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Post by matt on Jan 3, 2017 16:02:10 GMT -5
The problem is not just the delisting deadline. The company has to be in compliance ten days before the deadline, which if my math is correct means that the PPS must be at or above $1 at the close on March 6 in order to have ten trading days above $1 accumulated by March 17 (the ultimate deadline). However, consider the alternative which is a reverse split. That requires notification to the brokers to reduce the share count, and that requires shareholder approval, and that requires a special meeting, and that requires a proxy, and that requires 21 day advance mailing, and that requires a prior SEC review of the disclosure documents. Thirty days is a barely manageable schedule complete all the required steps, so really we are talking end of this month for a decision on the reverse merger. Nobody likes a reverse merger, it is not good for the share price, but if Matt lets the clock run past the end of January then the possibility of a reverse merger is going to be off the table due to timing, and a second delisting extension is off the table due to lack of compliance with initial listing shareholder equity requirement. The company can't play chicken on this one. Either there is material news ready and waiting that will push the price above $1 in the next few weeks, or Matt has to be getting ready to call the special meeting. Bumping to the OTC would kill the company.
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Post by matt on Jan 3, 2017 15:45:54 GMT -5
This is how the licensing game is played. The milestones start out very low (as do the royalties) and the larger payments don't happen until there are global commercial sales in excess of some large number like $1 billion. Face it, most drugs never even get to commercial sales and those that do never get to ten digit global sales numbers.
It makes for a nice press release to say that the company will receive royalties up to the mid-double digits and total milestones of $XXX million, but if the company doesn't disclose the specific milestones and sales thresholds that trigger the payments then you need to be realistic about whether the figures are realistically achievable. At this point we don't know where RLS gets its funding, what the product in development is, the triggers for the milestones, or the royalty table. Take the $1 million and be happy; few licensing deals of this size on purely developmental drugs pay more so early in the process.
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Post by matt on Dec 31, 2016 15:05:29 GMT -5
Review periods depend on the category in which FDA places a label change. Some are trivial, like ink and font changes, and those make it through in a few days, others take a long time. I think the initial response to a label change on an already approved drug is due within six months after filing, but the initial response can be to ask for more data which may extend the process years. A lot depends on exactly what the company wants the label to say and whether they have the data to back it up.
What they need to overcome is the chart shown in the current label which clearly shows that absorption is fast, but the dynamics of glucose changes are about the same as other insulins. FDA is not going to give the desired label copy unless the onset of action is consistent with the rate of absorption, and there a number of reasons why those numbers may be different.
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Post by matt on Dec 29, 2016 8:59:30 GMT -5
Quantitative finance models have a voracious appetite for data; that is how they are calibrated and recalibrated. It should not be a surprise that anybody who engages in any form of securities arbitrage will pay big bucks for reliable real time data just as it is no surprise that high frequency traders co-locate at the Battery Park data center right next to the NASDAQ feed. The business is so efficient and competitive that these traders pay a huge premium for data that is delivered a few milliseconds faster than what is available to brokers a few blocks further up Wall Street.
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Post by matt on Dec 27, 2016 12:58:39 GMT -5
what is the penalty for failure to deliver?
ps. <---- is also interested in the discussion in these moments.
(lower the crank)
In theory, if the party fails to deliver then the broker can execute a forced buy-in at market price and charge the cost to the client's account. In reality, brokers have ways to stretch the period and they rarely take such draconian actions against a good client. FINRA rules can be extremely flexible is most situations.
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Post by matt on Dec 22, 2016 9:50:25 GMT -5
You can't fault BCBS for that determination as they are just parroting what is on the labels. Afrezza is still stuck with the qualifier "Despite the faster absorption of insulin (PK) from Afrezza, the onset of activity (PD) was comparable to insulin lispro" and lispro is similar to Novolin. Novolog acts slightly faster than Novolin.
BCBS plans rely on the Blue Cross / Kaiser TEC (Technology Evaluation Center) for such opinions. The TEC is unusually fair and balanced, but they are not going to reach a conclusion that runs counter to an FDA approved label. Phone calls are not going to change this; new label copy will.
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Volume
Dec 18, 2016 15:01:34 GMT -5
Post by matt on Dec 18, 2016 15:01:34 GMT -5
So that's why the price didn't budge despite the volume I suppose. If Blackrock Fund A sells to Blackrock Fund B then it's going to be an ATM price for the entire block since they have no interest in negotiating the price up or down (it's all internal dollars). That is not quite true. While a transaction between two Blackrock funds is obviously friendly, Blackrock itself doesn't own the beneficial interest in the funds but rather their clients. Since each fund owes a fiduciary obligation to serve the economic interests of their client it is not as simple as the Fund A investors get to sell and Fund B investor get to purchase, both ATM. In theory, Fund A investors should be on the hook for the cost of disposing the shares when the index changes.
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Post by matt on Dec 17, 2016 7:34:49 GMT -5
One question is whether MNKD is targeting specific geographies. The Sanofi cuts were not even because the opportunity to sell into certain markets are quite different. In some geographies there are a handful of insurance companies and pharmacy benefit managers that have moved to sole source contracts for insulin and where the prevailing practice among the large offices is "no see", meaning that a rep cannot visit a doctor or other staff during clinic hours for any reason. You can have teams of reps driving all over but if they don't get to see the physician, it doesn't matter.
