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Post by matt on Mar 19, 2019 18:03:09 GMT -5
Institutions MUST mark-to-market their portfolio at the end of each reporting period according to SEC rules. That is why you see large upticks in volume in the first few trading days of a new quarter, especially in October when they tend to dump their losers and load into new investments heading into year end. This applies to long and short positions; they often dump some winners to offset the losers to maximize fund manager compensation for the year.
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Post by matt on Mar 19, 2019 11:48:00 GMT -5
Warrants throttling us from here, or are we just waiting for the next wave of volume? If the $1.60 warrant holders have shorted as many shares as they can cover, that puts a damper on the upward movement. The $2.38 warrants are out of the money so unless something material happens in the coming days, those will expire. Even if the price does move above $2.38 by a few pennies before expiration, that will bring in a bit of cash which on balance is good news and the exercise would be essentially non-dilutive to present holders. I don't think the $2.38 warrants are a problem at the present price. Realistically, I think what the market is waiting for is some solid news that the company controls. Afrezza sales have not done anything dramatically different than 2018 so that doesn't influence the price much either way, and the prospects for partnerships and licenses are essentially in the control of third-parties that may, or may not, climb on board the TS train, and if they do the timing will be to suit the partner's time line and not MNKD's. The net result is the stock increasingly reacts to realized good news and not to speculation about possible news.
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Post by matt on Mar 18, 2019 9:27:07 GMT -5
Individual A owns $2.38 warrants that expire April 9, 2019. Individual A sells a put for one share to individual B for $0.44. One is making a bet SP is above $1.92 and the other, below $1.92. So the issue becomes is there a market to sell puts for the 28mm $2.38 warrants, correct? Without the ability to sell puts on the 28mm shares, the only other way to make money is to hope SP goes above $2.38 and either exercise and sell on open market or short and fill with the warrant. Comments welcome. The option market is not that granular. There is a March 22 put, strike $2.00 with a last sale price of .31. If you don't like the $2.00 price, then the next choices are $1.50 or $2.50 but those markets are very thin. There can always be off-market deals made between accredited investors and/or institutions, but as a general rule you are correct that if the price remains below $2.38 then the warrants will expire unexercised. Also note that there is the "competitive warrant holder" problem if the price is very close to $2.38 at expiration. In this situation it becomes optimal for some, but not all, warrant holders to exercise and the math gets very messy.
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Post by matt on Mar 15, 2019 12:24:22 GMT -5
when will we know how many of the $1.60 warrants have been exercised? The fact that the company announced that the warrants were outstanding is sufficient disclosure under SEC rules; the company does not need to update the status more often than the quarterly report. As each 10Q or 10K is issued, the footnotes will have the relevant disclosures about how many have been exercised and how many remain outstanding. To the next snapshot is the 10Q for the period ending March 31, and that is due to be published on or before May 10. As a general rule, no matter what, a holder should never exercise a warrant prematurely on a non-dividend paying stock. Once a warrant is exercised the holder enjoys the upside in the stock, but they are also subject to the downside risk. A warrant has value until expiration due to an implied put option and if the warrant is exercised early the value of the put is extinguished so it is better to sell the warrant than to exercise it. Since the $1.60 warrants don't expire until December, don't expect them to get exercised this early.
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Post by matt on Mar 13, 2019 15:59:31 GMT -5
I will have to look up the announcement but that’s what I remember. MNKD would produce the product for clinical trials and early commercial volumes, then UTH would take over manufacturing their own supply. would make sense for UTH if this clearly is a blockbuster (and it may end up being so) There are a lot of reason for UTHR to want to own the manufacturing, especially if they have underutilized manufacturing facilities. Keeping API production and packaging in the same facility resolves a lot of regulatory headaches and, depending on where the API is made, there may be financial reasons for completing the product in certain jurisdictions. The financial concerns are normally not obvious to those outside the project, but these can often made the incremental cost of additional production equipment look like a rounding error.
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Post by matt on Mar 13, 2019 8:13:54 GMT -5
See that’s the beauty of TS it’s quick in and quick out. Will doctors prescribe it off label ? That beauty is not attributable to TS delivery. TS gets a drug into the lungs rapidly and frequently that translates to a quick absorption into the circulatory system, but TS does nothing to guarantee a quick exit. How fast a drug is metabolized and excreted depends on the molecule or protein and the condition of the patient's kidneys and/or liver as virtually all drugs are broken down and excreted in the stool or urine. Insulin is quick in and out as it is intended to be a rapid-acting hormone, but other drugs may be quickly absorbed but slowly metabolized. TS delivers quickly, what happens after that requires a full ADME section in the drug application.
