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Post by matt on May 2, 2019 14:38:01 GMT -5
The chemistry is different for every molecule or protein so to is the kinetics. You can't assume that the "rapid in and rapid out" dynamics seen with Afrezza will be observed for other drugs just because they are inhaled, with or without TS as a carrier particle. Drugs that can be formulated for TS delivery will, in theory, reach the bloodstream as quickly as Afrezza does but some drugs are not drugs at all but rather "prodrugs" that must undergo an additional chemical change inside the body to become active. This activation can be almost instantaneous, or it can take some time, but in any case it is highly variable depending on the drug. Similarly, how long a drug remains active in the system depends on how it is eliminated from the body; most drugs are filtered out by the kidneys and are passed in the urine while others are inactivated by the liver and eliminated as stool. In some cases rapid action is desirable, as with insulin, in other cases it is highly undesirable, as with hypertension medications where the need is to control blood pressure 24 hours a day.
So the answer is "it depends". TS is good for rapid delivery into the blood stream, especially those drugs which are delivered in an effective form. What happens after that is largely independent of the delivery method.
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Post by matt on Apr 26, 2019 16:14:06 GMT -5
It's a poster session at a conference. It's good for mnkd but hardly a big event for a big bio company. Posters don't get that much attention at most conferences. I have been to several conferences where there were 10,000 posters presented over the course of 4 days, and the poster sessions are usually held in the afternoon and they usually compete with multiple podium presentations. Your feet and your eyeballs wear out long before you run out of poster content to view so you have to target the ones you want to see. Bottom line, if somebody knows about Afrezza and is interested in the topic they might make an effort to visit the poster but there is not much "drive-by" traffic. Booths on the exhibit floor are much more effective for educating new prescribers but that is expensive.
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Post by matt on Apr 25, 2019 7:29:55 GMT -5
"Biologics" aren't labor intensive, they are oversight intensive. That sort of depends which biologic you are talking about, but I would agree that much of the labor intensity of the MNKD production process likely has more to do with the design of the process itself. If a company thinks a new product is going to be a big hit in the market, it is logical to design a manufacturing process that is highly automated with a relatively higher fixed cost component. If the product sells well, that fixed cost is absorbed across many millions of units and almost becomes a rounding error in the cost equation. However, if sales do not take off that same fixed cost is allocated to many fewer units so the cost of production (per unit) is much higher than planned. The challenge with biologics is that the precise production process is part of the FDA approval. Traditional drugs are different, there is more than one way to synthesize a chemical molecule and analytical techniques exist to verify that two different production lines using different methods produce the identical chemical entity. That is why there is a thriving generic drug business but very few biosimilars; lots of small companies with good chemists can figure out a way around production patents for small molecules while biologics require much more to prove equivalency. The rub is that once a company like MNKD has a biologics product approval, it cannot easily change the way it does things without going back to the FDA for further approvals while a small molecule drug producer can adjust its production process to the best scale as sales expand or contract. In the biologics world, even apparently minor manufacturing tweaks can result in an entirely different product being produced which is why FDA ties the product approval to the production process. The good news is that if Al Mann had guessed right on the market acceptance of Afrezza, MNKD would be sitting on a highly productive and efficient manufacturing facility. The bad news is that since Afrezza volumes have lagged expectations, there are a lot of under-absorbed fixed costs that cannot easily be eliminated in the absence of growing volume. Whether you characterize the underutilization of the plant as a "sales problem" or a "manufacturing cost problem" is largely a matter of your perspective.
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Post by matt on Apr 20, 2019 7:38:58 GMT -5
At first blush, that does not seem like an excessive number of people. I have not seen the manufacturing line so I don't have a feel for how labor intensive it is relative to others, but the overall number seems about right although the head office number could probably be shaved 5-8 heads if they were running a very lean operation. That assumes that most of the R&D activity is centered in Danbury but if not then the San Fernando headcount is reasonable.
The important thing to keep in mind is that a large portion of manufacturing labor is engaged in performing period driven activities rather than volume driven activities. If your manufacturing documentation specifies that certain machines will be recalibrated every 14 days, then that has to be done whether the machines are running at capacity or not. The number of people needed to produce 100 units is not much different from the number needed to produce 10,000 units.
