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Post by matt on Jul 27, 2017 7:36:00 GMT -5
18 months is ample time to set up deals... and the fact that two different deal advisers were just recently hired means that he wasn't having much luck finding deals that would bring in the money within the time frame required. That sums it up pretty well. I have done a lot of healthcare deals in my career, some from inside a big company and some working with small clients seeking a deal. It is easy, very easy, to get an initial conversation with any big pharma company, but getting through to the next phase of discussion is usually frustrating as can be. In large companies you have different committees to deal with that are looking at hundreds of opportunities and are under pressure from their management to focus resources on a just a handful. When I managed the strategic portfolio for a large enterprise, I had 1,500 deals come across my desk every year, we took a serious look at maybe 100, and closed on about 20. Once a deal was rejected, it was almost impossible to have it looked at again (we maintained an Access database of deals to insure we were not reinventing the wheel). I knew many people in similar jobs at other companies, and we were all doing something similar to manage deal flow. Along comes Mike who is trying to do a deal with a major distribution partner. How many of those major companies have never been exposed to Afrezza before? Whatever you may think of Mike's predecessors, they were not terminally stupid and they approached most of the logical candidates. Al managed to sell Sanofi on the concept, but you can be sure that approaches were made to Lilly and Novo as well as players on the periphery of diabetes like Merck. Those companies are unlikely to return even phone calls from Mannkind at this point. There are whole groups of companies, like BMS, that focus on areas like oncology and are not interested in metabolic drugs at all, and true biotechs, like Amgen, that only invest in recombinant proteins or monoclonal antibodies. They won't even look at an insulin opportunity because it does not fit with their marketing focus, production expertise, or regulatory experience. Business model alignment is more important than you think. All of which means that Mike, despite his best intentions and substantial efforts, may not have that many potential partners left to pitch. Most of the companies still interested in metabolic disease that have the kind of money needed to help Mannkind are outside the US, and they are difficult to identify if you don't read the trade publications from those countries every day (does Mike read Japanese?). I suspect that management is doing all they can, but finding a serious partner at this point is like looking for the proverbial needle in the haystack and the process can only move as fast at the potential partner. Just because it is urgent for Mannkind to find a partner does not create a sense of urgency for the other company who may have other priorities.
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Post by matt on Jul 26, 2017 15:09:11 GMT -5
It could be Mann Group having to monetize a part of their shares to make the upcoming $19.4 million payment. If they are quietly moving big blocks to a single buyer, like large a fund, they can do so in an off-the-market transaction or which has almost no impact on the PPS, but it has to be reported if a broker was involved so it hits the tape eventually.
If you look at the tick by tick trading for the previous two weeks you can see some large transactions (100K blocks) going through during market hours, and those have started to move the PPS and, in more recent days, even smaller blocks have caused the market makers to drop the bid price immediately. Doing large blocks off-the-exchange or outside of market hours is better for everybody when trading volume is low.
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Post by matt on Jul 24, 2017 7:02:19 GMT -5
The amphastar contracts were renegotiated. The Pfizer insulin needs approval for use as technosphere insulin? The amphaster insulin is approved for technosphere.
the post makes me flash on over the counter.
Whenever you buy a drug, it comes with an expiration date that is generally not more than three years from the date of manufacture. If you have old drug, its chemical stability cannot be guaranteed beyond the expiration date. Often this is not because the molecule is inherently unstable, but because the manufacturers only tested the drug for 36 month stability and not 48 or 60 months (or longer). Bulk API (active pharmaceutical ingredients) also have an expiration date, so the Pfizer insulin and all insulin bought from Amphastar will likely expire before it can be used. The difference is that bulk API can be restested to prove that the molecule is still stable and, if it is, then FDA will allow it to be used in manufacturing new product for the consumer. Some molecules are stable under proper storage conditions almost indefinitely, but the manufacturer has to test each lot periodically if they want to extend the usable life. At some point it comes down to a business decision of whether to spend the money retesting, or to spend the money to buy a fresh supply. Given that MNKD has such large quantities of insulin on hand I suspect it is a very stable drug.
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Post by matt on Jul 23, 2017 13:05:19 GMT -5
All these new hires indicates bankruptcy!?!? It indicates nothing. If Mannkind cannot get more funding then a couple of employees makes no difference to the outcome. If they can get funding then the money is there to cover the employees. Either way Mannkindy may as well hire on the principle that they are going to get the money, and anyway CT is an at-will state so Mike can always fire them if need be. Pretty much what agedhippie said. For a company in MNKD's position there is only one metric that counts, and that is cash in the bank. If the company has cash to meet its legal obligations as they mature they will not go bankrupt, period. If cash continues to leave the company faster than it comes it, the day will come where they cannot meet their obligations. Mike (and Matt before him) have done some very positive things, none of which can be criticized, but growing scripts at the rate we have seen, doing more social media, running television commercials, making some key hires, and cutting international deals with no up-front payments do not move the cash balance. Moving the Deerfield payment out a few months provides some breathing room, but it does not increase cash. Reducing the last of the Mann Group credit line to cash is a positive that moves the cash needle, but that contribution will only last about two months and that payment is not in the bank just yet. Mike has to step up and complete a strategic deal or a financing that brings in a serious amount of new money. If Mike can do that he will be a hero, a lot of the short-term risk will fall away, and the PPS should react accordingly. In the meantime, don't be distracted by less important accomplishments; if there no immediate positive cash flow impact from an announcement then in context of the moment it is unimportant. If an announcement comes with cash, that is a big deal to celebrate.
