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Post by matt on Sept 17, 2019 7:57:09 GMT -5
OneDrop is sold in Apple stores. Will the Bluehale device get similar coverage? It depends on how FDA labels the device. Simple medical devices, like thermometers and blood pressure monitors, can be sold anywhere while other devices can be dispensed only on the orders of a physician (i.e. the sale requires a written prescription); that implies a level of regulatory infrastructure Apple stores do not have. Since BluHale is intended to dispense a prescription drug it will probably be available through the same channels as Afrezza itself.
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Post by matt on Sept 13, 2019 8:56:32 GMT -5
Both Lilly and Novo have recently cut their insulin prices in half. Is there any likelihood that Mannkind will follow suit? Both Lilly and Novo cut their price but at the same time they cut the rebates paid to the major pharmacy benefit managers. Lilly, in particular, has demonstrated that more than 100% of the price increases seen in recent years were used to obtain a preferred tier status with the PBMs (in short, as the PBMs increased their profit through rebates Lilly actually made less gross profit on the drug). Mannkind was never in that position, partly because Afrezza was never on a preferred tier on any of the major plans so they never paid out a lot of rebates to begin with. There is not a lot of wiggle room in Afrezza pricing since the company barely covers its production cost. If there is any price reduction, don't expect it to be significant and surely not half.
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Post by matt on Sept 11, 2019 10:40:33 GMT -5
The warrants went to those who invested in the last round of financing. Regardless of who that may have been, if the value of the shares acquired plus any conditional shares issuable upon exercise of the warrants exceeded 4.9% of the outstanding shares, then a disclosure obligation would exist. In other words, exercise of the warrants into actual shares would not trigger a new disclosure since the warrants themselves have to be disclosed. Since we have not seen a Regulation 13 filing by UTHR you can safely assume that they are not the holders.
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Post by matt on Sept 11, 2019 8:51:56 GMT -5
Does the fact that the BREEZE study is now officially recruiting have an impact on timing of the next milestone payment of $12.5M? There are two sets of milestone payments, one for TreT and one for the "undisclosed" molecule. These are two completely separate initiatives and the progress on one drug does not help or hurt progress on the other. The next milestone payment expected is for the undisclosed molecule, not TreT, at the decision of whether to progress the mystery drug to the next stage rests with UTHR. This is common with drug licensing deals; the licensor is writing the checks and thus controls most of the decisions and, ultimately, the timing.
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Post by matt on Sept 10, 2019 7:26:42 GMT -5
It would have been nice had he revealed the size of the shipment. Also, have they revealed the payment terms -- on delivery, 30,60, 90 days? Payment? It would normally be by Letter of Credit. This means cash on the barrelhead upon delivery in Brazil (through the banking system). Payment guaranteed by an LC is not the same as cash on the barrelhead. Terms can still be net 90 days with MNKD only able to present the documents to the guarantor bank on day 91. The benefit of an LC, other than eliminating the risk of getting stiffed on payment, is that the auditors will not reserve the sale due to payment risk the same way they would without an LC. Of course the bank makes a big difference; if the LC is issued by Citibank that is one thing but if it is issued by a small Brazilian bank then there is still credit risk. There are lots of ways to get a temperature controlled product to Brazil, and ocean freight is not necessarily the best way. Airlines charge "actual weight" if a shipment is very heavy while if the shipment is light and bulky the shipper pays "dimensional weight" which is a hypothetical weight based on volume. A good air freight forwarder will mix products on a single pallet so that boxes of Afrezza can ride on top of boxes of machine parts such that actual weight is equal to dimensional weight for the consolidated shipment. On the other end, the forwarder splits the pallet and sends the individual products to their respective destinations. Companies like Caterpillar ship a lot of heavy parts by air because that costs less than having a construction project sit idle, so there is plenty of capacity for consolidating light shipments depending on who else is shipping to Brazil regularly. Likewise, if an express carrier like FedEx is shipping less product into Brazil than they are shipping out the plane heading to Brazil will be half empty so they adjust the rates heading to Brazil to ensure the plane is filled to capacity. Often times air works out better than ocean although that is counterintuitive by just looking at the published rates.
