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Post by otherottawaguy on Jun 30, 2014 10:19:53 GMT -5
GRIFFIN SECURITIES Member FINRA, SIPC Keith A. Markey, Ph.D., M.B.A. June 30th, 2014
griffin.bluematrix.com/sellside/EmailDocViewer?encrypt=409e2cbd-0a15-4df1-bd66-2b1d3b72ba12&co=griffin&mime=pdf&id=replaceme@bluematrix.com
"maintaining our BUY rating on MNKD shares and have raised our price target to $15."
MannKind Corp. BUY Target Price Change : Pharmaceuticals
A Giant Leap for Mannkind
FDA approves Afrezza for type 1 and type 2 diabetes. The label is less than might have been hoped for, though it came with no major issues. The inhalable insulin is not recommended for individuals who smoke or as a treatment of diabetic ketoacidosis. And, the label includes a boxed warning against the use of Afrezza for diabetics with asthma, chronic obstructive pulmonary disease, or lung cancer. In addition, physicians are advised to test each patient’s pulmonary function prior to prescribing the drug and every six months during the first year and subsequently on an annual basis. What is missing is the Company’s preferred language of “ultra-rapid acting insulin” or an acknowledgement of the fewer hypoglycemic events associated with Afrezza.
MNKD share price surged on the news. For reasons unknown, the stock had sold off by as much as 26% from the high of the day shortly before the FDA issued its decision. However, in the 30 minutes or so between the announcement and the close of normal trading for the day, the share price rebounded to close off only 5.5%. And in after-hours trading, the price continued to rise, surpassing $11 per share.
New clinical trials will be conducted. The FDA has requested three trials in its approval letter. One will be a 5-year study to assess the risk of lung cancer and another will establish the drug’s pharmacokinetic (PK) profile, safety and efficacy in children as young as four years old. Normally, young children are not involved in post-marketing studies right after a drug has been tested only in adults. Hence, the request suggests the FDA thinks the drug will be widely used by pediatric patients and it must be fairly comfortable with the drug’s safety profile. The third study will expand the data on Afrezza’s PK and pharmacodynamic profiles and on intra-patient variability.
Securing a marketing partner now tops the priority list. MannKind is seeking a partner(s) to support Afrezza in global markets. The goal is to have a partner for the United States to launch Afrezza by early 2015. MannKind initially estimated that a deal could come within 6 to 8 weeks after approval.
Afrezza will likely garner a sizable share of the diabetes market, as we describe in this report. Accordingly, we are maintaining our BUY rating on MNKD shares and have raised our price target to $15.
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Post by otherottawaguy on Jun 30, 2014 9:53:40 GMT -5
Is that a picture of a cat that was short on Friday and just saw the announcement?
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Post by otherottawaguy on Jun 27, 2014 15:11:20 GMT -5
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Label
Jun 27, 2014 15:07:49 GMT -5
Post by otherottawaguy on Jun 27, 2014 15:07:49 GMT -5
The shorter the label the better the label. They are also looking for the post marketing studies but these were already known that they would be asked for upon approval.
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Post by otherottawaguy on Jun 27, 2014 9:56:10 GMT -5
Think it greatly underestimates (600M) final future insulin sales as this equates to about 300k user world wide which is actual less than the estimated production capacity (370-400k) at go live date.