The cuts in some geographies were more than 60% and in others less than 10%, but a quick browse of the MNKD job listing suggests that Mike is focused on national coverage. I would rather see multiple reps thrown into markets where the company can be competitive even if that means other areas will have thin coverage.
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Post by matt on Dec 16, 2016 16:53:21 GMT -5
It is typical to see huge volume go through right before the close on the last day before an index change. The index funds have to hold the exact shares in index to match the return so they need to sell those exiting the index and buy those entering. I have seen volume pick up 30 minutes before the close and continuing into the early AH session, and a few times some activity in the Monday PM trading. Regardless of how it happens, it is a one-time event.
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Post by matt on Dec 16, 2016 13:07:22 GMT -5
The actual number for Sanofi came to slightly more than 900 comprised of 200 contract reps, 70 nurse educators, 575 Sanofi reps, and 75 area/region managers. It is no coincidence that it happened the same week Lilly launched its biosimilar that will compete with Lantus, and two weeks before they are shut out of both CVS/Caremark and ExpressScripts formularies.
The competition is brutal out there, and so far, Lilly seems to be taking the lead and the expense of Novo and Sanofi.
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Post by matt on Dec 15, 2016 8:04:36 GMT -5
Early February isn't far away. February is plenty of time to plan and execute a reverse split.... I would disagree with that assertion. The company can do a forward split based on a resolution by the board of directors, but they must obtain the consent of shareholders to do a reverse split. That is not a NASDAQ rule, that is a matter of state law. Obtaining shareholder consent requires calling a special meeting which in turn requires filing of a proxy statement, and for the proxies to be valid the SEC requires that they be mailed out no less than 21 days prior to the special meeting. If you consider that the board must pass a resolution to call a special meeting, a preliminary proxy must be filed with the SEC for approval, the final proxies printed and mailed out, the meeting actually held, and the exchange / brokerages given a required five days notice of the change, the total elapsed time is slightly more than a month if nothing goes wrong. If the deadline is early February, the process has to start, at the latest, by the first week in January. With the holiday soon upon us, that is shaving it close!
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Post by matt on Dec 14, 2016 17:03:05 GMT -5
There is a lot of talent on the street right now, and more coming. As noted, Sanofi will be cutting 20% of their sales force tomorrow and numerically the cuts are more like 40% (they had roughly 20% open positions plus 20% in new terminations). All the nurse educators were let go from Sanofi last week, with immediate effect, and all the contract reps from Quintiles were notified last week that they were out. Area and regional business managers were cut earlier this week. Similarly, Astra-Zeneca is having a substantial downsizing as well so there is a lot of talent out there.
I don't envy anybody that has to do that much interviewing, but if MNKD seriously wants to fill 50 slots now is the time to do it.
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Post by matt on Dec 13, 2016 14:06:14 GMT -5
Any idea how many shares are held by index funds? NASDAQ lists around 100 million held by institutions but doesn't make it clear what percent are index fund holdings. Institutional reporting is governed by the Investment Act of 1940, and the reporting rules are a little messy. Suffice it to say that reports for large entities (Goldman Sachs, Fidelity, etc.) are allowed to combine many accounts under their umbrella; some are specialty funds, some are index funds, and some are retail holdings in street name. That information is not publicly available and only the reporting entity knows the breakdown. One thing I forgot to mention is short interest. Index funds must hold the index in the exact percentages required, but they can also loan out shares to make a little extra from short sellers. When the funds sell out of the shares there will be fewer shares available for lending, at least for a few days, as the market equalizes. Normally that is not a big deal but with the MNKD short interest it will be something to watch. Of course the buyer of those shares might scoop them up and offer them for lending, or the shorts might use the price downturn as an opportunity to cover. We will have to wait and see how it balances out.
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Post by matt on Dec 13, 2016 12:51:04 GMT -5
There is no immediate effect, but there will be a sell-off heading into the close on Friday. Since index funds are required to hold the exact basket of securities that comprise the index, they will sell out of MNKD and the other names being dropped from the list and will buy the names being added. Predictable as this is, many times you don't see the price action until the last 30 minutes of trading, and some funds will wait until the AH session or the open on Monday to rebalance.
Other than the one time impact of exiting the index, and somewhat less trading volume going forward, participation in the index doesn't have much of a long-term effect either positive or negative.
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Post by matt on Dec 12, 2016 9:36:51 GMT -5
Create adoption (and demand) by making it readily available (cheaper) and THEN raise the price. Doing it backwards will kill your sales, as we've seen over the past two years. But that doesn't even begin to address the major issues of doctor awareness or willingness to prescribe, which is something altogether. I partially agree with you, but I wonder if the company can afford to do it. If you look at the actual number of scripts reported for the third quarter and divide that into the sales number, the average revenue per script is just shy of $200 on a net basis and not the $600 gross figure reported by Symphony. This difference exists because Symphony reports gross pharmacy charges and they do not have visibility to the cost of rebates, free samples, or the impact of the co-pay cards which do not impact the pharmacy itself, but which reduce the revenue actually realized by MKND. Co-pay cards and rebates are not free to the company; they are just different words for a price discount. I am not sure you can make a script cheaper than $200 and still afford to run the company even in survival mode. While it is always dangerous to look at a single quarter's data to extrapolate into the future, based on the net sales information we have from third quarter and a recurring quarterly cash burn rate of $22 million the breakeven number of scripts is significantly higher than 4,000 even without a price cut. If the company cannot drive adoption with a $200 net price, will a $100 net price change the story in a meaningful way?
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