," Abner said. The interdisciplinary team of researchers collected data through a sample of more than 2,300 autopsied human subjects with and without diabetes. Data was obtained from the national Statistical Modeling of Aging and Risk of Transition (SMART) consortium, which is led by UK researchers Richard Kryscio and Frederick Schmitt. The researchers examined a number of variables related to the neuropathology of Alzheimer's disease and cerebrovascular disease and correlated these factors with a condition of diabetes reported through medical records and the use of anti-diabetic medications. The results clarified the relationships between diabetes and brain infarction, or a type of stroke caused by a blockage of blood vessels in the brain. Individuals diagnosed with diabetes have a greater risk of developing cerebrovascular disease. While the biological mechanism through which diabetes causes this condition is still unknown, researchers suspect this process involves many factors, including insulin resistance, hypertension and abdominal obesity. Explore further: Diabetes may be associated with increased risk of mild cognitive impairment More information: Diabetes is associated with cerebrovascular but not Alzheimer's disease neuropathologyAlzheimer's and Dementia. DOI: dx.doi.org/10.1016/j.jalz.2015.12.006 Provided by: University of Kentucky
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Post by mannmade on Aug 31, 2016 13:28:41 GMT -5
If only Express Scripts understood how AFREZZA could make it so much easier to improve patient compliance, achieve the desired "quality metrics" for a patient population at a significantly overall cost both short term AND long term... What a shame today but there is hope for tomorrow...
Business Express Scripts promises clients caps on diabetes spending By Samantha Liss St. Louis Post-Dispatch 14 hrs ago (2) Editor's note: An earlier version of this story incorrectly stated that a specific type of insulin was excluded from CVS 2017 coverage.
Express Scripts Holding Co. is rolling out a new program with the goal of lowering the cost of diabetes care for its clients by implementing spending caps.
The program, which launches March 1, introduces a multifaceted approach to cut spending — and makes bold promises to the company’s clients, including employers, insurance carriers and government agencies.
“We’ll pay them back if their costs exceed the cap,” Dr. Glen Stettin, the company’s chief innovation officer, said Tuesday.
Diabetes remains one of the biggest drivers of overall drug spending at Express Scripts. In 2015, spending on diabetes medications rose 14 percent, according to the company’s annual report.
With the new program, Stettin expects the year-over-year increase clients face in diabetes drug spending to be cut in half.
To achieve those savings, Stettin said Express Scripts has partnered with Walgreens and more than 1,200 other independent pharmacies to help patients stay on track with their prescriptions.
Express Scripts will establish “quality metrics” it and the other pharmacies should meet when it comes to caring for diabetic patients.
For example, Express Scripts is expecting to improve adherence rates — a measure of how well patients comply with directions on medications, mainly taking pills on time.
To accomplish that goal, Express Scripts and the partnering pharmacies will fill 90-day prescriptions for diabetes medications instead of the 30-day standard.
One of the reasons patients are not adherent to their medication is because they may forget or don’t retrieve their refills on time.
With 90-day supplies, Stettin said, now there’s “four chances to be late instead of 12.”
Patients may also have more interaction with the pharmacists if they’re chronically late to pick up prescriptions. The pharmacist may start a conversation about what barriers those patients are facing to retrieving medicine on time.
Express Scripts, the nation’s largest pharmacy benefit manager, is able to purchase the drugs at discounted prices, which lowers the overall cost.
Because of that, diabetic patients will have broad access to a range of insulin products including Sanofi’s Lantus and Eli Lilly’s version, Basaglar.
Express Scripts’ rival CVS Caremark will not cover Lantus in 2017.
While many other areas of health care are moving toward payments that emphasize quality over quantity, Express Scripts really hasn’t taken on risk like this before, said Vishnu Lekraj, an analyst with Morningstar who covers the company.
“Health care is all about value-based payments and moving away from a fee-for-service model, and being able to better manage the expenses for health care for clients,” Lekraj said.
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Post by mannmade on Aug 31, 2016 12:24:55 GMT -5
Nice find Sports. This may be the start within the diabetes Community for more self generated and widespread awareness to the masses with an advocacy tone about the real world benefits.
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Post by mannmade on Aug 30, 2016 19:33:37 GMT -5
aged, I tend to agree with you for the most part, but there are two sides to the dilution coin... Consider if in fact we begin to see a sustained and consistent increase in TRx, NRx and retention even if not enough by itself to move the share price up, when combined with the new financing (which I expect will not be on the most favorable terms), AND the new financing then takes the money issue off the table for, let's say 12 months, then I think it is possible that the decrease in share price may not be as great. imho... How's that for a run-on sentence?
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Post by mannmade on Aug 30, 2016 19:23:25 GMT -5
I have also been buying calls for 01/18 at $1 and $1.5 strikes. I own a considerable amount of shares so for now have decided to buy the leaps and will likely continue as they remain a very opportunistic play.
My thinking is that even with dilution we are at the point that either Mnkd will be sustainable if not thriving by 2018 or will have been sold. Either way at $1 strike for .19 and $1.50 for .20 they should be in the money a year and 4 months from now. I recognize there is the chance of BK but I don't see it as realistic in my current snapshot.
Thank you Baba and Sports for my recent education on this matter...
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Post by mannmade on Aug 30, 2016 17:21:57 GMT -5
My only point was that we do not have an exact date for end of current cash balance. Rather it is an approximation for a period in time.
I do agree that will need to do before Nov as I also have considerable experience and it is much harder to do business during the holidays starting the middle of the wk before TG.
On the other hand I am more than confident that Matt P is aware of all this and for all I/we know he may already be lining it up.
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