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Post by matt on Apr 18, 2019 7:57:39 GMT -5
This board has debated at length the potential causes for the slow Rx growth, with insurance, marketing and uninformed doctors as the lead talking points. Afrezza may simply rest in what is described in the business literature as "The No Profit Zone"; there are lots of examples across all industries. Afrezza has its charms, no doubt, but it comes at a very high price relative to other options and managed care companies do not seem inclined to pay up for the additional value-added features, and physicians do not seem to convinced enough in the incremental benefits of Afrezza to fight the battle either. Afrezza has a high manufacturing cost relative to competitors, and even at higher production volume the cost disparity will remain, and the competition has started to retreat on recent price increases in face of public and Congressional criticism. When entrenched competitors have an absolute cost advantage and are rolling back pricing to earlier levels, the opportunity to ever make money on Afrezza may well be unachievable. That leaves the pipeline. Any drug that comes out of the pipeline effort will have the same manufacturing cost disadvantage as Afrezza, but inhaled delivery is a bigger deal for some drugs than for others. If MNKD carefully targets indications where inhalation provides a significant therapeutic advantage, there might be a workable strategy to turn the company around. If MNKD pursues formulations for any generic medication without regard to the increase in therapeutic benefit, they will likely not be successful. TreT is a good example of a drug where the increase in therapeutic benefit may outweigh the additional cost of production, epinephrine is not.
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Post by matt on Apr 11, 2019 7:12:01 GMT -5
It's quite illegal. But you can't let reality get in the way of your dreams. Yeah, outside my area of legalize...that's why I had to ask because we know it's done (wink-wink) but, they'll do it until they get caught. Sounds like Risk-Reward/Cost-Benefit planning...not like Pharma-bro and his defrauding investors. It is not done, even with a wink-wink, since the 1980s. There are a host of laws that this violates, but you can start with the Stark Act (federal) which strictly speaking applies only to Medicare and other federally funded programs, but there are similar statutes in every state that cover private insurers as well. Originally designed to combat excessive referrals of lab tests to physician-owned laboratories, it has been expanded to cover all forms of medical services and outpatient prescriptions. If it smells like a kickback, it is a kickback. Any time a physician is paid directly in exchange for the number of prescriptions written both the physician and the company making the payment are in deep trouble. That doesn't stop companies from doing nice things for their heavy prescribers, like holding seminars at nice resorts, but linking patient volume to specific rewards is clearly prohibited. While there are criminal penalties available, the usual hammer is disgorgement of past profits and banning the physician from billing Medicare for any service for some period of time. You can imagine the financial consequences if a medical practice is unable to bill Medicare for three to five years.
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Post by matt on Apr 8, 2019 7:09:18 GMT -5
Not more stock, just permission from the SEC to trade those shares if and only if the shareholders authorize more stock to be issued, and that requires an affirmative shareholder vote. Remember that corporations are created as a matter of state law, and the laws of the state (in this case Delaware) determine when and if a company can sell more stock. The SEC is a federal agency that regulates the securities exchanges and trading, but they do not and cannot regulate corporation law. Shelf registrations go stale after three years and have to be renewed. That is what this filing is, and practically every publicly traded company in the US has an effective shelf registration because it allows the company to more quickly and easily if there is a need to raise capital, but it does not authorize raising a single penny of new stock. If the company issues a proxy for a special meeting to increase the number of shares outstanding, they you can worry about more stock, but until then authorized shares remain at 280 million with most of them locked up for potential warrant exercise and conversion of debt instruments.
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Post by matt on Apr 7, 2019 8:48:42 GMT -5
The problem isn't that Cipla couldn't do it, the question is what is their sense of urgency? Sanofi could have promoted Afrezza really aggressively, but it was a lower priority for them than getting customers switched over from Lantus to Toujeo and we saw how that ended. Where does Afrezza stand in Cipla's list of priorities/ At the moment they have spent $2M for the rights which is peanuts for them. That is the problem with any partnership or marketing relationship; there is always one party that has an extreme sense of urgency and for whom the deal might very well be do or die, while the other party is not nearly so engaged. When the interests of the companies are so well-aligned that they both need and want the deal to the same extent, that is usually the recipe for a merger rather than a distribution deal. MNKD will always have this problem, at least for the foreseeable future, because Afrezza needs a marketing / sales powerhouse to drive adoption and those companies with monster market presence have their choice of partners. A good place to check how important a deal is to a company is right on the home page where they list their most important therapeutic indications. Cipla has sixteen therapeutic categories listed (which these days is an extreme number for a company with roughly $2 billion in sales, most big pharmas are focused on five or fewer therapies) and on the diabetes pull-down they mention metformin, TZD, a sulfonylurea, statins, and others but no insulins. Instead, you have to read between the lines under the drug delivery menu where they mention dry powder inhalation without ever mentioning the type of drug they intend to deliver. That left me with the impression they view Afrezza as a developmental drug rather than something that fits with their current menu of marketed therapeutics; your read may be different.
