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Post by matt on Mar 26, 2016 7:55:48 GMT -5
There are perfectly good competitive reasons for keeping a low profile. I am involved in launching a new biotech at the moment, we are licensing a drug from an extremely well-known multi-billion dollar pharmaceutical company, and it is all very hush hush. The reason is that the product we are licensing was developed for other indications, but we are using it for a novel use based on knowledge of a little known mechanism of action. The problem is that this is not the only molecule in the class that can be used in this way, and we don't want others to see what we are doing until we are at least past Phase II to insure that we protect the first to market position.
RLP might be in much the same situation. While being public gives you better access to the public markets, if you can raise funds elsewhere sometimes you are better off waiting to make the required disclosures. Just because RLP is licensing technology from MNKD they are under no obligation to say more.
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Post by matt on Mar 25, 2016 15:10:40 GMT -5
Getting Afrezza on the formulary is one trick, getting the VDEX doctors enrolled onto each insurer's open panels is another. It doesn't help to have the drug covered if the physician is out of network. It would be interesting to compare both formularies and networks for overlap.
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Post by matt on Mar 25, 2016 15:07:54 GMT -5
Its not that bad, both HIPAA and the European Privacy Directive focus on personally identifying information. If what gets collected is dose response characteristics for obese, females, between 50-70 years of age with insulin dependency, that is not personally identifying information because there are lots of obese females of that age. Link a name, SSN, or a patient ID of some type to that data and it becomes personally identifying. The trick is having a clean database that you can data mine and without seeing the raw patient level data is hard to prevent corruption of the database; just ask any clinical trial coordinator.
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Post by matt on Mar 24, 2016 7:36:25 GMT -5
Interest on borrowed shares is a reflection of demand for shares to short. Beyond that fact, I am not sure you can find a reliable pattern since neither the shorts nor the longs are always right. At most, rising borrow costs are a reflection of negative overall market sentiment but again that is only predictive if the market is always right, which it is not.
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Post by matt on Mar 23, 2016 16:42:40 GMT -5
We need to show (and prove through clinical studies) that Afrezza lowers A1c levels (cause of neuropathies) better than anyone else before we can have any sort of differing voice at these kinds of conferences. MNKD will never have a voice at these sorts of conferences, which are populated almost exclusively by vascular surgeons. Once a patient has advanced to PAD and/or critical limb ischemia, no amount of insulin is going to reverse that condition. The time to prevent PAD is when the patient is still in the care of the endocrinologist / internal medicine types, the vascular surgeons "cure" patients with a knife. |
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Post by matt on Mar 22, 2016 17:51:43 GMT -5
So long as puts and calls are available on the same underlying with the same strike price, there will be no price arbitrage possible with the possible exception of pennies due to transaction costs. If there was a price difference, a savvy investor would create a synthetic security with options and bonds and take an offsetting trade in the real security pocketing the difference.
However, if the demand to create short shares via synthetics was large enough it would move the option price and destroy the price parity. While it may be possible that somebody out there is creating naked synthetic shorts, there can't be too much of that activity without moving the market for the underlying in the opposite direction. That is the entire basis of arbitrage pricing.
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Post by matt on Mar 21, 2016 9:21:35 GMT -5
Most R&D driven companies with a credible story trade at some premium to cash, but not a huge premium until those hopes and dreams get close to reality (like a completed Phase III and a confirmatory Phase III in progress). There are plenty of pre-revenue biotechs you can look at to calibrate your estimates of how much the market will pay for unapproved, but late in development, drugs.
The hard part with your scenario is that anybody would pay a ten digit figure for Afrezza. Pharma companies rarely have a value more than about 2X sales or 8X net income. Admittedly Afrezza has the capacity to achieve much higher sales than it has so far, but buyers do not pay a multiple of theoretically possible sales; they pay a multiple of actual sales or actual net income with a bonus thrown in for a rapidly growing business and potential synergies.
