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Post by matt on Jun 17, 2018 10:32:54 GMT -5
Yes, index funds can and do lend shares as a way to supplement returns but that is something they need to do if the administrative costs are to be kept low. The index fund promises to deliver the exact return on the index minus their administration fee which can be as low as 8 basis points (8/100ths of 1 percent) on the amount invested, so the cost of running the operation has to come from somewhere. Most investors prefer lower fees and don't care about shorting of any particular stock since by buying an index they are betting on hundreds or thousands of stock.
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Post by matt on Jun 17, 2018 7:51:27 GMT -5
Yeah, it was really odd wording. The list is preliminary in the sense that things like mergers can change the final list. Otherwise, it is set on the rank day in May, which gives everyone a head's up on what the changes will be. Is there a minimum size position they need to take? Yes, the minimum (and maximum) size they need to take is whatever percentage MNKD makes up in the index. Most stock indicies are quantity weighted so a stock with a $10 price and 2 million shares outstanding will be double the weight of a stock with the same $10 price but only 1 million shares. Index funds buy the index, exactly what is in the index, and nothing more. If MNKD represents 0.02% of the value of all companies in the Russell then the funds will put 0.02% of their assets in MNKD. The position is constantly tweaked as component prices move up and down, and as investor buy into or exit the fund, but whatever comprises the index is what the fund holds at the end of the day. Needless to say this is all computer driven trading because no human could tweak holdings for 3,000 stocks every trading session.
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Post by matt on Jun 15, 2018 15:28:47 GMT -5
Is there a standard test for this? There are standards for how stability tests are done that specify what "room temperature" really means and for that matter what "refrigeration" or "frozen" means. The international standard is that "controlled room temperature" can fluctuate between 15 and 30 degrees C (roughly 60 to 86 F), and the FDA likes to see samples kept at each end of the range as well as those in the middle of the range. Usually samples are taken at three month intervals for the first year, six month intervals for the second year, and annually thereafter. Product must be tested in each container size offered for sale so the 4U cartridge is a different test than the 12U. There are also specs on direct light and humidity and FDA generally requires that the test product be stored in direct light in humid conditions. Alternatively, the package can be designed to prevent light or humidity reaching the product, but this has to be tested as well. Overall, stability testing is not that expensive and there is no excuse to have a short expiration date unless the drug is unstable. Literally the manufacturer just puts samples in rooms with the specified conditions and then the packages are opened at the specified intervals and tested for degradation using simple chemistry tests any pharma company should be able to do in their sleep. If Afrezza has restrictive expiration dates then it is likely because the drug is not sufficiently stable in the required conditions. Granted, most patient homes may be significantly cooler than 86 degrees, but the drug may sit in a warehouse either in Danbury or at a wholesaler for much longer periods. Pharmaceutical warehouses and trucks are only cooled to 86 degrees, per the spec, so degradation is a legitimate worry as in the humidity. Warehouses hold all manner of products and they tend to be located near waterways when possible to allow for containerized freight to be sent via ship so the conditions are often humid. Summer is never a fun time to visit a pharmaceutical warehouse!
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Post by matt on Jun 11, 2018 15:24:25 GMT -5
Why are we dealing with debt not due until December 2019? Somwthing else in the works. This is called managing your duration. Duration is a fairly esoteric financial topic that is mainly of interest to fund managers who have long-term liabilities and long-term assets. Without going into detail, the goal for the manager is to roughly approximate the duration of your assets and the duration of your liabilities. For example, if you are a life insurance company with a bunch of policies expected to pay out in an average of 25 years, you don't want assets that mature in 20 years or 30 years because then you have a mismatch. Deerfield can shorten the duration of their asset (the debt due from MNKD) by playing a little hard ball. In recent deals, they have rearranged the timing of MNKD's future commitments so that cash received in the near term is applied to debts that would otherwise be due in the longer term. That reduces the duration of their portfolio and their risk. By moving payments earlier in time, they get the certainty of cash now (or soon) instead of the uncertainty of cash later, and they still have a security interest is the assets of the company. This is equivalent to what happens to a bank when a borrower decides to pay off their mortgage sooner rather than later; if the mortgage was due to run for another 15 years but the homeowner has paid it down such that the remaining balance amortizes over 5 years, the bank has less risk of default but still holds a first mortgage on the value of the entire house. It should also be noted that sometimes debt pools are arranged in tranches, and different people own different tranches. Deerfield is a debt fund, but they get their money from various investors with whom they do business. There may be certain tranche holders that want their money back and have offered to give Deerfield a bonus of some sort for liquidating a particular tranche of payments earlier than planned. Those dealings are between Deerfield and their private investor so we cannot know if such arrangements exist or not, but it would not be uncommon.
