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Post by matt on Jan 7, 2020 9:55:25 GMT -5
What does a strong relationship with CGM providers look like? Genuinely curious. Bear in mind that the overwhelming percentage of their customers use RAA, and a growing percentage of their revenue is coming from pump integrations. Having been in healthcare for more than 40 years, well before Medicare adopted DRGs and upset the entire structure of health insurance, I take a pretty cynical view of phrases like "strong relationship". Every company has an obligation to its shareholders, and the only shareholders a CGM company will truly care about are its own. There are lots of marketing initiatives where the partners march out promotional materials that make it sound like two companies are like Siamese twins joined at the hip, but many of those relationships only last until next quarter's financial results come in. The only true relationships are those that make continuing economic sense for both sides such as one in which a manufacturer cannot reach a group of customers without help from a specialty distributor and the distributor can make an above average profit margin introducing the manufacturer's product. Otherwise, it is like being the most beautiful girl at the dance; everybody wants to be with you until an even more beautiful lady shows up at which point the former number one is relegated to standing alone in the corner. CGM companies are device manufacturers that could care less about which insulin product the patient uses. They want to sell electronics and they will gladly "partner" with any insulin manufacturer that will co-promote their CGM, but they will always prefer Lilly and Novo Nordisk over Mannkind simply because that is where the market share is to be found. If Afrezza can start bringing in the same volume as Lilly and Novo (they account for roughly 125,000 scripts each every week vs 1,000 scripts for Mannkind), then the CGM companies will line up at corporate headquarters offering to partner. Until then, for the CGM producers the grass is greener elsewhere. It is not personal, it is just economic reality.
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Post by matt on Jan 6, 2020 9:00:10 GMT -5
The prior version also mentioned inhaled insulin although I think the exact wording in this version is somewhat different. The wording makes it clear that the ADA does not consider the clinical trial work done to date sufficient to make a definitive recommendation on use of inhaled insulin or fast-acting insulin aspart without further studies. I think that is generally consistent with last year's version.
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Post by matt on Jan 3, 2020 15:53:17 GMT -5
I also notice that the Afrezza price, which was previously priced under the "Regulado" regime is now listed as "Monitorado". Under the monitored regime the company can price the drug as they like subject to the price being lower than in the various reference countries listed by local law, but the price is flexible for now. Once a regulated price is announced the numbers could change back to what was posted in early December. Just a warning; I don't understand this particular nuance of Brazil pricing so this is a guess.
Note that the US dollar equivalent of these latest prices are about 10% lower than the comparable price from GoodRx for the similar units.
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Post by matt on Jan 3, 2020 15:38:35 GMT -5
It appears that the max ICMS for pharmaceuticals has increased since this article was written. The ICMS varies by state government. Most are at 18%, Rio de Janeiro is at 20%, some states give a lower rate for some items (like generic drugs). It gets complicated!