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Post by matt on Sept 8, 2019 7:24:27 GMT -5
I believe that they are the same event. When you go to the site it mentions that it is sponsored by H.C. Wainwright. But, that's mytakeonit The Rodman conference is healthcare companies only, the H.C. Wainwright conference takes all comers (tech, healthcare, services, etc.). The post-Labor Day period (Sept-Oct) is heavy with investment bank sponsored conferences in NYC; you can literally fill up your calendar for two months doing nothing but shopping at these conferences. I used to have a job where I was the designated person to shop for new companies, and I used to attend maybe 8 a year or so, and maybe 6 of those were in the autumn months in NYC, the others were mainly biotech meetings held in San Francisco with the JPM conference, held right after New Year's, being the largest of all. They are all sponsored by investment banks looking to place money for the presenting companies. They are free to attend (albeit by invitation only) and the bank more than recoups the expense in placement fees during the coming year. Unless a company has something really new and different that excites the market, it is hard to be heard over the background noise. Most conferences have 4-8 simultaneous presentations and, like a medical meeting, if you are not presenting in the main room between 9:00 and lunch then it is hard to attract eyeballs since the attendees can only process so many pitches in a day. Late afternoon slots and last day of the conference slots have very empty rooms. At least MNKD has a noon slot on Monday; that is probably right before lunch and people will still be attentive. The big question is who else will be presenting in the same time slot but in a different room.
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Post by matt on Aug 23, 2019 9:08:08 GMT -5
Mike nor any CEO would do that. The only way to burn the shorts is to grow sales and the company. Sooner or later the shorts cover but don't expect a rocket ship higher. The market makers will protect them and give them every opportunity to cover when they are ready. And, why, would a CEO not do this? Again, is there anything that makes it illegal to do so? I look at it somewhat like a share buy back. But, I'm a novice in this area. I don't think there is any regulatory prohibition, but you need to understand two things: 1. Much of what is reported as "institutional ownership" is really a brokerage account held by an individual at that brokerage. Legally the brokerage has bare title to the shares but the beneficial owner (the customer of the brokerage) calls the shots on what can or cannot be loaned out. 2. The balance of institutional ownership is mostly in index funds that trade in and out of stocks according to an algorithm. These funds usually have very low fees to the investor so the main way the brokerage house makes money on index funds is to loan out shares for shorting. In short, it is not likely that this would be a particularly effective strategy. The best way to stop shorting is to clearly articulate a financial plan and to then hit those numbers consistently, and secondarily to have an upside surprises once in a while.
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Post by matt on Aug 21, 2019 9:30:05 GMT -5
When dealing with large companies it all comes down to portfolio strategy. The days when pharmas had broad portfolios are over and most now focus on three to five therapeutic categories, which is down from ten to fifteen in the early 1990's. If a drug doesn't fit with one of the remaining therapeutic categories then a big pharma is not going there, and metabolic diseases are not nearly so popular as they once were. Even Pfizer, who had some huge hits from their metabolic portfolio (Lipitor, Viagra, Benicar, Norvasc) has moved on due to the cost of developing follow-on products and the difficulty of launching any new drug in the face of some generic drugs (many of which were former Pfizer branded drugs) that perform very well for more than 90% of the patient population. Big pharma is looking to move their top line and that generally requires a drug that can account for at least 5% of future sales within a few years without diluting the gross profit margin. Pfizer, for example, sold $53 billion last year with an 80% gross margin so they are looking at new drugs with a $3 billion sales potential and at least 80% gross margins. That is not a good description of Afrezza.
The other reason big pharmas spend money is to protect franchises, which is why Sanofi get into bed with MNKD in the first place. There is little doubt in my mind that they looked ahead at the patent cliff for Lantus and wanted something to fill that hole, but for a variety of reasons Afrezza did not work out for them. I am not sure Lilly or Novo have the same problem as Sanofi did so they are going to be very much less motivated to take a flyer on Afrezza.
It is not enough to be a good investment opportunity; Afrezza must be the best investment opportunity and be aligned with the portfolio strategy of the company. As the pharma world increasingly chases after neurological, cancer, and pain drugs, finding great partners for new metabolic drugs is going to be tough.
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Post by matt on Aug 20, 2019 9:07:34 GMT -5
Aged - how many trials do we need to show that BG over 140 for 2+hours causes vascular degeneration? How many trials do we need to show nothing can bring post meal BG's down as fast as afrezza? I don't think there is going to be a lot of argument that reducing excessive BG levels has attendant health benefits. Most physicians will take it as a given that properly regulated glucose levels are highly desirable. The implied benefit from your second sentence is not so easy accepted. While perhaps Afrezza does work faster than other alternatives, what has not been demonstrated is how fast is fast enough? If Afrezza can act within 20 minutes while another drug takes 40 minutes, does that difference translate into long-term health benefits and, if so, what is the magnitude of those benefits. That is not merely a debate about semantics given that Afrezza is also the most expensive insulin product on the market by an order of magnitude. If MNKD wants to charge what it charges for its drug, then there had better be some really solid economic data that justifies the additional expense over competitive products because we already know that the arguments about patient convenience and aversion to needle sticks are not sufficient to obtain preferred placement on formularies. Medical decisions and formulary coverage are based on data, not assumptions, and the data is lacking. Running a head to head trial against the other insulins claiming ultra-rapid action (like FIASP for example) are the only way to get a better label and have credibility in the market. This has been talked about for years, but until the company actually starts such a trial the results will remain years away from completion.