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Post by matt on Jun 4, 2018 12:25:31 GMT -5
A drug that is illegal to sell in the US is also illegal to export, period full stop. There are no exceptions to this rule even if the drug would meet regulatory requirements at its intended destination. If MNKD had segregated production lines they could use insulin raw material from two different suppliers (so long as both were approved), but if the company wanted to use insulin from two different suppliers on the same production line they would either need to shut down the line for cleaning between batches to avoid cross-contamination, or else MNKD would have to prove that the two insulins were identical in every way. Proving identity for a large protein produced by different methods by different companies is probably an impossible task. As for India and China, stop thinking of those as markets. They are not markets, they are countries on a map that happen to be occupied by a lot of people, most of whom are still poor by world standards. There is a market for the upper class, which may account for 10% of the population, that is covered by private medical insurance and which has considerable disposable income. The opportunity is to sell to to the 10% because the other 90% struggle to buy food and can't afford much medicine at all. The other thing to keep in mind is that most countries in the world are used to paying FAR LESS than US prices for drugs. Here are a few examples of current approved government prices for rapid acting human insulins: Germany, 100U/ML, 30 ML vials (3,000 units) Euro 86.96 = US$101.67 United Kingdom, 100U/ML, 10ML vials (1,000 units) Pounds 14.08 = US$18.75 New Zealand, 100U/ML, 10ML vials (1,000 units) NZ$ 30.03 = US$21.11 India (State of Tamil Nadu), 40U/ML, 10 ML vials (400 units) INR 51.20 = US$0.76 Oman, 100U/ML, 5X3ML Cartridges (1500 units), OMR 19.84 = $23.19 Canada (Ontario), 100U/ML, 10ML vials (1,000) CA$29.64 = US$22.91You can work out the cost per unit for yourself to make the comparisons apples to apples, but consider that the 4U / 90 cartridge pack of Afrezza (360 total units) retails for about $300 in the US. Government health authorities used to paying far less for RAI are simply not going to pay for Afrezza. If you can't make money selling to the German government, then it is nearly hopeless trying to sell to any other government in the world other than the US. There is a reason US health insurance costs are so high. Which is why I say that shareholders need to quit looking at raw population numbers and maps of the world and start looking at income distributions and the number of actually wealthy consumers in the international markets. That will make the potential readily visible since it is only the few that do not rely on government healthcare that constitute a viable opportunity. Here is a good list of links to official price lists at various government ministries around the world maintained by the World Health Organization, the numbers may surprise you: www.who.int/medicines/areas/access/sources_prices/national_medicine_price_sources.pdf.
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Cash
May 10, 2018 6:11:57 GMT -5
Post by matt on May 10, 2018 6:11:57 GMT -5
Yes. Will the REMS removal and Stat study translate to more sales. If not it’ll be more dilution. The biggest impact of REMS was that the sales force had to mention it when detailing a new physician, but nothing more. I doubt it really had much of an impact on sales. STAT, due to its design, is set to deliver a positive message but it is a very small study that is not controlled and those don't change physician behavior much. Will those two items help? No doubt they will, but expect incremental improvements not hockey stick growth rates. The fact is that the company burns cash at rates that far exceed the increase in profit contribution from additional sales. They will be in cash raising mode for at least several more years.