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Post by matt on Apr 2, 2019 13:04:21 GMT -5
It is entirely reasonable for the Indian drug agency to insist on more data. Many drugs work differently in groups with differing genetics, and Afrezza also has some unique "human factors" that need to be considered, such as need for temperature controlled storage. If you have ever been in Delhi on a hot day you would not question the need for broader stability studies. However, mostly the regulators are concerned with genetic variations of which there are several for T1 diabetics.
The flip side is that the cost of doing a bridge trial is generally fairly low, not anything close to $200 million. The goal is to demonstrate that the drug works in those of Indian ethnicity similar to way it works in Americans and, if not, to document the differences and adjust instructions for usage accordingly. If an initial trial is large enough (think in terms of 2000 patients per cohort) and enrolls patients from several countries, then some drugs can do without the bridging studies but the original MNKD trials were not that large and was performed in the US, hence the need for a bridging study.
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Post by matt on Apr 1, 2019 15:46:33 GMT -5
If it was only the sales line that contributed to cash flow I would agree with you. However, when you factor in cost of sales, general and administrative expenses, sales and marketing, and other costs Afrezza still bleeds cash, approximately $90 million for 2018 (that is the operating loss of $76.6 million net of the license feeds from UTHR and the effects of foreign currency gains). That is the $90 million that has to come from somewhere. The $90 million operating loss was reduced from a $110 million operating loss the prior year so it is heading the right direction, but until the numbers turn from negative to positive a reliable and predictable source of cash will be needed to support the company. It sounds like you did not understand my post. Here is the summary: Starting with Q4 2020 I am projecting that Afrezza net sales will be $25M, which would be equal to quarterly expenses. That to me means cash flow break even point for Afrezza. Until then we have cash plus milestones plus warrants money to offset operating losses ($160M to $190M). We just saw today the first milestone for TreT and I expect that program to move forward. It is also expected that second molecule moves forward by 1H this year. That’s where the money to support the company will be coming from, to offset estimated $200M in expenses until Q4 20. This scenario does not include ex US sales or any potential partnerships for a pretty substantial pipeline the company recently outlined. I fully expect to see additional revenue from ex US sales and pipeline by Q4 20. So, do we need a major dilution ? No. Even if additional offerings are planned, I expect the share price to be substantially higher after 1H 19 catalysts materialize, which would reduce number of shares to be offered. No, I didn't misunderstand you, we just disagree. In Q4 costs plus expenses were $31 million and net sales were $16 million. That is a deep hole for any company to climb out of and Q1 sales have not seen a rocket-like increase from Q4 so net sales are not hitting $25 million in Q1, and until the next 10Q we won't know for certain what the costs of the marketing realignment and advertising campaign will be. Since the $2.38 warrants aren't likely to be exercised, the only warrant money is the $1.60's that won't be realized until Q4. It is imprudent for any company with high fixed costs not to have at least six months of anticipated fixed costs on the balance sheet at all times, which is why auditors are required to issue a going concern qualification if there is less cash available. It is simply a matter of corporate prudence. You don't run the cash in a publicly traded company down to zero especially if you need shareholder approval to issue more shares; that alone is a 28 day process once the company starts it as the SEC requires a minimum of 21 days for the proxy to be mailed. Partnerships and milestones are great, just as year end bonuses are great in your paycheck, but you don't depend on those irregular and uncertain events to pay the mortgage. If a new partnership comes along, fine, the raise can be postponed another quarter or so, but with Q4 costs and expenses running at $31 million and today's milestone payment at $12.5 million, that fresh money will fund operations for about five weeks. The other thing to keep in mind is that everybody can read a balance sheet. If the cash gets too low, the cost of money becomes punitively expensive in terms of discount and warrants. It is better to bite the bullet and do a raise before you have to do a raise. Dilution is never pretty, but dilution with a gun to your head is downright ugly.
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Post by matt on Apr 1, 2019 7:33:04 GMT -5
I would like to stress the fact it was clear the new shelf registration statement was intended to replace the old one... A lot of bashing... A shelf registration lets the company register its securities to be traded, it does not authorize the company to issue more shares. The SEC can only regulate the trading of securities because corporations are creatures of state law and it is the fifty states that regulate when and how securities are authorized and issued. There is no reason to fear significant dilution until, and unless, the company calls a special meeting to authorize an increase in shares. The fact that MNKD is legally formed in Delaware protects shareholders in this way, unlike incorporation in some states (e.g. Nevada) where shareholders do not get to vote on share increases.