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Post by matt on Aug 16, 2019 14:52:44 GMT -5
If you can't provide proof of MULTI-MILLION dollar incomes for employees, then ust go away. Seriously, what's $50k on the open market, when you're taking home 10x that, post tax on a yearly basis? Well, actual investor, I'm pretty certain the stated compensation for each member of our C-suite, plus several VP's is at or above $1m per year, all-in, including options. And, as a holder of multiple 10's of thousands of shares, myself, I have every right to ask this of our executives. So, I will not "go away." Factually, no MNKD executive is making $500K after tax. The highest cash compensation last year was MC and he made $650K pretax, which after 11% California state income tax and a 37% federal rate (plus an uncapped FICA contribution) his after tax take home would be no more than 55% of the gross, or $357K (assuming he still got some permitted deductions that did not get totally phased-out). Some California residents are closer to a 50% tax leak. $357K is not exactly minimum wage, but it is not a multi-million dollar salary either, especially considering the somewhat crazy California real estate prices. At the end of the day, it is only realized after-tax cash compensation that counts. What gets reported in SEC documents as option value is the theoretical value based on the Black-Scholes formula or a binomial pricing model; it does not reflect how much profit the executive actually made. In the late 90's I was hired to run a start-up and between the time I agreed to join the company and the time I actually started, the dot-com explosion happened and my theoretical option value shot through the roof. In that year the SEC filing said I made $28 million on those options while, in fact, they all expired worthless and I took home exactly zero in cash! In short, the income that gets reported under SEC rules is very different than what an executive brings home (you can talk to my wife about the fact that the grocery store does not take options in exchange for feeding three children). All the options the MNKD officers got in 2018 were issued at $1.91 so they are as underwater as the shareholders. That is $833 thousand in SEC reported "income" that MC will likely never see in his wallet and, if he ever does, the tax man will be happy to take his half. As a shareholder, you have every right to question whether executive compensation is too high or not, but get your starting facts correct. You don't know what other obligations the executives have, what they gave up at previous employers to join MNKD, or anything about their personal situations. Some may have given up a lot for the opportunity to join MNKD, and shareholders do not get to dictate how they spend their current compensation or invest their accrued wealth. Any good financial adviser will tell their clients not to invest more than 5% of their net worth in any single investment, and I suspect that with salary, bonus, options, and 401(k) match every one of the executives are already overdependent on the value of MNKD; that is true for senior executives at most companies.
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Post by matt on Aug 14, 2019 15:47:57 GMT -5
The momentum indicators put the price behavior in the right context so to speak, thus the terms fake out break out and capitulation low...more for longer term perspectives, not so much day trading although it will help in deciding which trading bias one should look at going forward IMO. This was amusing to me today, a very respected and successful money manager I'm friends with sent me an email about how the mortgage rates in Denmark are actually negative, he compared it in a sense to the tulip bulb era...he is a huge gold bug and has been long KL since it was in single digits and has had all his accounts in it as well. So I said you mean I could take a mortgage out in Denmark (theoretically if you were a citizen) get paid interest AND rent the property out for income? Why would one invest in a yellow metal as opposed to purchasing the asset that is returning both interest and income? Waiting on the answer lol? Very strange times we're living in currently...including the best available insulin being kept in the corner by the bullies (insurance & gov't regulators) That can happen when assets are overpriced and people put so much money in the bank that the bank has to charge negative interest rates. If you think housing prices are overinflated, would you buy a house for $500,000 at 0% interest if you thought the future price in five years was only going to be $450,000? You still have to repay the principal, and when yields go upside down then there may not be that much income from renting out the house. FYI, the yield curve on US Treasuries has inverted a few times in recent days. Normally it costs the US Treasury more to borrow long-term than it does to borrow short-term, but as I type this the one-month yield is 1.98% while the five-year bond is 1.51%. When the curve inverts and stays that way either asset prices are upside down, we are heading into a period of deflation, or a bit of both.