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Post by matt on Jan 3, 2020 15:36:36 GMT -5
Has there been a previous discussion on how to interpret these entries, and the meaning of the columns IMCS 0% up to IMCS 20% The most expensive line at IMCS 20% appears to be for 4U and 8U for “90+90+2INAL” which ranges from IMCS 20% PMC of 3909R ($967US) to IMCS 0% PF of 2278R ($563US) Does anyone have their head around the definitions of IMCS and their associated percentages and the two numbers coded as PF and PMC? Yes, I did a comprehensive explanation in an earlier posting around early November (or there about). The condensed version: PF = Factory Price. This is the maximum wholesale price that Biomm/MNKD can charge a pharmacy for the drug. Since they have to split the PF price, some goes to Biomm to support sales and marketing and some goes to MNKD to pay for the manufacturing costs. PF with a % = Factory Price plus sales taxes. Note that PF and PF 0% are different because imported drugs carry and extra tax that domestically-produced drugs do not. Brazil is on a VAT t wype system so some of the sales tax is collected from the pharmacy when they buy from Biomm, and the rest from the patient when the drug is purchased at retail. In practice, the patient pays all sales taxes since the pharmacy gets a rebate for what they paid when reporting retail sales. PMC with a % = Factory price, plus a regulated retail mark-up for the pharmacy (around cost plus 32%), plus the import tax (12% of Factory Price) , plus sales tax (varies by area). This is the maximum amount the pharmacy can charge a consumer. The sales tax rate varies with the various states in Brazil so if a consumer lives in Rio de Janeirio they will pay PMC 20% while if they live in Sao Paulo the rate is lower and they pay PMC 18%. Most states have an 18% ICMP rate, and some have a lower tax rate for generic medicines. PMVG = Price for selling to state entities like government hospitals, the military and so forth which is essentially a legally mandated 25% discount for the government. Importantly, note that the numbers published this month are about 20 times higher than the numbers posted originally in December. Why the big change? I have no idea. Will there be another change in the future? I have no idea. The good news is that the permitted wholesale price is now high enough that MNKD might be able to make a modest profit over its manufacturing cost, but the bad news is that most Brazilians won't be able to afford the new prices. The old factory price for a 12U x 90 cartridge Afrezza package was 105.95 while the new factory price is 2042.42 (prices are in Brazilian Reals). The most expensive comparator product is FIASP which has a factory price in 100U X 10ML vials for 95.10 and FIASP supplied in a carton of 10 units of 3 ml pens is 285.30. Typical recombinant human insulin from local producers has a factory price of 29.76 per vial (100U x 10ml) and is available to diabetics via the Farmacia Popular for free. Imported insulins are not available at the Farmacia Popular and must be paid for at full retail prices.
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Post by matt on Dec 30, 2019 19:23:38 GMT -5
The problem with already approved drugs is not failure in the clinical sense, but hurdles in the economic sense. Every drug MNKD has put on their pipeline slide is off-patent, which means there are hungry generics trying to gobble up their share of the market, and getting a third party to fund the new formulation and to pay MNKD a decent royalty (based off already low generic prices) makes it a tough sell to the partner. No question that using approved drugs shortcut the efficacy and some of the safety hurdles, but the economics become the primary concern. Most drugs that do not advance to Phase III fail on the economics, not on safety or efficacy.
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Post by matt on Dec 30, 2019 9:11:11 GMT -5
Golfeveryday seems you just haven't been listening TrepT trials are going full speed ahead with an additional mile stone from UTHR made in 2019. MC has finished a renovation of the plant to manufacture other molecules that he would like to take into P1. I would say the pipeline is in full swing with Mannkind holding the reins. Mannkind is more so than ever building a pipeline on the back of a considerably improved balance sheet with financiers who are not looking to burn us, but work with us in light of that pipeline. All the while continuing to grow Afrezza sales. This is the turn around story I have been looking for. If only I had the trading Acumen to work with MCs timing I would have been popping a cork at this most recent 8K. All that said and done MC got game, Mannkind got pipeline. Lets Go! like I said, when he starts a P1 trial and/or partners one of the other pipeline drugs I will consider it turned around. If you want to be realistic on pipeline drugs then be realistic. 45% of preclinical drugs never make it to a Phase I and less than 70% of those that do advance to Phase II. If you are keeping score, that means the conditional probability of a molecule going from a preclinical target to successfully completing a Phase I is around 30%. Phase II is successful around 40% of the time, meaning the conditional probability of reaching Phase III is slightly less than 13%. Once in Phase III, the odds improve significantly. There are a lot of reasons that drug do not make it out of preclinical. Since MNKD is focused on "old" drugs with a new formulation, they are less likely to fail due to a safety issue. However, since they are trying to introduce an old drug with a new delivery system into a market that is likely already dominated by generics, the economics may not be there for a partner to take a chance. Grabbing maybe 10% of an established market where the delivery system can command a modest price premium simply does not compare with bringing a totally new drug to market where the manufacturer has ten years or more of patent exclusivity. For the potential partner firm they have to choose between competing research priorities with a limited budget. Are they better off trying to commercialize a totally new drug, or better of with a TS reformulation of an old drug? It is not that TS pipeline opportunities are bad ideas, but it may well be the case that they are not sufficiently good ideas to make it to the top of the priority list at the partner firm. Shrinking research budgets can't fund everything so getting on the short list has never been more important.
