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Post by matt on Mar 23, 2017 7:21:41 GMT -5
Seems that other companies are trying to develop more rapid insulins. Will this really prevent others from doing so? This is a method patent covering the method of administration of a rapid acting insulin at meal time, with a second possible dose to hit a target window. Essentially method patents are attempting to patent a list of instructions for how to do something useful, but they are inherently weak because the person who is giving out the instructions to the patient is a physician or nurse. It is bad for business to sue your customer and since there are thousands of care givers monitoring infringement is nearly impossible. About the only protection such a patent provides is that it prevents a competitor from training physicians on this exact protocol, but there is nothing to keep the physician from implementing the protocol with another rapid-acting insulin. I am not sure this patent passes the non-obvious test. To issue a patent the inventor must prove three things: it must be novel, it must be useful, and it must not be obvious to one skilled in the art. As the method is a means of administering insulin at mealtime depending on the glycemic load, and possibly administering more two hours later if BCG readings are too high, it is a tweak on what already happens with these patients, thus it may fail the test for obviousness. The only patents that really create value in the pharma world are "composition of matter" patents for new drugs and, occasionally for difficult to produce molecule and proteins, patents on methods of manufacturing.
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Post by matt on Mar 21, 2017 10:00:08 GMT -5
I wouldn't expect too much change in the way that this stock trades. There was plenty of ammunition in the 10K and conference call to reinforce the beliefs of the loyal longs, but there was an equal amount of ammunition for those with the opposite view of the world. If everybody sticks to their core beliefs the longs will go longer and the short will short more, resulting in a Mexican standoff of sorts. Eventually it will become evident who was more correct, but eventually will not sort itself out for several more months.
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Post by matt on Mar 18, 2017 14:55:25 GMT -5
Attorney's are a dime a dozen, but sophisticated one's are extra special...they also dress nicer. They dress nicer and charge more per hour. If they can use antiquated Latin instead of common legal terms that is another increase in the billing rate. Heaven help you if you ever have to pay a well-dressed, sophisticated scholar of Latin.
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Post by matt on Mar 16, 2017 18:12:27 GMT -5
The terms on the Mann Group note were changed some time ago to keep Deerfield happy. Essentially, Mann Group has guaranteed that the entire balance of the $30 million will be available and Deerfield agreed to count that credit line towards the $25 million minimum. So MNKD, in theory, can run the cash down to zero and keep the Deerfield covenant so long as the $30 million credit facility remains untouched. Mann Group is on the hook for the full $30 million no matter what; it is almost equity.
Ultimately, cash remains the issue and if you look at Q4 the cost of sales still exceeds revenue which means sales are still made at a loss, but a big improvement over Q3. Back all the one-time numbers out of Q3 and Q4 (and the facility sale out of Q1) and things will become clear. There is a positive trend there, the question is whether it is positive enough.
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Post by matt on Mar 16, 2017 11:09:13 GMT -5
Yep, that person is certifiably crazy. The CEO of a company cannot just "sit" on a buyout offer; he is legally obligated to present it to the board of directors for their consideration and they are legally obligated to consider it and make a decision of whether to present to the rest of the shareholders for a vote. The alternative is that a true buyer could simply make a tender offer directly to the market and could be successful with a much lower price. How many day traders would be absolutely thrilled with a 100% premium (i.e. about $4). The fact is, very few acquisition deals go off at more than a 25% premium unless the drug has demonstrated rapid growth or has yet to launch but is expected to own the market niche; neither of those criteria describe Afrezza.Matt, feel free to describe afrezza.
Are you a rep from a pharmaceutical company?
