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Post by matt on Nov 8, 2017 10:51:45 GMT -5
As I mentioned in another post, regional marketing deals involving big pharma were the norm back in the 1970's but have become increasingly rare. Even in places like Japan where some of the big pharma avoided like the plague, I have not seen a major regional deal since the early 1990's. Big pharmas are organized by global business units and they tend to want a drug for all countries or not at all and, from their perspective, that makes perfect sense.
Which leaves distributors. There are regional distributors, but they tend to operate on tight margins. Distribution is an entirely different business than pharma marketing and most don't have the kind of highly trained sales force needed to push a drug into a competitive environment. Similarly, most companies do not offer enough of a financial incentive such that the distributor can afford to field a large sales force. If you look at the three largest US pharma distributors, McKesson, Cardinal Health, and Amerisource Bergen, they operate on razor thin margins and huge volumes. Even McKesson, who is the most profitable of the group, only made 3.5% at the operating profit line. From that income they have to pay taxes, carry receivables, invest in warehouses, debt service, and so on. The others make even less.
Back in the day (the 1970's), many international distributors made 5-6% at the pretax line and there may still be pockets of the world where that is true. Whether MNKD can find one of those to cover a huge geography like India and the Middle East is a good question to ask.
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Post by matt on Nov 8, 2017 9:24:39 GMT -5
All of these things would seem to directly contradict the notion it would be one of the global big pharma companies. Exactly right on that comment. As I have said many times, the global pharma companies either want to control the entire product (globally) or not at all. There have been very few deals where a major player takes on a regional opportunity since the late 1980's. Part of that has been driven by regulatory changes, partly by how the major players have restructured themselves into global strategic business units. At the same time, the number of potential regional partners has declined precipitously as the good ones are acquired and the poor ones go out of business. As for the share increase, it was to be expected. Nothing happens quickly in pharma unless the product is truly novel and has no competition. Afrezza is insulin and that is not a novel drug despite its unique attributes, and the price competition is fierce with two large an well-entrenched players to contend with. The company has to fight a strong headwind, and MNKD is not going to be successful or cash flow positive in the short-term (a year or two). Without an increase in capitalization there will be no long-term; only insolvency. Dilution hurts, but the alternative is much worse for shareholders. Good news and well-timed placements can make the capital increase more palatable, but at the end of the day investors have thousands of public companies to choose from and MNKD has to compete in the financial markets just as it competes in product market, and no company is big enough to dictate financial terms to Wall Street.
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Post by matt on Nov 7, 2017 10:05:02 GMT -5
other than the cob no one can say definitely there was a long position taken thru the secondary offering. Until some 13d s come out I think Wall Street lulled a fast one. Sold above 6.50 and covered thru the secondary at 6. You won't necessarily see that data, not ever. Many investors deliberately cap investments at 4.99% of the outstanding shares which lets them off the hook for filing a 13D. Similarly, most institutional holders only have to disclose once per quarter their holdings on the last day of the quarter, and that not until 45 days after quarter end. It doesn't matter if the institution was long or short, or by how much, on September 29 or October 1; they are only required to report their net position on September 30 and then not again until December 31. A lot of PIPE investors commit to purchase securities from the offering and immediately short the position, delivering the new shares to close off the short. This is entirely legal since the investor has a bona fide economic exposure to hedge the moment they sign the subscription agreement. While some will argue that this is not worth it to simply lock in a 50 cent gain, making small money on a riskless bet over the course of a few days translates to huge percentage gains when repeated enough times over the course of a year and the investors don't need to worry about the fundamentals of the company they are buying; only the size of the discount.
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Post by matt on Nov 3, 2017 7:11:02 GMT -5
Because they don't have enough to sustain operations . . . which means there is another raise coming in the future and if he continues to play nice they may get a piece of the next round. Analysts show their teeth once in a while to remind the company who writes the research, that the research isn't really free, and that the teeth can either smile at you or bite back. Message delivered. no guarantees of such, that is an assumption, it doesn't mean squadoosh or it could mean that Mike either sees funds coming from something or someone else....how does the analyst know for sure? Are you insinuating that he has some type of inside information of an additional capital raise/direct offering/ and not Mike waiting to use the ATM or some other vehicle? He looks like an idiot and sour grapes and his third tier firm would have been better served playing with sugar to get honey rather than throw a tantrum at missing out on the last one. How's his track record post his recommendations? The company is not generating positive cash flow, and anybody who knows how to read a financial statement knows that, so another raise is coming if MNKD is to remain in business. You are correct that those funds could come from any source, not necessarily secondary offerings, but "something or someone else" is a lot less likely method for a public company to get funding than the secondary market. The issue here is that MNKD made a strategic blunder by not directing part of the deal to Maxim. When a company writes research on your firm, the quid pro quo is that the banker gets a taste of the next financing. It is not necessarily a guarantee of 100% of the deal, but the company can direct the lead bank to share the offering with other firms in particular percentages, just as they can direct a portion of an IPO to particular investors. The rules of the game are largely unwritten, but widely understood. When you are a multi-billion dollar giant with investment grade securities you can shop for the investment bank that suits your taste, but a company like MNKD cannot access most of the large investment banks. For a smaller firm like MNKD it makes sense to have lots of friends, and very few enemies, on Wall Street.