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Just posting it here so it does not disappear: seekingalpha.com/article/2289223-mannkinds-clock-is-ticking-but-balance-sheet-sounds-an-alarm
Summary •MannKind is awaiting FDA approval of its inhalation powdered insulin for diabetes patients. •After two previous FDA rejections, capital resources have dwindled. •Capital raise could increase already significant dilution from options, warrants and convertible debt. The clock is tickingfor MannKind Corporation (MNKD) and its application for approval of its AFREZZA powdered inhalation insulin. There have been some setbacks and delays since the company first applied to the Food and Drug Administration (FDA) for approval of this innovativetherapy for diabetes sufferers, and the FDA pushed out its deadline date for a decision to July 15, 2014. MannKind shareholdershave been waiting on pins and needles for some action from the FDA. AFREZZA and the inhaler devices that are to be used to deliver the insulin powder have been under development for many years and the company's financial resources are dwindling. Shareholders would rightly be concerned about whether the company has enough financial resources to usher AFREZZA to the market AND what a capital raise might mean for valuation. Need for More Cash First, let's take a look at how much financial support MannKind's operations appear to require. (We will use data from MannKind's 2014 10K, a registration statement amendment filed in March 2014 and March 2014 10Q filings with the SEC.) In the twelve months ending March 2014, the company used $133.7 million in cash for operations - mostly administrative and research and development activities. Even though the heavy lifting in the development of AFREZZA is nearly complete, in the March 2014 quarter the fire consuming MannKind's cash seemed to heat up, using $37.0 million. At that rate of spending, the company may need $148 million for the full year 2014. MannKind reported $35.8 million in cash resources at the end of March 2014. However, the company is required to maintain a minimum of $25.0 million in cash by an agreement with an investor group that has provided a loan facility. The other $10.8 million is probably needed to just meet near-term expenses like the next payroll and rent checks. Thus the company's cash resources are already a bit strained. Bank account: no excesscash Tapping the Capital Markets The company has been relying on two financing facilities as well as the issuance of new sharesof common stock to keep the home fires burning. Mann Group, ledby MannKind's founder and chief executive officer, Alfred Mann,has provided a loan facility for up to $370 million. Much of the available credit has been used and already converted to commonstock by the Mann Group. At the end of March 2014, there was $49.5 million outstanding under the Mann Group facility and the company had about $30 million in available credit. While that is atidy sum, shareholders should not count on all of this credit to support operations in the near-term as management has already declared that it will rely on at least a portion of the facilityto cover capitalized interest. Mann Group Financing Facility: potential $20 million The second credit facility made available by the Deerfield private investment group could be a source of additional capital. The original agreement with Deerfield made $200 million available to the company in separate tranches. MannKind has already drawn down the first three tranches and had $98.6 million in senior convertible notes at the end of March 2014, after some of the notes were converted to common stock. A fourth tranche of $40 million remains available, but only if MannKind receives FDA approval of AFREZZA. A recent amendment to the Deerfield facility added another possible tranche that could put another $20 million in the company's bank account even without a favorable FDA decision. However, if AFREZZA is approved this new tranche could be expanded up to $90 million. Deerfield Funds: potential $20 million without FDA approval of AFREZZA or $130 millionwith approval of AFREZZA With the verdict still out on AFREZZA,MannKind has had to make alternative arrangements for additional capital. At the beginning of March 2014, the company secured anew equity-based financing facility for up to $50.0 million. Atleast through the first week in May 2014, the company had not yet tried to sell shares through the facility. At-The-Market Equity Facility: $50 million So far, searching through MannKind's 'corporate sofa cushion' we have found $120 million in available capital without an approval of AFREZZA and $210 million if AFREZZA