Nope, not a rep but I have been in the industry for over 35 years, much of that doing mergers, acquisitions, and business development so I have a pretty good sense of what the market will bear as far as acquisition prices. I have done something in excess of $25 billion worth of transactions of my own when I was responsible for managing the external pipeline for a Fortune 500 company. Big companies do mergers to fill their portfolio gaps and, once in a while, to get a deal. Mostly, big companies go after products they think are a must have for their business and much less often are interested in picking things up on the cheap because those companies are usually cheap for a reason, just like a $300K house in a neighborhood of $400K homes. I once dropped about $25 million in a bankruptcy auction for as asset that had been selling for $100 million a few months earlier, but only because the company was local to our company and they had a product that helped round out our product offering. Mostly we looked for what we needed and paid the going price. We didn't short, we didn't conspire with any particular investment bank, we didn't do street sweeps, we didn't do opportunistic deals and most other companies in the industry don't either. To get acquired the target company has to deliver earnings growth to the buyer, and normally that means slightly negative earnings year one, neutral year two, and accretive to earning by year three. Some companies won't look at anything that is not accretive by year two. A buyer cannot pay $12 a share (as was hypothesized) and make a return for their shareholders. The acquiring CEO probably wants to keep his job and not have his phone line melt down with calls from angry shareholders and fund managers; and boy do they call! That means the price has to be right. If a company is buying a slow growth / no growth product that fills a gap in a portfolio offering they might pay a 20% premium over market. If the drug or the company is doing well and growing, with a strong potential to grow further, 35% is more typical and if the company is a rocket ship 50% or more is not impossible. Note that these are not potential growth numbers, that is why the acquirer is buying, but what has already been achieved by the current owner. The weekly script numbers for Mannkind tell the story of a slow growth drug that has already been on the market for two years with a big pharma as a marketing partner. Any acquirer is going to look at the fact that Sanofi could not get market traction and give that lots of thought. You can say that Sanofi could have done a better job, and you might be right, but the market perception (including the perception of the buyer's shareholders and managers) is that Sanofi is a leader in diabetes so if they couldn't make it work then what chance do we have? Perception matters to the public markets even if the truth is somewhat different. Under those criteria, Afrezza is a slow growth drug (actually negative year on year) and one that is not the current market choice for prandial insulin. Could a clever acquirer change that? Perhaps so, but they are not going to pay a big premium for a high growth opportunity if it is their responsibility to make the drug a high growth success where others have failed. Will Mannkind get acquired? Perhaps, but not for $12 a share unless Matt and Mike are the ones to take the company past the breakeven point and with strong market momentum.
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Post by matt on Mar 16, 2017 7:26:28 GMT -5
The buy out talk is starting again. Some crazy person said Matt gots one he's been sitting on for $12 pps. Yep, that person is certifiably crazy. The CEO of a company cannot just "sit" on a buyout offer; he is legally obligated to present it to the board of directors for their consideration and they are legally obligated to consider it and make a decision of whether to present to the rest of the shareholders for a vote. The alternative is that a true buyer could simply make a tender offer directly to the market and could be successful with a much lower price. How many day traders would be absolutely thrilled with a 100% premium (i.e. about $4). The fact is, very few acquisition deals go off at more than a 25% premium unless the drug has demonstrated rapid growth or has yet to launch but is expected to own the market niche; neither of those criteria describe Afrezza.
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Post by matt on Mar 15, 2017 10:32:37 GMT -5
However, FDA restricts sales reps from printing and providing these studies as part of any marketing activity.
All of what you said above is true, but the reason for the FDA stance goes well beyond certain companies paying doctors on the side. There is a reason for medication labels; they show the indications for which the drug has been adequately tested as has been shown to be effective. Physicians rely on such information when writing prescriptions. A few clever companies worked very hard to expand off-label usage by having friendly investigators run additional clinical studies and author papers purporting to show that the drug was safe and effective for these new indications. In some cases the studies were well done and powered to prove their point, and other times they were not. Salesmen passing out reprints of medical journal articles was used to do an end around sweep of the FDA approval process. Some of that is regulatory overreaching and some of it was a fair reaction to an actual abuse of the process. Either the labelling process has integrity or it doesn't. A lot of MNKD shareholders are clamoring for a designation as an "ultra fast-acting" insulin, but in order for that to matter FDA must first define what those words mean, and the agree that Afrezza meets that standard. If FDA is not tough on those standards, anybody can come along and claim that they too have a ultra fast insulin and thereby dilute Mannkind's potential marketing message. Regulation is always a two-edged sword.
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Post by matt on Mar 14, 2017 7:39:40 GMT -5
It is broken out in the 10Q for you. Numbers before Q3 had a mixture of Sanofi and Mannkind in there, so not reliable for future forecasting, but Q3 is close to pure Mannkind and when earnings release later this week you can back into the numbers for Q4.
For Q3 it was roughly $4.3 for product cost, 3.9 for R&D, and 13.1 for selling & administrative expenses. There were other expenses reported as well, but I think those were accounting entries recording cash that had been spent in earlier periods. The R&D number includes new product development (that TS deal came with some costs remember) and continued development of Afrezza (most companies include medical trials in R&D expense). The line to watch, in my opinion, is selling & administrative cost. YTD Q3 2016 the number was slightly down when compared to YTD Q3 2015 even though Sanofi was doing all the sales and marketing in 2015. If sales are going to increase then more money has to be spent in this area.