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Post by matt on Mar 5, 2019 14:08:58 GMT -5
Is there a realistic scenario where scripts rise significantly in the near term but there's little to no change in the pps this year? Yes, and that scenario is where the incremental gross profit from those scripts is less than the cost of advertising and promotions to obtain them. There is not enough visibility to the detailed numbers to assess what the company is spending on advertising and co-pay cards relative to the incremental revenue, so it could be a positive, a negative or a wash. It will take through the end of Q1, and perhaps the end of Q2, to have a better idea about that. The company might also find that any increase in scripts is short-lived unless the advertising spurt continues. There are many examples of products that advertise constantly, not because sales are growing, but because when advertising exposure declines sales goes down. The other great unknown is competitor actions. As we have just seen with Lilly launching an unbranded version of Humalog, Mannkind can do nothing to control the actions of the other players in the market. Given the rapid increase in insulin prices in recent years, even though the unbranded Humalog is half the price of the branded version, I can guarantee you that Lilly is still making nice money on the new product. Lilly can cut prices even more if need be to maintain their share of the market, and Novo can do the same, but since Afrezza is inherently more expensive to manufacture there is not much wiggle room in MNKD's cost structure. The competition can profitably sell their product at a low enough price point to guarantee that Afrezza remains a relatively expensive option such that it never becomes more than a niche product. Spending more on R&D and building out the pipeline makes more sense than trying to flog Afrezza in a highly competitive market.
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Post by matt on Feb 28, 2019 12:56:31 GMT -5
One of the slides showed that the avg number of prescriptions written per prescribing doctor was something like 5 or 6. I don't remember the time frame (week, month,?) Does this mean a few doctors are writing almost all the prescriptions and most are writing almost none? I would think a vdex affiliated doctors would be writing dozens per week. Or are all 1200 (?) doctors writing just a few? Is this bad news if all the doctors are just testing the waters with afrezza and aren't fully on board yet? Or is this good news because the doctors can quickly increase the number of prescriptions once they get great results from their initial patients? I can tell you from my experience launching new products that many doctors are very quick to try and very slow to adopt new products. It is often easy, very easy, to get a physician to try something new especially if there is high dissatisfaction with the available alternatives. However, the pattern that is often evident is that they will put two or three patients on the new product and then stop, just stop, for a long period of time until they see how it works out. If the doctor is happy with the results after six months or so, they will begin moving their other patients to the new product. I say six months, but that can be faster or slower depending on the course of the disease; some products exhibit improvement almost immediately and some over time so it depends on the therapy. I have even seen this behavior in clinical trials where an investigator that "promises" that they can contribute 20 patients to a study but will only contribute a few at first. If those work out, then the rest follow as promised but if the first ones are a failure they don't enroll any more patients and move on to the next trial. The problem is that often the early patients are the worst of the lot (non-adherent, failed other therapies, rapidly progressing disease, etc.) and those are the ones least likely to show a benefit from any drug. On the upside, if you can treat those early patients successfully then getting the rest on the therapy is fairly simple.
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Post by matt on Feb 27, 2019 16:44:26 GMT -5
My understanding is that if warrant holders were to use warrants to cover a short position they would cover at the $1.60 warrant price. So if they are looking to short, seems would make sense to let stock climb as high as can before shorting if no news. And if there is news they also win! But we do too! Yeah but I don't see them shorting because if the stock is lower than the strike price at the time of expiration then they lose and are forced to buy the warrants at a loss. The warrants cover their downside. A warrant holder today could sell short and receive $1.87 with an obligation to replace that share later. Worst case, the stock stays near the current price or increases in which case the warrant holder exercises the warrant for $1.60 and pockets 27 cents in profit (minus some costs). However, if the stock goes down to $1.50, the warrant holder can cover at the market and make 37 cents (the warrant expires worthless). The big payday is if the stock price swing up and down. If the warrant holder sells today at $1.87 and covers at market at $1.50, the make the 37 cents and still have the warrant. If some more good news comes out that bumps the price back up to $1.80, the warrant holder can play the game again. And again. So long as each short transaction is slightly above the warrant price, it is a guaranteed win for the warrant holder. The more volatile the stock is on either side of the exercise price, the more can be made.
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Post by matt on Feb 25, 2019 13:21:07 GMT -5
These are stock awards, not purchases. Restricted stock units that fully vest in one year, 02/20/20. Any particular clue about the timing? The timing probably has to do with the earnings release. Virtually all companies schedule board meetings at the time of the 10-K and 10-Q releases so that the audit committee can review the results with the outside auditors and discuss any issues, and while the board is in town it is normal for compensation committee decisions to be made at the same time, especially if part of management's bonuses are tied to specific budget numbers. RSU grants are normally decided by the Compensation Committee and ratified by the full board, so now is the most logical time to make such awards. All typical timing for public companies.
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Post by matt on Feb 24, 2019 10:27:27 GMT -5
Officially, the company had 159.6 million as of the end of Q3 and issued 26.7 million just before year end (plus another 26.7 million additional warrants). That is out of 280 million authorized. Essentially 100% of the authorized are locked down because of warrants, convertible securities, and employee option plans so no additional shares can be issued until and unless the shareholders authorize more. Assuming the warrants expiring in April are not exercised, that will free up 14 million shares which can then be issued.