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Post by matt on May 9, 2018 10:34:57 GMT -5
Will trials be required in India before approval is granted? The standard for approval, almost anywhere, is that the drug must be tested on a sample of ethnic groups that approximate the intended market. There are legitimate differences with how drugs are metabolized by different groups based solely on genetic differences, thus to get a drug approved in the US based on foreign data it needs a mix of Caucasian, Hispanic, African and Asian ethnic groups or else a bridging study will be required. If necessary, the bridging trials are normally limited size Phase III trials. I would not base any estimate about India based on what happened to Generex since that company had a very dysfunctional management. The other thing to look for is whether India will require additional stability studies. It is hot in India during the summer, significantly worse than the SW United States, and humid. In parts of the country the electrical grid is prone to failure so storage requirements may be more strict than for the US. That all depends on how the regulators react. I know many are disappointed by the amount of cash received for the deal, but don't expect a lot more from China. The markets are roughly the same size and the pricing dynamics are similar, although Chinese pricing is always less transparent. Besides, now that the cash benchmarks have been established at the low end don't expect the Chinese to suddenly pay up; they are better negotiators than that.
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Post by matt on May 8, 2018 14:14:45 GMT -5
Am I missing something? If we averaged $600k / week in sales for the year, isn’t that well within the 2018 guidance? Not that I’m happy with $31.2 mil in sales, but I don’t understand the concern that they’ll lower guidance. dreamboatcruise explained it pretty well. For reference, the difference between retail sales reported by Symphony and net sales reported by Mannkind has been running about 50%. Also you should be aware of "good news, bad news" announcements such as the agreement for CVS/Caremark to list Afrezza on some of their tier 3/4 formularies. The good news is that more patients will have at least some insurance coverage for their medication and that could help future retail sales, but the bad news is that CVS/Caremark didn't agree to that deal without the promise of a rebate which will further reduce the gross retail to net reported sales difference.
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Post by matt on May 6, 2018 16:46:34 GMT -5
Appreciate the response - it appears that unless i want to loose a great deal of $$ i will need to go even further out on a limb and invest more $$ to try and average down. Thanks Guys!! Don't get into the fallacy of averaging down. If you made an investment at too high a price in prior years, you have incurred a loss. Realize that loss when you have taxable gains to offset and get on with life. Nobody bats 1.000 and any gambler will tell you that it is better to fold then to try and salvage a weak hand. Look at each investment you make as a separate transaction that is totally independent of every other investment transaction you have ever made (because it is). If you think MNKD is a good buy at the current price then by all means buy a reasonable amount of shares. If you would not buy at this price for any reason other than averaging down, then you are letting a sunk cost influence future decision making and that is never a good idea.
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Post by matt on May 1, 2018 6:55:37 GMT -5
It might not make sense to invest precious dollars in going after this population. While it is unfortunate that some women have this condition during pregnancy, onset of gestational diabetes it is almost always a third trimester event that self-corrects when the baby is born. That would mean a significant sales effort to obtain patients that will be on therapy for less than 90 days. Given the low penetration in Type I and Type II diabetic populations, a continued focus on those populations would be a far better investment. That is not to say that the affected women could not benefit from the drug, but this is not a business priority for a company bleeding cash.
Since Afrezza needs careful titration and patient education, I wonder if the physicians will simply decide that it is too complicated a regimen given the need to get glucose under control rapidly. By the time the patient is properly trained and the medication adequately titrated the pregnancy, and need for supplemental insulin, may well be over.