is approved. If the approval of AFREZZA is not forthcoming by the anticipated July 2014 deadline, it will likely be due to a request by the FDA to provide additional data or clarification. If AFREZZA is approved, the company must complete production capacity at a facility in Danbury, CT and begin a sales and marketing campaign as part of its commercialization effort. Either way, I believe it will be necessary for MannKind to go back to investors for additional capital. Stock Price is Investor Bet on FDA Decision In April 2014, an advisory committee voted overwhelmingly for approval of AFREZZA for both Type 2 and Type 2 diabetes suffers. Nonetheless, the FDA elected to take another three monthsto review data from Phase III studies completed last year. It seems more likely than not that the FDA will finally give MannKind the green light for AFREZZA. Press releases for such events serve as great elixirs for investors, rendering them eager to opentheir purses and ready to bestow rich valuation multiples against future earnings. A discussion of valuation multiples of earnings would be beyond the balance sheet theme of this article. However, my review of recent trading patterns in MNKD shares suggests the stock developed considerable upward momentum beginning with the company's first quarter financial report in the first week of May when the decision of the FDA advisory committee was made public. Since then the stock appears to have reached a plateaunear the $11.00 price level. However, news of a favorable action by the FDA would certainly have sufficient influence to propelthe stock through a price resistance level. I believe the stockcould reach the $16.00 price level within a short time just on the news alone. Balance Sheet Provides Reality Check on DilutionAn even more important question for investors to answer as theylisten to the tick, tick, tick of MannKind's clock is what share price is justified by MannKind's balance sheet. The company has completed a number of financing and may need to again dip a bucket into the capital market well. As a part of those financing arrangements, the company has issued a plethora of options and warrants on its common stock, not to mention the conversion features of various debt facilities. Some of these derivatives have already been exercised, bringing shares outstanding to 388.6 million by early May 2014. In fact, warrant exercises have just in the last year presented an important source of capital. In the year 2013, 66,353 warrants were exercised, bringing in $171.5 million in new capital to MannKind. There are many more options and warrants chucked away in the desk drawers and file cabinets of investors. An approval of AFREZZA will make it more likely than not that all the derivatives would be exercised as they become eligible. A mash-up of data from recent filings with the SEC, suggests the company had already issued derivatives and conversion features that would require MannKind to print up another 69.4 million shares of common stock if everyone comes forward. The good news is that the options and warrants could bring in an estimated $151.1 million in new capital. Granted some of those options are not yet exercisable, so in the near-term only $67.9 million in new capital might be forthcoming. Derivative Exercise: $99.9 million with another potential $51.2 million in the long term from options that become exercisable later. Adding the proceeds from options and warrant exercises to the other capital sources thecompany already has at its disposal begins to bright up the financial picture for MannKind. However, it would bring total shares outstanding to 446.2 million (458.0 million with all options exercised). If the company uses all currently available credit and equity-based financing facilities and its creditors convert debt to common stock would be 11 million shares if AFREZZA remainssidelined at the FDA and 27.4 million shares if AFREZZA is approved. At maximum that could bring total shares outstanding to 491.4 million, a 26% dilution compared to current shares outstanding. What Dilution Means for Your Trade From the current share price near $10.00 and a potential 491.4 million shares outstandingsometime in the near future, the company will need to command market value near $10 billion to give shareholders the 'double bagger' reward many require to take a position in a risky biotech.MannKind must capture market share from Novo Nordisk (NVO), a producer of injectable insulin. There have been numerous estimates of what those sales might be. EvaluatePharma, a provider of market intelligence on life sciences companies, reports that the consensus sales estimate for AFREZZA is