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Post by matt on Jul 21, 2017 7:07:40 GMT -5
There is a small mountain of paperwork that must be completed before any trial gets going. That includes FDA submissions, IRB approval of the protocol and investigator's brochure, legal review by each hospital participating, third-party contracts (like insurance), engagement of a CRO for data collection and statistical analysis, organization of kick-off meetings for the participating centers, and more. In any multi-center trial, the process tends to move as slow as the slowest participant since whatever changes are made for one center winds up propagating to all centers. Given the financial difficulties that MNKD is experiencing at the moment, some participants may also be insisting on prepayment or financial performance guarantees from a third party.
The culprit for the slow down could be the sponsor (Mannkind) or any of the other participants. Combine all those reasons with the general difficulty of doing anything when key players are on summer vacation and there are plenty of opportunities for delay.
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Post by matt on Jul 20, 2017 11:22:56 GMT -5
So you can have someone at VDEX (who is willing to write Afrezza scripts) writing scripts remotely and then ship to those PWDs Afrezza up to a certain number of boxes per month (or per year if they pay the annual subscription fee in our payment). Just something for your consideration. What do you all think? I don't think this is feasible because most physicians won't write a script for a patient they haven't seen in person, and that includes refills if the patient has not visited their office in the past year (six months in some cases). I don't know if that is state law in some places, a provision of their medical malpractice policy, or just prudent medical practice, but given the complexity of diabetes and the associated comorbid conditions, I don't see a physician treating a new patient by remote control without the benefit of lab work (which also requires a physician's order in most cases). If OneDrop were licensed as a pharmacy, they could certainly ship the drug along with the test strips for a negotiated subscription price, but there would still need to be a willing physician to write that script.
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Post by matt on Jul 18, 2017 15:11:02 GMT -5
Ok sorry if my message was unclear. I was disappointed to find our that Mannkind is not the exclusive sponsor of the show and that this other company will also be running a commercial during the reversed program. My issue with this other company's commercial is that they claim to reverse diabetes, which is exactly what Charles has previously said this show's title is not meant to portray. while charles is aiming to reverse daibetics' lifestyles, this company is actually claiming in their commercial to reverse diabetes. It's BS and looks and sounds cheap to me. There are numerous examples in the medical literature of patients with diabetes that managed to reverse the decline in insulin sensitivity and get off their meds completely. Most patients would consider a substantial increase in insulin sensitivity and discontinuation of any other treatment as reversal of their disease. Success is necessarily restricted to Type II diabetics who still have a functioning pancreas but who have become insulin insensitive. Those patients can reverse their condition although not all of them manage to do so. Patients with very advanced Type II and all Type I patients without enough functional beta-islet cells are still going to be insulin dependent.
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Post by matt on Jul 18, 2017 12:58:00 GMT -5
Epi is not a no-brainer. As has been discussed here before, in a severe episode of anaphylaxis there is no substitute for the injector pens; inhaled drugs are simply not sufficiently reliable with severe bronchospasm. For less severe cases, like bronchial asthma, an inhaled product would be totally fine and that is probably the bigger part of the market anyway.
The reason that is not a no-brainer is that Amphastar (MNKS's supplier of bulk insulin) also owns the trademark to Primatine Mist, which was removed from the market due to EPA regulation banning their aerosol propellant. They are working on getting FDA approval for an alternative version and plan to introduce "New Primatine" as soon as possible. A lot of companies would hesitate to jump into a project to attempt commercialization of an OTC drug that will be late to market and wind up competing with an established brand name. Those who are brave enough to take on the challenge will likely not be willing to front big dollars for the privilege.
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Post by matt on Jul 18, 2017 8:34:34 GMT -5
So back to the questions. What is going on?
I think what is going on is a full court press to demonstrate that the company is financially viable. Everybody knows that the company cannot spend $7 million a month with script volume stuck around 300 per week for very much longer. I think Mike and friends are throwing everything they have into play, hoping that they create some significant progress by the end of October. It is not realistic to think the company will sudden become profitable in the next three months, but if there is enough movement in a positive direction then somebody may be willing to commit the necessary funding to let the team continue their efforts. If management cannot pull off a significant turn-around in that time then at least they gave it their best shot. No guts, no glory.