Remember that the acquiring company, whomever they are, will have to obtain a fairness opinion from an independent investment bank, and fairness opinions create legal liability for the authors. The authors can acknowledge the issues that have faced Afrezza, but ultimately they will opinine on the numbers as audited as that is the most reliable evidence. The only way to get a billion dollar valuation on Afrezza is to create a steep sales ramp that delivers at least several hundred million in profitable sales. Only then does the scenario you paint becomes plausible, but there are a lot of "ifs" at the moment. That could change, but probably not this year.
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Post by matt on Mar 20, 2016 16:21:40 GMT -5
Whether or not they need to disclose depends on whether or not their ownership in another entity creates such a conflict of interest that it potentially harms the patient by changing their prescribing patterns. Can an endocrinologist write enough scripts to influence the financial results of Novartis or J&J? It would take a small army of endocrinologists to make much of a difference in those company's results so the temptation to alter prescribing patterns is not there.
As for VDEX, it depends on their stake and whether it is material to their practice and their overall economic well-being. If they are prescribing Afrezza out of a bona fide conviction that it is better for the patient then the investment is incidental. If it is more than that, disclosure might be appropriate. Sometimes it is hard to draw the line.
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Post by matt on Mar 20, 2016 15:27:00 GMT -5
Two reasons:
1. What gets reported as "institutional shares" is the summation of reports filed by companies regulated under the 1940 Investment Act. You may have a personal account at one of these "institutions", say a self-directed IRA that is parked at Fidelity, and it shows up as an institutional holding of FMC Corp despite the fact that you can freely trade in and out of that account. Institutional holdings are not what most people think they are. You have to understand what is reported or exempt from reporting under the 1940 Act to make sense of it all.
2. When a stock declines in price and volume, the brokers and market makers will hold less inventory to protect themselves. You might offer to buy retail shares, your broker then has to go to one of the wholesalers for inventory. That wholesaler might buy the shares from a different wholesaler who in turn bought the shares from another retail holder. So what is really a single transaction from one shareholder to another gets recorded up to four times (once by each broker and again by each wholesaler). Since volume of trades is a big deal on Wall Street due to a focus on rankins, every trade that can be counted is counted and that encourages this practice.
In the end the DTCC doesn't care since all the trades cancel out in the end, but the volume reported on the tape is often overstated substantially versus the number of shares that actually trade hands on a given day at retail. In other circumstances or on other stocks, brokers might tend to keep more in-house inventory and fill orders from that supply so there is no double counting there. It all depends on the brokerage and their policies.
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Post by matt on Mar 17, 2016 7:54:48 GMT -5
The phrase "commercially reasonable" is generally interpreted by the courts (the only opinion that matters) as whether the judgement of management was so faulty as to be grossly negligent. Put differently, it doesn't matter if YOU agree with the decisions taken or not or even if the judge agrees with the decisions. The standard is whether the reasons given by Sanofi for the decisions that they did make were reasonable in light of everything they know about the market for insulin, prior attempts to commercialize inhalable insulin (that includes the failed launch of Exhubera), feedback from physicians, and their own market research. It doesn't have to be the best strategy, it doesn't even have to be right, it just has to be reasonable given everything that Sanofi knew.
On that standard, it is hard to win the argument. When Afrezza didn't bring in thousands of new prescriptions a week soon after launch, it was commercially reasonable to assume the drug would not be successful. That conclusion may be proven wrong eventually, but it was not unreasonable to draw that inference.
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Post by matt on Mar 16, 2016 8:19:20 GMT -5
It is important to understand precisely which plant extracts we are talking about. Eukaryotic cells vary widely and the cost and technical difficulty of extracting useful proteins from plant material is widely known, which is why almost all biotechnology production systems use mammalian cells, e. Coli, or yeast in their expression system. Without knowing the exact molecule it is impossible to conclude that TS is the ideal delivery system or even a feasible system for any particular drug.