near $600 million per year. That implies a sales multiple of 16.6 to reach a market cap near $10 billion (I am assuming all debt is converted and there is no excess cash). That hardly seems plausible. Perhaps investors would be satisfied with a valuation near that of Novo Nordisk,which currently trades at 7.9 times sales. That would imply a market value of $4.7 billion ($600 million times 7.9) or $9.56 per share for MannKind, if all financing vehicles are used and alloptions, warrants and conversion features are exercised ($4.7 billion divided by 491.4 million shares). That hardly seems worththe trouble. Conclusion: The clock is ticking for MannKind and an alarm should be sounding for investors who are taking long positions in MannKind without consideration of the dilutive impactof recent capital raising efforts. MNKD shares appear to have the potential for upside from the current price level, but may bemore a matter of investor excitement than reasoned evaluation of fundamentals. The company's balance sheet points to so much dilution, that fundamental financial projections may not support astock price much higher than the current level. Use your own sales or earnings estimates for valuing MNKD, but do not forget totally up shares outstanding. Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliateshave a beneficial interest in the companies mentioned herein. OUTSTANDING DERIVATIVES - MANNKIND Derivative Issuable Shares 3/31/14 Average Exercise Price Potential Capital Raise Options Total 23.9 million $4.35 $103.8 million Exercisable 12.1 million $4.36 $52.6 million Warrants 19.7 million $2.40 $47.3 million Senior Notes Conversion feature 14.7 million -0- Make-whole premium 2.0 million -0- Restricted stock 9.1 million -0- Total* 69.4 million $151.1 million *Total shares issuable would be 57.6 million and total capital raised would be $99.9 million excluding those options that are not exercisable. Source: MannKind 10K and 10Q filings; Crystal Equity Research estimates HISTORIC BALANCE SHEETVALUES - MANNKIND Dollars in Thousands 12/31/12 12/31/13 3/31/14 Cash 61,840 70,790 35,759 Current assets 66,810 76,275 39,399 Total assets 251,314 258,646 224,553 Accounts payable 4,555 3,860 3,638 Senior convertible notes, current 114,443 -0- -0- Loan facility, current portion -0- 102,300 25,871 Current liabilities 144,775 127,794 44,515 Senior convertible notes 97,583 98,439 98,662 Loan facility, long-term portion 119,635 49,521 49,521 Total liabilities 361,993 289,359 207,017 Deficit (110,679) (30,713)17,536 Shares outstanding, 000s 377,208 388,615 Source: MannKind 10K and 10Q Reports
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Post by otherottawaguy on Jun 25, 2014 11:52:50 GMT -5
A Featured Presentation On Mannkind Corporation's Revolutionary Diabetes Treatment
Published: Tuesday, 24 June 2014 11:18 Written by Doctor Hung V. Tran, MD, MS
Table of Contents I.360 Catalyst Keys II.Background III.Poised To Capture The Growing $21 Billion Global Insulin Market IV.Revolutionary In Diabetes Treatments V.The ADA Is Pushing For Early Insulin Treatment Pitting Afrezza In The Complete Dominancy In Diabetes Treatment VI.Advantageous Negotiations Regarding Partnerships or Acquisitions VII.CEO Mann Alleviates The Issue of Dilution Plaguing Many Development-Stage Biotech Firms. VIII.Persistent Efforts Often Leads To Big Reward IX.Afrezza Is Completely Superior To Exubera. X.45 Percent Ownerships By CEO Mann Demonstrate Strong Votes Of Confidence. XI.The Recent Transactions Were Inconsequential XII.Independent Research Revealed That Doctors Are Highly Receptive To Afrezza XIII.Company Valuation XIV.The Anatomy Of An Epic Short-Squeezed XV.Conclusion XVI.References
I. 360 Executive Catalyst Keys ■Afrezza would became the most dominant player in the rapidly expanding $21 billion insulin market, which rapid acting analogues comprises of $9 billion. ■Growing at the estimated 12.4 percent CAGR, the global insulin market is expected to become $45 billion by 2020. ■The first revolution in diabetes treatments commenced with Doctor Banting and Best, who isolated insulin from a healthy dog's pancreas to successfully treat another dog with diabetes. ■The second revolution in diabetes treatment resulted from Doctor Mann's insulin pump. The pump is implemental in managing Type 1 diabetes. ■Afrezza would catalyze for third revolution in diabetes treatment, inclusive of not only Type 1 and Type 2 diabetes but also pre-diabetes. ■Obesity often cause to insulin resistance, leading to pre-diabetes. Without treatment, pre-diabetes would progress to Type 2 diabetes. Research shown that pre-diabetes is a highly prevalent condition. Perhaps more