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Post by matt on Aug 12, 2019 16:51:13 GMT -5
We really need actively managed institutional investors. Does a buy-in from "actively managed institutional investors" imply or require dilution? Some actively managed funds will buy on the open market if they sense a real opportunity. All funds prefer to get in on private placements because the securities are sold at a discount and, sometimes, with warrant coverage. If you think a company is worth a $1.00, wouldn't you rather buy for 80 cents? On the flip side, if the company has enough upward momentum then the fund manager may be willing to pay full price in order to make sure the fund participates in the upswing. It comes down to whether the company is a tightly coiled spring about to explode in value, fund managers do not want to miss out on that, but buying cheap is an easier way to guarantee their bonus. Most of the time that means a private placement with some dilution.
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Post by matt on Aug 12, 2019 8:59:44 GMT -5
I think Mike was talk about getting Institutional investor backing now that the company is funded. "At the end of the quarterly conference call yesterday, CEO MC said something that seemed odd to me about now he can focus on getting new investors. Okay. Why? How?" There are two buying thresholds for many funds; $3 for some; $5 for others. Its actually a little surprising Vanguard still has the holds they have as their standard policy is $5. The minimum price standard for most managed funds is $5, but the Form 13 reports combine all the funds that are managed under a single umbrella company. What gets reported as Vanguard holdings is their managed funds as well as self-directed funds, brokerage-type account that are held at Vanguard, and index trackers. Only the managed funds are subject to share price minimums; the self-directed funds can invest in whatever the holder determines. Vanguard likely offers one or more index tracking funds as well, and those funds track whatever is in the index regardless of PPS. The same applies to the other major financial houses (Fidelity (FMR), State Street, Blackrock, major brokers); they offer a mix of ways to invest and they all get combined into a single institutional holding report.
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Post by matt on Aug 11, 2019 16:32:16 GMT -5
from Mannkind website investors.mannkindcorp.com/stock-information/ownership-profile"Shareholder Breakdown Shareholder Holders Value ($MM) % O/S Shares Institution 166 98.34 27.71 52,056,965 Mutual Fund 155 30.09 13.55 25,434,465 Insider 16 20.58 5.68 10,665,014" According to these numbers from Mannkind website, 53.06% is in the hands of retail investors. You have to be a little bit careful with institutional holding numbers. If you have shares held in street name at a major brokerage, like Fidelity, you are the beneficial owner of the shares but Fidelity is the legal owner of the shares. A lot of the institutional holdings are actually beneficially owned by individuals and do not reflect the investment decisions of Fidelity itself. As those beneficial holder buy and sell securities around in in their portfolio, the institutional ownership changes share for share. However, according to SEC rules for Form 13 reporting, these shares get reported as institutional ownership because, legally, they are Fidelities property (with an off-setting legal liability to pay the account holder). I suspect that nearly all shares shown as institutional are really street name brokerage accounts, self-directed IRAs and similar vehicles that are really retail investors. Likewise, most of the mutual funds are not managed funds where portfolio managers are picking winners, but rather index funds that buy whatever is part of the index.
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Post by matt on Aug 11, 2019 8:33:26 GMT -5
So there you have it. MannKind’s assets & IP are apparently only worth only $75M to Apollo/Midland. Sad to think about it as the erosion of shareholder value continues. I sincerely hope CEO Castagna succeeds with his newly-funded business plan. I was hoping for financing in excess of $300M to be used to launch multiple trials for pipeline candidates. A $40M initial cash infusion will likely be insufficient without future partnerships to pick up drug development costs. I am not sure you can look at it this way. Lenders always want more security if they can get it and for them to take less than 100% of the assets would be out of character. If you take out a $100,000 mortgage against a $1 million house, the bank will have first lien on the entire house and not just the kitchen and living room. Likewise, the Danbury plant is good for just one thing - making pharmaceuticals delivered by TS. Pharma plants are big empty boxes with rooms constructed inside that are specialized to a particular production process, and the equipment inside those rooms is also specialized. The "empty box" has no more value than any other empty building in the Danbury market; it only has value as a pharmaceutical plant. If the lender forecloses on the physical collateral, that does them no good if they can't exploit the intellectual property that enables the production of drugs. As I have said many times, there is no value inherent in any patent. The value of a patent arises from its ability to enable production of a product that competitors cannot copy, and if the product is not a success then the patent has little value. The fact that the lender bundles the physical assets and IP together to form the collateral for the loan is perfectly reasonable. Your other point, that the company needs $300 million or so to develop the pipeline, is spot on. R&D isn't cheap and developing new delivery forms for already generic drugs is not going to get the job done. It is time to get serious about the pipeline, and that funding should probably come from equity and not the debt market. The company is way overleveraged relative to the debt they can service from their operations.
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