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Post by matt on Dec 26, 2019 11:57:22 GMT -5
A year ago, 12/28/18, CVI Investments discloses 6.3% passive stake in MannKind. CVI Investments reports a 6.3% stake in MannKind, which represents 11.75M shares. The filing does not allow for activism. Read more at: thefly.com/landingPageNews.php?id=2841870Remember that Form 13 filings are a snapshot of the holdings on a particular day, and may be materially different the day after. PIPE investors like CVI typically do not hold their shares for more that a few weeks. They buy at a nice discount, but only in amounts that allow them to liquidate their position in about twenty trading days without hammering the PPS. Typically the average daily volume puts a cap on the size of PIPE transactions equal to twice the daily volume as that lets the new buyer offload their shares without accounting for more than about 10% of the daily volume. More than 10% and the PPS will get depressed quickly. How many warrants did they exercise this time? An amount that can be absorbed by the market in about 20 trading days. Rinse, repeat.
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Post by matt on Dec 23, 2019 15:54:33 GMT -5
I expect that shareholder authorization of $60-$100 million worth of additional common stock will be on the Proxy for next year’s annual shareholders meeting. As shareholder approval is required for any number of newly authorized shares, this is almost a certainty. Of course I said that last time and they didn't put the vote on the proxy for the annual meeting but instead held a special vote after the fact. That was easier to do then because The Mannkind Group held a much larger percentage of the outstanding shares and they had agreed to vote them for the proxy, however that percentage has declined quite a bit so circumstances are different.
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Post by matt on Dec 23, 2019 9:32:05 GMT -5
ST.... $MNKD So, am I misunderstanding this or did MNKD just give the shorts another window by telling the Street that the stock is only worth $1.31, possibly for anther 6 months. This is the equivalent of selling those shares into the market, but since warrant exercise doesn't generally incur a second investment banking fee placement (typically about 7%) and there is a lot less legal paperwork involved, it is less expensive. Whether the company needed the money that badly is another discussion. Certainly the optics of repricing the warrants as they are about to expire is not favorable. As I mentioned in another thread last week, any time a company sells securities for less than the current market price the market tends to respond by discounting all outstanding shares to the same level. It is still pre-market as I write this, but as of this moment the stock is trading down 6 cents. In other words, the company just imposed a $12.4 value loss on the shareholders to raise $5.9 million in cash, and put a price ceiling on the stock until the new expiration date in June. I leave it to you to opine on whether that was a prudent move or not.
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Post by matt on Dec 22, 2019 14:16:12 GMT -5
I know I don't get it. I thought they were working together. It is in OneDrop's interest to work with every company that sells insulin. At the same time, it is equally in their interest not to play favorites lest they upset a big insulin producer. OneDrop is much better off playing nice with the larger players (Lilly and Novo) than they are with Afrezza since their job is to sell meters and test strips, and those companies have a much larger base of customers. "Working together" pretty much means whatever they want it to mean; it is not the same as an exclusive partnership.
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Post by matt on Dec 20, 2019 17:09:05 GMT -5
Matt, I hear what you are saying but you assume that management will want to sell those 22 million shares immediately after the warrants expire. MNKD has cash on hand so I don’t think there is a high probability that they will sell those shares until later in 2020. And when they do, our hope is that the stock price will be higher than $1.60. MC said he hopes the warrants expire at the last conference so he must think the price will be greater than $1.60 before they have to be sold. I would agree that there is no urgency to sell the remaining shares although the new covenants will make it difficult to draw tranche 3 as originally expected so it might come to pass earlier than you may think. The issue is not the low stock price, although that certainly doesn't help, but the limited number of shares available to issue. The limited number of share, combined with the discount required to sell them, and netting out the placement fees, means that the negative impact on the market value of the 206 million shares outstanding is greater than the value of the cash raised for any discount greater than 9%, and the discounts without warrants usually start around 20%. That is going to be true if the market price of the stock before the transaction is $1.00 or $100.00; regardless of the share price it will be very inefficient to sell such a small number of shares and may preclude those shares from ever being issued until more shares are made available. The math is relatively simple, but the point I am making is that the theoretical proceeds from those shares may not be available to fund operations in 2020 unless management is willing to make the shareholders swallow a larger than average dilutive event. That makes the new covenants required to draw tranche 3 all the more important.