patients have pre-diabetes than clinically diagnosed diabetes per se. Obesity and pre-diabetes tend to occur together due to their correlated etiology. ■The American Diabetes Association (ADA) is pushing for early insulin treatments. Early insulin treatment prevents diabetes complications stops the progression from pre-diabetes to diabetes. ■Patients who have never been on insulin are reluctant to try insulin injection. Hence, this position Afrezza to be the drug of choice, thus, pitting Afrezza to dominate this increasingly vast market. ■Treating diabetic complication is ineffective, costing the taxpayer $245 billion annually and contributing to the increasing US healthcare spending. Afrezza would reduce this striking figure. Therefore, the FDA should be motivated to approve the drug. ■To gain approval the drug only needed to meet its primary endpoints in the Phase III study with statistical significant and Afrezza demonstrated stellar results in reducing the Affinity Trials 1 and 2 primary endpoints in reducing hemoglobin A1C. ■Back in April 2014, the Advisory Committee (ADCOM) voted the near unanimous vote of 14 - 0 and 13 – 1 highly favoring Afrezza, as treatment for Type 1 and Type 2 diabetes, respectively. Keep in mind that the FDA nearly always follows the expert committee's recommendation. ■Mannkind is in the advantageous position for partnerships and buyout given the ADCOM votes and the upcoming FDA approval. The CEO and Founder might sell the company at the right price. Mannkind already hired the expert merger and acquisition firm, Greenhill & Co., to facilitate the strategic process. ■Afrezza is superior to Exubera in all aspects including convenience, pharmacokinetics, dosing, as well as, doctors and patients affinity or receptiveness toward the drug. Exubera market failure caused doubts pertaining to Afrezza's success, which created the perfect buying opportunity for shareholders. Nonetheless, it's only a matter of time until the market becomes cognizant of Afrezza tremendous value. Independent research revealed physicians are highly receptive toward prescribing Afrezza. ■Conservative valuations revealed that Afrezza should be valued around $51 per share. ■The Billionaire CEO and Founder, Doctor Mann, owns roughly 45 percent stakes. If the Mannkind ship goes down, the captain would go down with shareholders. It is reassuring when the management aligned their interests with shareholders. ■Recent insider transactions were through the pre-arranged, 10B5-1 plan. Hence, they had no bearing on the company's prospect. ■With 68 million shares shorted, the upcoming binary event would trigger an epic short squeezed that would wipe out short portfolios. II. Background MannKind Corporation, a small biotechnology company based in Valencia, California, has planted the catalytic seed for the revolutionary diabetes treatment more than a decade prior. The Company's efforts are materializing into life-saving treatment for million patients suffering from diabetes. In this featured presentation, I will provide an integrated research analysis on Mannkind through the distinctly comprehensive paradigm of an MD, researcher, financial analyst, and an investor.
Source: Finviz III. Poised To Capture The Growing $21Billion Global Insulin Market The market for diabetes mellitus is gigantic, and it's getting larger by the days. Research estimated that over 25 million or 8.3% of the U.S. population have diabetes in 2011. In addition, there are roughly 1.9 million new cases each year. Research showed that the $21 billion global insulin market, in 2013, is growing at 12.4 percent annually, and it would become $45 billion by 2020.
Source: Grandview Research Overweight and obesity are quite common in the U.S. and modernizing nations like China. Obesity causes insulin resistance which leads to pre-diabetes and subsequently Diabetes Mellitus Type 2. The cost to diagnose diabetes in the U.S. amounts to the burdening of $245 billion. This figure is comprised of $176 billion from direct medical cost plus $69 billion in reduced productivity. IV. Revolutionary In Diabetes Treatments The first revolution in diabetes treatment commenced when Doctor Frederick Banting injected an isolate from a healthy dog's pancreas called "Isletin" to save another dog with diabetes. Since this monumental event, we've mass-manufactured insulin and further developed the drug that became the standard of care for diabetes treatment.
Source: Nobel Prize The second revolution occurred when Dr. Alfred Mann, Mannkind CEO and Founder, invented the insulin pump for his previous company, MiniMed. The Serial Entrepreneur later sold MiniMed to Medtronic for $3.7 billions.