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Post by matt on Mar 31, 2019 8:27:09 GMT -5
"If MNKD is going to stay in business, the money will have to come from somewhere and the only reliable source of financing is dilution." Based on the sales trend for the last 2 years, Q4 2020 Net sales will most likely be $25M or more, for US sales only. This trend should be confirmed by Q3 19 Net Afrezza revenue of $9.7M or more. By that time (Q4 20) , I would also expect sales from Brazil and India to contribute substantially to Net sales. My not so bold prediction is that all FUD stops in 18 months In the meantime, we are looking at at least $40M of warrants and $50M of UTHR milestones (yes, TreT will continue to progress) plus most likely another $30M for undisclosed molecule option coming up. By the way, we finished 2018 with $71M in cash Can we possibly stay in business for the next 24 months with 160M - 190M, until Afrezza sales provide a cash flow break even net revenue, without any major dilution ? Yes. If it was only the sales line that contributed to cash flow I would agree with you. However, when you factor in cost of sales, general and administrative expenses, sales and marketing, and other costs Afrezza still bleeds cash, approximately $90 million for 2018 (that is the operating loss of $76.6 million net of the license feeds from UTHR and the effects of foreign currency gains). That is the $90 million that has to come from somewhere. The $90 million operating loss was reduced from a $110 million operating loss the prior year so it is heading the right direction, but until the numbers turn from negative to positive a reliable and predictable source of cash will be needed to support the company.
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Post by matt on Mar 30, 2019 16:01:35 GMT -5
aged’s comment: Registering the warrants is Mannkind trying to keep somebody sweet. It makes the warrants more valuable so it's free money for the current holders. That warrant registration was unnecessary and designed to be buried in the shelf offering. Most warrant agreements have "piggy back" rights which means the next time any security is registered, the warrants must be registered as well. This is standard in nearly all securities contracts because without registration any shares acquired would be subject to Rule 144 (which limits how much stock you can sell). As for the fact that the S-3 is out there . . . that, by itself, is no big deal. Any company that meets certain SEC requirements is entitled to file an S-3 and the paperwork headache is minimal because the company can incorporate information already issued "by reference" to previous filings. Nearly every company that is eligible to file on Form S-3 keeps one filed and current. It allow the company to comply with SEC rules, but it does not authorize the company to issue any shares. An increase in the number of authorized shares requires a shareholder vote or the board would have to issue a certificate of designation for the 10 million preferred shares already authorized. What it does tell you is that the company is getting ready to ask for more shares at some point. When that will happen, and in what amount, is anybody's guess but a request to take the share count up to 500 million should not be a shocker if and when it happens. Milestones are great, new licensing deals are great, but neither is a reliable source of cash because the timing ultimately is in the hands of UTHR and other potential partners. Just because MNKD shareholders are champing at the bit for UTHR to advance their molecules in development in the next quarter or two does not create a sense of urgency at UTHR who may have an entirely different time frame in mind. Ultimately, UTHR management will do what is best for UTHR (as they should). So, absent Afrezza making a HUGE increase in sales the product will continue to be a cash drain. If MNKD is going to stay in business, the money will have to come from somewhere and the only reliable source of financing is dilution.
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Post by matt on Mar 29, 2019 9:36:37 GMT -5
The 19,859,000 shares the Trust holds includes the Mann Group's 19,674,442. The various Mann entities control 9.99% in total. A lot of those shares are not real though, and are shares they could acquire if they convert debt to equity at $4 per share. Correct. There is essentially a double count due to the way the SEC requires reporting for interlocking entities. If I did my math correctly, the Mann entities now own 8,919,000 issued shares which is 4.75% of the outstanding, the rest are contingent on exercise of conversion rights on the debt.
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Post by matt on Mar 21, 2019 9:24:54 GMT -5
As Fitbit, Apple and Google jump in the game with non-invasive "fitness" CGMs, everyone will be connected to their remote monitoring services.
Monitoring alone does not fix the problem of non-compliance; it requires constant human follow-up to insure the patients actually adhere to the drug therapy. I was involved in one such project during the period when effective "cocktail" therapies were first becoming available for AIDS patients. Those early drugs had very tight dosing windows, a dose administered as little as a hour late could result in the virus spawning many new mutations. The major cost was not for the monitoring service, which was largely computerized and triggered a system update every time a pill bottle was opened, but in the human cost of trained nurses to call the patients when doses were missed. If insurance will not pay for a CGM, will they pay for the much higher cost of human interventions and coaching needed to make the monitoring effective? Monitoring gizmos are great for motivated patients that will use them as intended, but unfortunately that is not a good description of the majority of patients.
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