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Post by matt on Nov 2, 2017 12:48:03 GMT -5
RRE Funding and Stuart Ellman ring a bell? If your funding One Drop why not MNKD. Afrezza is a pharmaceutical with all its charms and drawbacks. One Drop is a Class II medical device with an entirely different set of charms and drawbacks. While it may seem that there is some synergy there, most pharma investors stick to pharma and most device investors stick to devices. Pfizer, for example, has a large portfolio of drugs for treating cardiac and other metabolic diseases but they totally exited the device business in the late 1980's. Similarly, Medtronic has an outstanding medical device and disposable business but does not develop drugs (although they market a few made by others). The other issue is that One Drop is in business to sell monitors and strips, and from their standpoint it doesn't matter if the insulin used is Afrezza or not. However, their other co-promotion agreements may not fare so well if there is a perception that One Drop is in bed with a competitor. That is why most co-promotion deals are either exclusive between two business partners or totally brand independent, and Afrezza doesn't have the sales volume at present to demand an exclusive relationship.
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Post by matt on Nov 2, 2017 7:09:05 GMT -5
Why not just go straight from buy to sell if you are saying they don't have enough to sustain operations... Because they don't have enough to sustain operations . . . which means there is another raise coming in the future and if he continues to play nice they may get a piece of the next round. Analysts show their teeth once in a while to remind the company who writes the research, that the research isn't really free, and that the teeth can either smile at you or bite back. Message delivered.
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Post by matt on Oct 26, 2017 12:09:00 GMT -5
The link suggests that Mannkind is targetting people laid off by Merck. Mannkind did the same sort of thing a year or two ago, when another pharma laid off its employees (off the top of my head, I cannot recall which pharma it was). Didn't work out all that well. You gotta remember, people being laid off are not the cream of the crop. The photo is certainly a Merck facility, but candidates could come from many companies. With the loss of patent exclusivity on Lantus (immediately followed by Lilly's launch of a biosimilar) Sanofi's diabetes business has turned into a dumpster fire. Novo Nordisk laid off 185 field sales reps in August, and even Lilly is laying off 3,500 in the US although most of those are head office and research. Bottom line, more and more the purchasing decisions are not made by the physicians but by the pharmacy benefit managers like CVS/Caremark and ExpressScripts. Fewer physician offices will even let a pharma rep through the door so that means fewer reps are needed, and that is doubly for big players who have major PBM contracts locked up. A pharma rep being laid off because they live in a territory that has largely gone to a "no see" office policy for drug reps might be the cream of the crop but they are located in the wrong geography. However, if they are being laid off because doctors in that geography won't talk to them then they are not going to do any better banging on doors with Afrezza in their bag. The "share of voice" selling model in pharmaceutical is all but dead for most companies. The question is whether MNKD can do any better if their reps are no more welcome than others.
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Post by matt on Oct 26, 2017 8:17:54 GMT -5
What agedhippie said. There is little reason any company would spend time and money to negotiate with MNKD if they knew that Amphastar could steal the deal as it neared the finish line. Agreeing to compensate the other party for their time and efforts is normal business practice, and precisely why most merger agreements have a walk-away clause should a better offer be received by the seller. Practically speaking, the mere existence of the Amphastar arrangement makes other parties less likely to deal with MNKD. Recovery of wasted expenses is one thing, misdirected management efforts are far more difficult to value.
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Post by matt on Oct 25, 2017 11:40:54 GMT -5
Someday the EU will get it. This is a global. It is not a matter of the EU "getting it". Like most things in Europe, the CHMP is a committee with two rapporteurs from each member state and it is largely a consensus driven process. You don't see the kind of adversarial debates and arm wrestling that are characteristic of FDA advisory panels because most of the negotiations take place quietly behind closed doors. All it takes is one rapporteur that is concerned about cancer risk to side track the process because consensus requires that nobody on the CHMP has a serious objection. An EU approval literally requires the EU parliament to pass an act, similar to an act of Congress, to finalize the approval and I am only aware of three instances where the EU parliament acted differently from the EMA recommendation. What shareholders can't know is what has happened behind the scenes. Each new drug is assigned two rapporteurs who have the job of quietly soliciting opinions from their colleagues, and working with the sponsor to resolve any issues. It is unknowable what kind of feedback has been given and how much of an effort it would be to get EMA approval. However, given the magnitude of healthcare funding in most EU countries versus Brazil, it makes more sense to push on the EU. Brazil has a lot of people, but most of those people and their national health system are both extremely poor resulting in dismal pricing. That is not the case with central and northern Europe where the Germans and the Swedes are used to paying about 80% of US prices.