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Post by matt on Jul 17, 2017 10:24:33 GMT -5
I would have loved to hear the dinner table conversation between Binder and his wife. "Honey, I'm leaving a secure position in a well established company to join a small struggling biotech with a questionable future." My guess is that after four years in Singapore they decided to pull him out. Three years is the norm for an expat assignment and it is sad but true that roughly 70% of repatriating expats move to a new job outside their former company within six months. This can happen because the home office did not carve out a job for him, because he was unknown in the home office because he went from BMS straight to Singapore (which makes networking tough), or his family loved the lush tropical beauty of Singapore and was not willing to trade that for Kalamazoo, Michigan (a town that has seen better days). I know Stryker well, have done business with them, and even interviewed with the head office for an expat job myself. Stryker is a very good company, but you really have to want to live in rural Michigan and enjoy snowy winters.
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Post by matt on Jul 17, 2017 7:11:18 GMT -5
That is a notice of effectiveness for the S-1 registration statement filed on July 3 relative to the Class A and B warrants. Near as I can tell, there was a defect of some type in the earlier filing so this was a replacement filing. The actual securities were issued some time ago so nothing new here.
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Post by matt on Jul 14, 2017 10:50:09 GMT -5
Deerfield want their money back, that's why they put the Greenhill and Mike clauses into the revision and time boxed the repayment window. Exactly right. As of last 10-Q the hole in shareholder equity was $198 million, and has almost certainly grown to a number larger than $220 million by now. While the company has not been sold, it would not be a stretch to say that the company has been pawned and, like any good pawnbroker, Deerfield has control of the goods. All they want is their money, but if they don't get paid they will do what any pawnbroker does and put the assets up for sale. Deerfield would very much prefer the cash and be done with it.
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Post by matt on Jul 13, 2017 10:43:55 GMT -5
Two things to think about:
1. The breakeven script number is higher than 4,500 due to some accounting anomalies which, though technically correct, are not reflective of on-going breakeven economics. The number is substantially higher than 4,500 but without access to the detailed accounting ledgers I can't offer a number more exact than "substantially higher". The anomaly has to do with the write-offs that took place at the end of 2015, thereby accelerating certain costs into 2015. As these costs are not reflected in the 2017 accounting (because they were written off in 2015), what appears in recent accounting statements does not reflect the replacement cost or the true breakeven point.
2. It is true that the company can do financing rounds forever (subject to getting shareholder approval for more shares), but each round become incrementally more expensive and punitive to existing longs. Companies living on recurrent equity raises need lots of buying volume because the kind of financiers that place money into an enterprise like MNKD are not long-term buy-and-hold type investors; they want to buy the shares and flip them for a few pennies of profit. A good rule of thumb is that this kind of new money wants to be out of the investment within 20 trading days, and selling by the new investors cannot add more than about 10% of average daily volume without affecting the stock price. Average volume is roughly 1.5M if you remove a few days that are big outliers, and the investors will want at least a 20% discount. Many would say 20% is an overly generous assumption for the discount, that it should be more like 30-40% when fees are included, but let's use 20%.
Assuming that the investor buy at 80% of market, that caps the amount of money that can be raised without punitive dilution at about 150K X $1.15 X 80% = $138K per trading day. At 20 trading days per month, the maximum amount that can be raised through equity sales without crushing the PPS is $138K X 20 = $2.75 million. That only covers about a third of the monthly cash burn before financing costs. Anything more than that will cause significant loss in value for existing shareholders.
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Post by matt on Jul 12, 2017 14:49:23 GMT -5
How can you trust any person coming for a interview with inside information especially when a lot of money can be made with such knowledge. Having been in a lot of biotech interviews (from both sides of the desk) the simple answer is that people don't usually ask. The sales and marketing folks often don't wonder about financial matters as much as they should, and the scientists almost never have an understanding of the finance world. There are exceptions of course, but most people simply make naïve assumptions especially when dealing with a public company. A lot of people interviewing have not even looked at the annual report or 10-K; you would be surprised as the questions that come out in interviews that any properly prepared candidate would know the answers to from public information. Which leaves you with a few financial and legal folks who know all too well that the interviewer can't answer their questions directly, so they are polite enough not to embarrass that person by asking direct questions. They will probe around the edges and infer what they can from body language, tone of voice, and the atmosphere in the office, but mostly when interviewing for any top job it is up to you to read the financial statements and to draw your own conclusions.
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Post by matt on Jul 12, 2017 8:44:14 GMT -5
I'm guessing the FDA would require a whole new trial to demonstrate that what you suggest is safe and effective. Why? It is the same device and the same active ingredient? The only difference is a person assembling the cartridge rather than a machine. So what is the "clinical trial" - having 100 people assemble 100 cartridges and then testing the cartridges to see if they operate properly? It likely wound not need a completely new trial, but it would require more testing than you might think. Products are designed to be used in a particular way, and FDA approves them based on that design, but what you are talking about is a user invented hack. At a minimum FDA would require a human factors study to determine how often the components get assembled incorrectly as this would affect the dose delivered to the patient. Similarly, expanding the label to pediatric use would require a showing that children above a certain age can assemble the device reliably without adult supervision. So long as the manufacturer can show that the redesigned device / disposable combination gives equivalent results without an increase in medication errors FDA should allow it onto the market, but it is up to the manufacturer to demonstrate those assumptions are valid through testing with actual patients.
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