Source: MedTronic The third revolution in diabetes care is brewing with Dr. Mann's Afrezza® – the novel super rapid-acting insulin, revolutionary in its ability to mimic the natural action of the human pancreas. Afrezza revolutionary performance was made possible by leveraging on Mannkind's proprietary Technosphere® platform. This new mode of drug delivery could have wide applications in delivering other medicines for treating other diseases. By inhalation through a small whistle-like device called the Dreamboat, Afrezza is rapidly absorbed from the lungs into the bloodstream, and works within minutes before mealtime. This is exciting news for million of patients suffering from diabetes, because Afrezza overcame many problems limiting existing treatments. Conventional injection of short-acting insulins, NovoLog and Humalog, required more than 15-30 minutes prior to mealtime to exert optimal effects. Also, needle injections are painful, not to mention the needles' stigma and inconvenience, that would hinder patient compliance. Due to the aforementioned rationales, newly diagnosed patients are likely reluctant to start insulin injection as well. While it's plausible that lifelong diabetics are not needle aversive, physicians still encountered patient's compliance as the major problem leading to diabetic complications. The aforementioned stigma, as well as, the cumbersome of having to inject needle in public surely contributed to the treatment adherence quandary. Afrezza is convenient, and frankly stated, "easy-to-use" due to its ingenious ergonomic design. One could carry this small whistle-like device in a purse or a pocket. In addition, there's no need to excuse oneself to utilize the public restroom for embarrassing needle injections. The convenience of this inhalable insulin, Afrezza, thus, would improve patient compliance, alleviate frustrations for doctors, and prevent further complications for patients such as limb amputations, blindness, kidneys and heart damages. When approved, Afrezza would also mitigate the rising U.S. healthcare spending by minimizing the $245 billion spent on treating diabetic complications annually. Further, Afrezza is not an expensive drug but rather would be sold comparable to generic insulin. V. The ADA Is Pushing For Early Insulin Treatment Planted Afrezza's Complete Dominancy In Diabetes Treatment The American Diabetes Association (ADA) is pushing for earlier insulin treatment to slow the progression of diabetes. Timing is critical for diabetes treatment since early treatments prevent diabetic complications of small blood vessel as well as nerve damage in the eyes, feet, kidneys, and heart. These complications are significant concerns for doctors and patients due to the body's impaired ability to heal itself when diabetes is not well-controlled. As an MD, I witnessed countless patients with poorly controlled diabetes, whom eventually succumbed to the wrath of diabetic complications of losing their feet, vision, and/or kidneys. According to diabetes treatment guidelines, clinicians would start a patient on oral medication when they have failed the recommended diet and lifestyle modifications. When oral medications alone are not adequate in controlling blood sugar, doctors will add insulin injection to the treatment regimen. Many patients who have not been on insulin treatment are reluctant to try insulin injection due to needle phobia, inconvenience, and its associated stigma. Afrezza, removing all of the namely above barriers, encourages early use of insulin that potentially preventing and/or reversing the disease course per se. By using Afrezza, million of diabetic patients would be able to live their life as if they do not have the disease at all. Given the stellar performance from Afrezza aligning with ADA's efforts in early insulin treatment, the FDA should approve Mannkind's inhalable Afrezza. VI. Advantageous Negotiations Regarding Partnerships or Acquisitions Mannkind hired an investment firm, Greenhill & Co. - a firm specialized in merger and acquisition to guide the company with partnership negotiations. With stellar trials results plus the near unanimous recommendation for approval by the Advisory Committee, Mannkind is now in highly advantageous negotiating positions. Furthermore, this high ground would become increasingly advantageous when the company gains FDA approval. Major players in the diabetes arena include Elli Lilly, Sanofi, and Novo Nordisk. Thus, any of these players would provide Mannkind with resources including funding, manufacturing, and marketing to ensure the successful launch for Afrezza. Even without a partner, Doctor Mann has the available insulin supply and already laid down the company's manufacturing infrastructure in Danbury, Connecticut. However, The CEO and Founder might sell the company after Afrezza approval, if the price is right. VII. CEO Mann Alleviates The Issue of Dilution Plaguing Many Development-Stage Biotech Firms A developmental biopharmaceutical requires significant capital financing, which is often done by issuing more shares. This is because it takes many years and intensive resources to successfully bring a drug to the market. This issuance of new shares, termed "dilution," devalues the stock shares price which is analogous to "inflation" reduces monetary value via the process of printing more money. Mannkind does not significantly dilute shareholder values like many developmental biopharmaceuticals. With Dr. Mann holds more than half of his fortune in Mannkind, it is logical that he would refrain from devaluing his own fortune unless when dilutive financing was deemed prudent. It is luxury in the world of biotechnology to find a company with the backing of the billionaire philanthropist CEO and Founder like Dr. Mann.