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Post by matt on Oct 18, 2017 16:14:12 GMT -5
We watched the stock price triple in a week in order to place 10 million shares at $6. There were some positive events announced a few weeks ago, but they were not sufficiently positive to justify triple the price without confirmation that the changes will translate to a better income statement going forward. I have to think that the stock will move backwards for a while as the market waits to see the income statement metrics improve in a measurable and consistent way. In the meantime, the price move put some much needed cash on the balance sheet which will give management the time to produce better numbers. True price appreciation always follows improvement in fundamentals, not the other way around. The recent price pop was anticipatory, but if the fundamentals move north the improved price will come back. If not, it go the other way. Give it some time.
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Post by matt on Oct 18, 2017 8:40:49 GMT -5
The original announcement suffices for SEC disclosure purposes. Once the company filed that notice, they created an obligation for a second disclosure only if the deal did not close so the absence of a second announcement is an indication that the offering did, in fact, close on the schedule indicated. The rest of the details will come out in the 10Q as a subsequent event.
As for why there was no filing by 5% holders, most PIPE offerings are chopped into pieces and sold to a number of funds and private investors. That might prevent any of the new investors from crossing the 5% threshold, and many investors deliberately avoid buying more than 4.99% of the shares precisely to escape such requirements.
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Post by matt on Oct 16, 2017 8:26:52 GMT -5
Mannkind can advertise what is on the label without further permission from FDA, but only what is on the label. As noted, they must also list the most serious side effects and the black box warning at least as prominently as they list the benefits which makes a DTC campaign less effective.
To the comments above, Novo did not get a new category designation either so they are unable to advertise anything other than rapid acting either, but the market is already crowded by prandial insulins with rapid acting designations. Making enough noise to make your product stand out in DTC advertising is a tough challenge. I think the best MNKD can do it to show the PK/PD data that FDA did approve and try to convince the physicians (and insurers) that the difference is clinically relevant and economically meaningful. Normally winning that argument takes a long-term follow-up study comparing the product to others on the market, and acquiring that data is neither fast nor cheap. That is why the approved PK/PD graphs are best short-term weapon in the hands of the sales force.
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Post by matt on Oct 12, 2017 7:50:49 GMT -5
There is not a lot of number crunching to do on a trial like this. There are only 60 participants and the study only lasted four weeks, so there is not a lot of time for data points to go missing (that is the number one headache in any clinical trial). This should be an easy study to data scrub, and the statistical analysis that is even possible on a two-arm study with only 60 subjects is very limited compared with a trial that enrolls thousands with detailed sub-group analysis. Without going into the intricacies of statistics, generally a study requires 30 subjects per arm to have minimally credible statistics, and this study barely reaches that threshold.
I believe the comment that they will have top line results later in Q4. However, note that this is an investigator sponsored study by the University of Colorado so it is not Mannkind's call when the data gets published. The sponsor gets to make that decision, and they may want to announce it at a conference or in a medical journal. Academics have different priorities than commercial companies, but free data and more publication is never a bad thing..
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Post by matt on Oct 11, 2017 9:51:49 GMT -5
I think an offering at $6 without any warrant coverage is nothing to sneeze at given that the stock was $1 and change a few weeks ago. This gives the company some much needed breathing room and removes the risk of near term insolvency regardless of what Deerfield and Amphastar decide, and that can only be characterized as a big win all around. The investors likely shorted the stock yesterday, as is common practice with any PIPE transaction, but they will cover when the new shares are delivered on the 13th so that is not going to create incremental downward pressure on the price.
Now Mike and friends need to show that they can turn the label change into better insurance reimbursement and script growth soon enough to move the needle on Q4 results because cash will be running a bit thin again by the time the 10-K is published. If Q4 and Q1 are strong, it will make the next raise that much easier.
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Post by matt on Oct 3, 2017 11:23:06 GMT -5
Why someone would purchase ~3k $3 puts @ $0.47 puts expiring this Friday? I might very well be a hedge of a portfolio of securities. Buyers of puts do not necessarily think the stock is going down any more than buyers of calls think the stock is going up. Unless you know the entire portfolio of securities held by this individual you just have to guess. Here is one hypothetical. A trader bought 3K shares near the open at $2.32 and added the puts later for $0.47. Total investment 2.32 + 0.47 = $2.79. Now this person holds a guaranteed value of $3.00 on his position, but if the stock keeps going up then he might do even better. However, if the stock price declines the $3.00 put insulates any downside. So this investor now owns the better of $3.00 (which is a profit of 21 cents per share vs the cost of $2.79) and wherever the price winds up on Friday, but the investor is not exposed to any downside risk. It is never the profit on a single security that matters, it is always the total return on a portfolio of related securities.
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