As for how many shares will be needed, it all depends on how long the cash burn related to Afrezza is allowed to continue, how much money comes in from licensing deals, and what price the market puts on the shares. Given that 280 million shares are essentially locked down, assuming the company can get to 2024 with just 40 million more might be more than a tad aggressive. You really need to outline your cash flow assumptions through 2024 and then figure out where the cash is coming from; that will give a better idea of how many shares are needed.
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Post by matt on Feb 22, 2019 11:32:46 GMT -5
Straight from the trial site... Estimated Enrollment : 400 participants You are citing a different study, the one AgedHippie refers to is indeed 40 patients. His point is valid that there is not active comparator allowed from the currently marketed RA insulins which rather stacks the deck in favor of Afrezza and an outcome that is nearly a foregone conclusion. If you measure your post-prandial glucose and find that it is out of range, a puff of Afrezza should certainly make the level go down. The only surprising outcome from that trial would be that Afrezza did not reduce the glucose level. So yes, Afrezza will reduce glucose and it will almost certainly be a statistically significant difference but that is not an apples-to-apples comparison for the vast majority of diabetics who use a RA insulin. Why not expend money and effort on a trial that compares Afrezza in a head-to-head comparison of competitive products? Physicians would be more influenced by that sort of data.
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Post by matt on Feb 20, 2019 12:01:02 GMT -5
Sure, but how long can Mannkind afford such deep discounts? None of us on this board knows. I believe Afrezza is not only promotionally sensitive but also PRICE sensitive. How much can shareholders know with certainty, maybe not much, but the financial statements are there for a reason. It is fairly simply to estimate from Symphony and IMS data the total volume of units sold, and from the cost of sales / inventory figures the actual cost of producing those units. If you are good at financial statement analysis, you can did into the footnotes and details about the various write-offs and reserves the company has booked in recent years and get an even better picture of what those costs will look like long-term. For those not so experienced at reading financials, it is enough to know that at present the cost of sales is higher than the net revenue per unit (i.e. for every dollar MNKD receives the company spends more than one dollar simply to produce the product). If rebates and discounts were totally eliminated, either by law or by a change in business practice, Lilly and Novo could cut list prices by 75% and still be making a healthy profit, while a 75% cut in list prices for Afrezza would dig the cash flow hole deeper. If Afrezza cannot cover its costs with its present pricing, it will do even worse if the market moves away from rebates and discounts simply because its actual costs are less variable than its competitors. That is a fact, and it makes for a difficult to compete absent a breakthrough in manufacturing cost reduction.
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Post by matt on Feb 20, 2019 9:07:49 GMT -5
The report date is sooner than what I was expecting. Does anyone know the latest date that they could have reported? And how close is this to the UTHR reporting date? The SEC required reporting date is based on the company size. Most companies are "accelerated filers" and must report 75 days after year end (i.e. on or before March 18). United Therapeutics is a "large accelerated filer" and must report 60 days after year end (i.e. on or before March 1). March 18 is more than 75 days, but the actual due date is on a weekend so the date slides forward to Monday, and the company can apply for a slightly extended filing date. As somebody noted above, what really matters is when the audit is sufficiently complete that the accountants have signed off. If the auditors have signed off by February 1, a company can report on February 2. You can find a few large companies with very stable businesses that report as early as mid-January because their sales are sufficiently predictable that the auditors let them do a hard cut-off in mid-December and they simply estimate the last few weeks of the year. Auditors tend to focus on their largest clients due to the earlier reporting date, and a company the size of MNKD is doing well to report by the end of February.
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Post by matt on Feb 19, 2019 9:25:31 GMT -5
we all have been waiting some time for that point. I think Rx reform would be great for us "According to the plaintiffs, in order to secure positions on pharmacy benefit managers’ (PBMs’) formularies, the drug companies artificially inflated list prices in order to provide higher rebates to PBMs while forcing patients (especially those who are uninsured, have high deductibles, have high coinsurance rates or are in the Medicare Part D coverage gap) to pay more out-of-pocket." Be careful what you wish for. Certainly the PBMs and large insurers have been pushing for ever increasing rebates in exchange for maintaining formulary exclusivity, but if rebates are prohibited as some in the Trump administration have proposed, that would not be good for MNKD. Certainly it might improve formulary access, but at the same time the prices for other rapid acting insulins would fall to 2010 prices which are less than half of today's price. If you think it is hard to compete against Lilly and Novo at the current price point, imagine what it would be like if those providers cut prices by half or more. The big players can take huge price cuts and still be making money selling insulin while MNKD has not yet figured out how to make a product that sells for more than its manufacturing cost. Beating up on Lilly and Novo may be a feel good moment but it might make matters worse for MNKD, not better.
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