Source: Forbes VIII. Persistent Efforts Often Leads To Big Rewards Since Mannkind received the complete response letters (CRL) twice, the company paid its due in following the FDA's guidelines. As followed, Mannkind conducted the Affinity Trials 1 and 2 in adherence to the Agency's protocols. On August 13th 2013, MNKD published their phase III top-line results, having both trials significantly met their primary end points - in reducing a blood marker for diabetes status coined Hemoglobin A1C - required for FDA approval. Historically, the Agency sometime delayed the approval for certain essential drugs and medical devices. Notwithstanding, the corruption by the FDA scientist in recent year, plus issue of medication shortage, prompted policy changes within the administration. These developments materialized into shortened approval time, increased number of approval, and decreased drug shortages. Hence, these enhanced FDA policies should loosen the overly rigorous process and favoring Afrezza approval. It's also notable that companies which are persistent in resubmitting their NDA, as a rule-of-thumb, would eventually gain FDA approval for their drugs. This third time is highly likely the charm for Mannkind's Afrezza approval. IX. Afrezza Is Completely Superior To Exubera While insulin inhalation is not a novel concept, Pfizer had their inhale insulin, Exubera, on the market but withdrew due to the drug's dismal sales. It's not far reach from the imagination to believe the market is apprehensive that Afrezza would meet the same fate as Exubera. Interestingly, my surveying with patients revealed that nearly all patients look forward to having Afrezza.
Source: Mannkind Corporation X. Pharmacokinetics of Afrezza Resemble The Action of Human Pancreas Though both drugs, Afrezza and Exubera, are inhale-insulins, Afrezza is superior in 360 views. For instance, Exubera delivered insulin through a bong-like device, which was both aesthetically unappealing and impractical at social settings. In addition, there's dosing issues associated with Exubera. Moreover, the drug did not demonstrate the superior pharmacokinetics intrinsic to Afrezza.
Source: Mannkind Corporation XI. High Insider Ownderships Voiced Strong Votes Of Confidence In practicing due diligence, I made it a habit to monitor insiders transaction. It's comforting for shareholders when CEO Mann is "putting his money where his mouth is" by holding 45 percent of the 388 millions shares outstanding without selling a single share. XII. Recent 10B5-1 Transactions Were Inconsequential
In 2013, the market was concerned regarding CFO Matt Pfeffer's transactions which prompted me to call him for clarification. Mr. Pfeffer clarified that there was no direct insider sales initiated on his behalf. Moreover, he then stated that his transactions were done through company's 10b502 plan a year prior. In the recent month, June 2014, similar market concerned regarding the management transactions. Nevertheless, such transactions were also intiated through 10b502 evidencing that these pre-arranged sales did not suggest any true negativity regarding the company's prospect.