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Post by matt on Mar 13, 2017 15:44:09 GMT -5
My guess is that somebody wanted to load up, speculating that Matt would say something unexpectedly positive at the Roth Capital conference in a few hours. There are not that many shares involved so it could just be a random glitch.
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Post by matt on Mar 12, 2017 16:39:38 GMT -5
Is the FDA going to change the Label without some sort of trial (data)? In a word, no. The only time FDA removes warnings is if there is substantial patient data (like 100,000 patient years with a post-market surveillance program) that shows the warning is not needed. In the case of Afrezza, most patients only stay on the drug for a very short time so the accumulated patients years of data is tiny compared with most other drugs. How many patients have been on Afrezza continuously as their only prandial insulin for more than one year? The refill rates would suggest not very many. The reality is that some patients will have reactions and the FDA is going to keep the warnings intact so long as that is true. Consider this actual drug warning: That is part of the warning for Bayer aspirin, a basic drug that has been sold since 1899. If that is the label for aspirin don't expect to get a risk free label for inhaled insulin.
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Post by matt on Mar 12, 2017 8:47:56 GMT -5
There should be a lot of these people available to hire. As insulin prices paid by the PBMs has dropped going into 2017, mostly as a result of Lilly introducing a generic version of Sanofi's Lantus, all the companies have been cutting back on certified diabetic educators. Sanofi cut 100% of theirs (who were all Quintiles contractors) at the end of December, others by smaller percentages.
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Post by matt on Mar 11, 2017 8:34:42 GMT -5
Depending on the number of hospitals involved, it can easily take more than six months to develop a consensus protocol acceptable to all investigators and get it approved by the respective institutional review boards and the FDA. Some of the IRBs are worse to deal with than FDA. Remember that the investigators have to read and suggest changes to the protocol in addition to their "regular" jobs teaching or seeing patients, and that some IRBs only meet once a month. If you have to go through two or three loops with the IRBs, who may or may not agree on certain matters, that can really slow things down.
While so people have said differently, the FDA does impose a requirement to test any new drug on a pediatric population if the drug could potentially apply to that age group. There is no need to conduct pediatric tests on drugs for diseases of old age, but insulin is not one of those. I don't know the current policy of FDA, but in Europe if the sponsor fails to conduct the pediatric trial within the agreed time frame then the agency can pull the adult drug from the market. You don't know what parameters FDA is insisting on for this trial, and all of it takes time to negotiate as it is an iterative process involving the investigators, FDA, and IRBs.
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Post by matt on Mar 10, 2017 17:59:50 GMT -5
“It’s irritating. Insulin is a growth hormone. So, when you put insulin in the lung, there’s always that fear that you get growth of lung tissue as well,” Dr. Evron said. That one is true. Insulin activates RTK Class II receptors, which can dimerize with any factor that activates the RTK Class II receptor which activates the ATK pathway, one of the principal tissue growth pathways in the human body. There are many examples where growth factors acted strangely and the patient wound up with ectopic tissue deposits in the wrong part of the body (ectopic bone in the heart and brain for example). It doesn't happen often, but if a physician worries that delivering growth factors several times a day directly to the lung will stimulate this type of response you can't say that he is crazy. Other growth factor drugs had to be removed from the market due to similar unintended consequences. You can't ignore legitimate scientific questions and hope they go away, because they won't. The proper solution is to run larger post-marketing safety surveillance studies to quantify the risk. A little data goes a long way.
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Post by matt on Mar 6, 2017 14:41:11 GMT -5
The conference call follows the earnings release, and the 10K for an accelerated filer is due 75 days after year end. For a calendar year company, that means March 16 this year. However, since all companies are scrambling to file their 10K at the same time, and the contents have to be reviewed by the auditor and the outside law firm, everybody tends to cross the finish line together; if the numbers do come early they will only be early by a few days.
Note that large accelerated filers had to report by March 1 so most big companies have already filed, and small non-accelerated filers have until March 31.
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Post by matt on Mar 4, 2017 15:01:21 GMT -5
In a scenario where they put up the company for sale now, 60% chance they get no bid (i.e. - value $0), 35% chance a bid somewhere less than $150m. 5% chance a bid somewhere between $150m and $250m. That is probably a realistic scenario when you consider that anyone purchasing the company also inherits $200-250 million in liabilities that have to be paid in cash. The Sanofi loan is gone, and some liabilities are accounting accruals that will never be realized, but the rest are real and will require cash to resolve. A bid of $150 million is really a bid for $350-400 million because that is the total an acquirer would have to pay to have the assets free and clear.
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