The forests of the world have given us many useful medicaments (the principal ingredients of digitalis, aspirin, and many antibiotics for example) but the same forests have swallowed billions in investment dollars with no payoff (Shaman Pharmaceuticals for example). Tread carefully and with your eyes wide open; plants are not nearly as cooperative as bacteria.
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Post by matt on Mar 15, 2016 8:57:31 GMT -5
Not defending Olsen or GS, but asking tough questions and making estimates and forecasts on skimpy data is what he is paid to do. Anybody can wait two or three quarters to see how a new product is shaping up before making a recommendation, but by then the profitable trades are gone. Olsen works for GS and, indirectly, for clients of GS and has no obligation to do anything other than call them like he sees them.
Do be careful when reading the tea leaves based on "institutional ownership". The numbers as reported are a function of the reporting rules under the Investment Companies Act of 1940 and don't necessarily reflect reality. If I were to own a brokerage and any of you were clients of my brokerage, the shares you bought in MNKD would be reflected in my quarterly reports as buys despite the fact that the brokerage itself sold shares or the holding were unchanged. A lot of things get rolled into the reported number; index funds, sector funds, self-directed IRAs, corporate pension funds for which GS is the custodian, trading house inventory, client managed accounts, and many more where GS is 100% uninvolved with the investment decision.
A larger number for a diversified financial giant like Goldman does not mean that Goldman believes in MNKD any more than a smaller number means they have turned sour on MNKD. The only institutional numbers that mean anything are those of "pick and hold" fundamental investment funds who are showing their true opinions in their share counts, and there are precious few of those.
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Post by matt on Mar 12, 2016 9:03:24 GMT -5
Patients don't need a full-blown PFT, but they do require a FEV test. The physician is under no obligation to follow FDA mandated prescribing directions, but if a physician failed to do the test and a patient sued that would be a slam-dunk malpractice case. Why would a physician not do at least the FEV test?
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Post by matt on Mar 8, 2016 17:15:31 GMT -5
So what? They're still shareholders and profit when the value of those shares goes up. What is the basis for saying they have "absolutely no regard for their shareholders?" Lead plaintiff does not have to be one of the more allegedly aggrieved claimants, in fact, I doubt the amount of damage allegedly suffered weighs much at all. The amount of damage suffered is the principal determinant of who gets to be lead plaintiff. The goal when the law was changed was to get institutional investors involved as lead plaintiffs rather than the brother-in-law of the first lawyer to file (this was actually a common practice with one infamous law firm). The criteria for who gets to be lead plaintiff is codified in federal law and it is up to the judge to decide which party best satisfies the statutory criteria; the rules are set forth at 15 USC 78u-4(a)(3). The reason there are so many law firms scrambling for position is that they smell money and whichever firm signs up the eventual lead plaintiff will get be the lead law firm and claim most of the legal fees. There is only one lead plaintiff for the case so from the law firm's perspective it is a winner take all deal.
There will be a case, no question about that, but the first step is to get the case beyond what is known as the 12(b) hearing. Once the lead plaintiff is identified Mannkind will file a 12(b) motion to have the case dismissed, and the plaintiff's law firm will file a motion in opposition to dismissal. Both parties have to show their cards and the judge decides at that point if there is enough evidence for the case to go forward. If Mannkind's motion to dismiss is rejected, the pressure will be on for a settlement from the Director and Officer insurance proceeds. If Mannkind's motion to dismiss is granted, the case is over at that point. While a 12(b) dismissal is theoretically appealable, very few are pursued further.
Since the law was changed in the late 1990's, approximately 50% of securities cases have been dismissed at the 12(b) hearing and 50% have proceeded to trial or settlement.
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Post by matt on Mar 8, 2016 16:53:53 GMT -5
There are lots of legal issues on the horizon, most of which will probably be handled by outside counsel. However, outside counsel must still be managed and there is a lot of coordination between the company and counsel, the cost of which can be minimized by having an in-house attorney. Think of this position the way you think of somebody that manages a team of consultants.
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