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Post by matt on Dec 20, 2019 12:57:04 GMT -5
The problem that causes is not so much the loss of funding at $1.60, but when a company sells shares at a discount all of the outstanding shares get discounted to the same price. MNKD is literally in a situation where selling the last 22 million available shares at a discount would destroy more market value than the cash it would bring in. That is an entirely untenable position. Huh? Generally when a company sells shares at a discount, existing shareholders suffer. It is hard to argue that when the company just sold shares for 80 cents on the dollar that the already outstanding shares are somehow worth 100 cents. Look at practically any PIPE transaction in the last ten years and you will find that in nearly all cases the closing market price the following day is approximately equal to the discount offered (or lower if warrants are also included). Think of it this way; you just bought a new car and paid $30K for it. The next day, the dealer drops the price to $25K. Do you think your car is still worth $30K or does the market price decline to $25K? The problem with having only 22 million shares available is that at any discount larger than 9% (i.e. selling shares for less than 91% of current market value) reduces the market value of the 206 million outstanding shares by more than the cash raised (net of a typical 7% investment banker's placement fee). That makes the last 22 million shares essentially unsaleable at current market prices.
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Post by matt on Dec 20, 2019 10:20:45 GMT -5
If it is new, I think it helps firm up expectations associated with confidence in MNKD’s abilities to develop the pipeline that extracts additional value from Technosphere, and that MidCap does indeed want in on the action as investors, not predators (although it’s always good to be able to be both). The amended wording certainly is new. It does not strike me as a vote of confidence in MNKD's ability to develop the pipeline, but rather a hedge by the lender in case of MNKD's inability to achieve the good outcomes implied by the UTHR deal. Since decisions that can be taken unilaterally by UTHR affect the ability of MNKD to stay funded under this agreement, it is a new element of risk. How much risk is in the eye of the beholder. As for dilution, the warrants expiring do create risk of a dilutive event. The warrants were priced at $1.60 so that risk is priced in, but with the stock trading below that level any sale of the underlying share will have a different price and one that is most likely a significant haircut from yesterday's closing price of $1.38. Since future warrants cannot be offered on any new deal due to lack of authorized shares, the only way to entice a new buyer is with a deep discount, and percentage discounts starting around 20-25% would be typical (i,e, a discounted price of $1.04-$1.10). The problem that causes is not so much the loss of funding at $1.60, but when a company sells shares at a discount all of the outstanding shares get discounted to the same price. MNKD is literally in a situation where selling the last 22 million available shares at a discount would destroy more market value than the cash it would bring in. That is an entirely untenable position.
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Post by matt on Dec 19, 2019 14:16:37 GMT -5
Yes, the swath of material non-public information is wide. Could be just give and take. But why this change and why now? I think the "why now" is easier to answer; the numbers are in the hands of the company for November and they missed the covenant so something had to happen. Unlike shareholders, the lender does not need to wait until the quarterly financials are published to see the sales number. The fact that the company missed should not be a huge surprise to anybody since the sales had to ramp much harder than they have recently to remain in compliance, so this was a ticking time bomb. As to why these particular changes instead of declaring a default and bumping the interest rate, that is a trickier question. In many cases lender like Midcap are using other people's money, which means they split on-going interest payments according to one formula, but exit payments and other fees using another. It would not be the first time that a lender has opted to bump a piece of the consideration that they keep 100% rather than increase the interest rate which has to be split with the ultimate lender. Besides, declaration of default has only been delayed and a future default is not off the table since there are still covenants and some of them are going to be tough to meet.
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