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Post by matt on Apr 28, 2018 16:42:01 GMT -5
bigger players also look at cash flow, run way , adoption , insurance and they dont mind paying up .. if they want to buy, they will buy even if its trading at 1 billion market cap. unlike retail who just buy their minimal shares looking at just the price. oh..its under $2, lets just buy.. That comment is pretty much spot on. I did M&A for a good portion of my career and if an asset is critical to the long-term strategic plan you simply write the check. If the asset is not critical to the plan, then the price really doesn't matter; it could be damn near free and a big player will not go after it. In the 1980's and even into the 1990's a big pharma would go after an opportunistic play, but as the industry has consolidated the pharmas tend to be laser focused on a handful of therapeutic areas and no longer try to be all things to all patients. The other thing retail investors tend to overlook is the plethora of interesting opportunities. Eli Lilly and Novo Nordisk are well ensconced in the market and a new entrant will have to take market share away from two well-positioned and experienced companies. That is much easier said than done when the competitors are willing to use price to maintain market share. If you are the decision-making executive, do you want to buy a company that will have a hard slog making a go of it in the market, or do you aim at the low-hanging fruit in another therapeutic area? It is not good enough for MNKD to be an interesting opportunity, it has to be the most interesting opportunity available for a buyer to step forward. Metabolic drugs in general, and insulin in particular, are not nearly so attractive as they were fifteen years ago.
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Post by matt on Apr 25, 2018 6:29:37 GMT -5
It is pretty clear from the letter that the REMS, which consisted of the communication plan, is no longer required. Since most of that is water under the bridge, the benefit is minimal but it is helpful nonetheless.
A change in the REMS requirements has no impact on the label copy so the black box remains. If a label change is approved, that will be a separate letter with a sample of the new label and package insert. Those are harder to obtain.
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Post by matt on Apr 24, 2018 9:52:17 GMT -5
Milestone payments are always back-end loaded, and most of the time the maximum potential milestone recited in the agreement never materialize. It is common to throw a few million out when certain development milestones are reached, such as an agreed formulation and approval of an NDA. The big money comes when the product under development hits certain predetermined sales levels according to a table that might pay $5 million when cumulative sales reach $50 million, another $10 million when cumulative sales reach $75 million, and so on. Most drugs fail during the development process and the ones that do make it through FDA are rarely the screaming commercial success the developer had hoped. That is why the high end payout of milestone agreements almost never materialize, but they make for a nice PR.
Nothing can be said for sure without seeing the actual contract and the royalty / milestone tables are generally redacted under an SEC approved confidential treatment order. However, you might expect that MNKD will not see more than a few million in development milestones until RLS has an approved drug, and that is likely at least 6-8 years away because of the time required for clinical trials and the FDA approval process, and then only if the RLS drug is a commercial success.
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Post by matt on Apr 21, 2018 9:42:38 GMT -5
The standard of care is giving out the [IMHO: somewhat misleading and incomplete ] impression that: (a) inhaled insulin is non-inferior to RAA, but less effective in reducing A1C; (b) inhaled insulin has more limited dosage range; (c) inhaled insulin is contradicted with chronic lung disease and not recommended for someone who smokes; (d) inhaled insulin requires spirometry testing; and (e) is more expensive than RAA. Each of those impressions comes directly from the Afrezza label with the exception of average wholesale price. ADA is not going to issue a recommendation that contradicts a company-authored and FDA approved medication label. Until, and unless, Mannkind does the 8,000-10,000 patient long-term safety study FDA has mandated, the black box warning is going to remain. You can dislike the recommendation, but you cannot complain that it is not fact-based. Average wholesale price is what it is, and it is likewise a fact that Afrezza is not the cheapest RAA insulin on the market. The company could reduce the price, but given the cash bleed I am not sure that the trade-off between sales volume gained and profit margin lost would be worth it from a financial standpoint. There is only one way to test what dropping the price below $400 would do to the company's financial results.
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Post by matt on Apr 18, 2018 16:35:12 GMT -5
Judging by the overwhelming response I got from this post, you didn't watch the whole video (you have to wade through the ad in front of the video), or the hangover I had from the night before warped my synapses enough for me to be the only one that could see the humor in this. Oh well. No, you just didn't convey the proper energy. Maybe we could hire Ray to get people excited: www.youtube.com/watch?v=qdbrIrFxas0
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