Source: OpenInsider XIII. Independent Research Revealed That Doctors Are Highly Receptive To Afrezza With Afrezza's revolutionary developments unfolding in the diabetes treatment, Mannkind should be moving up by leaps and bound given its power to capture the multibillion dollars diabetes market. However, the market are not well adept to handle uncertainties. While doctors could be reluctant to prescribe Afrezza to their patients due to its unfamiliarity, because it's a new drug after all. Nonetheless, Afrezza is quite easy to use. The beauty in genius design lies in simplicity and Afrezza is the perfect fusion of ingenious design with simplicity. During my previous work as an MD, I treated many diabetic complications first-hand in the hospital, outpatient and wound clinic settings. Due to patient noncompliance with injectable insulin, I informally surveyed physician colleagues and learned that most would prefer prescribing Afrezza over conventional diabetes treatment. Moreover, nearly all of the patients that I either treated or encountered were fascinated by the idea of having a pocket-sized super rapid-acting inhalable insulin. XIV. The Company Valuation I calculated the RAAs market share of $9 billion by utilyzing revenues from the three major pharmaceuticals including Lilly, Novo, and Sanofi. Assuming Afrezza could capture 33 percent of the $9 billion RAA market, this would yield the figure $3 billion. ($9 billion x 33 percent = $3 billion) Using the conservative factor 7 (market cap per revenue), for a small cap pharmaceutical based on comparative market analysis, I multiplied 7 by $3 billion revenues to arrive at $21 billion revenues. To quantify Mannkind share price differential, I took $21 billion divided by $4.1 billion to obtain the factor 5. ($21 billion / $4.1 billion = 5). Calculating true PPS. I multiplied the current share price of $10.73 by factor 5, which equaled to $51 PPS ($10.73 x 5 = $51). These calculations are based on conservative metrics of using the factor 5 instead of 10 or 12. Additionally, I also did not account for the potential treatments for pre-diabetes, which are increasingly common, which resulted from increasing number of patients afflicted by obesity. Given Afrezza superiority over any insulin available on the market, it's highly probable that Afrezza would have an edge over competitors. Nonetheless, Mr. Market can be quite illogical at times. The market under appreciated Mannkind PPS before the Advisory Committee decision only to see its faulty conclusions and saw more than 100 percent share price appreciation in one day. The day in which many short-sellers were burned. It's interesting to note that even Warren Buffett –The Oracle of Omaha –could not predict the share price in the short term with precision. Nevertheless, time will ultimately prove the true merits of the visionary, Doctor Alfred Mann, as well as, the fruits of the managements. XV. The Anatomy Of An Epic Short-Squeezed Despite positive developments, there are still 68 million shares shorted or roughly 17 percent of shares outstanding. When the market realizes Afrezza potential, and in combinations with an FDA approval, partnership or a buyout, the bull will start kicking in full force – similar to the Bull Run in Madrid – creating a guillotine short squeeze phenomenon.
Source: Nasdaq As follows, the July 15 binary event could wipeout many short portfolios. I strongly believe that shorting Mannkind nearing its binary event would be more dangerous than shorting either Jazz or InterMune. Needless-to-say, those investors who heavily shorted InterMune earlier in the year ... either filed Chapter 11 or ceased investing altogether. XVI. Conclusion According to The Father of Value Investing, Benjamin Graham, Mr. Market's mood is fickle." Based on his labile mood, he would quote a great company either too low or too high at times. Mr. Market quoted Mannkind shares in the range $4 to $5 when I first published and recommended the stock. Mannkind shares, recently, have traded up – north of $10 – due positive development as forecasted. Inspite of using extremely conservative appraisal, the company true value should be at the minimum of $50 per shares. Since the stock's intrinsic value is much lower than its current market capitalization, the PPS would match its true value in the future as the catalyst materializes. Pertaining to Mannkind, the catalytic event such as a buyout, partnership or FDA approval could easily double the stock. The positive ADCOM indeed unlocked significant value for shareholders. Needless to say, an FDA approval for any company holding the treatment to the multibillion dollars diabetes market would unlock the ultimate reward for long-term shareholders. Nevertheless, it's important for investors to realize that investing research is an imperfect science with interweaving elements of art. Hence, I could not guarantee that Afrezza would be approved. Nonetheless, Afrezza has over 90 percent chance of approval based on my extensive research on the company. In his famous book "Common Stocks and Uncommon Profits," the Father of Growth Investing, Phillip Fisher, cited Shakespeare "there is a tide in the affairs of men, when taken at the flood will take to fortune." After the decade long of perseverance, the tide is approaching for "the intelligent investors," as well as, the million patients suffering from diabetes. Peter Lynch also stated that "you do not need many 'multibaggers' to have an outstanding portfolio that Wall Street would envy." Therefore, I believe that you could still outperform the market by holding only several stocks like Mannkind, InterMune, Intercept, Jazz, Michael Kors, or Chipotle. As the final note, I wanted to remind readers that an investor should stick to his or her circle of competence, exercise due diligence, build a strong stomach for stock prices fluctuation, believe in Mannkind's genius like CEO Mann or CFO Pfeffer, and get ready to celebrate this incoming revolutionary era in diabetes treatment. Disclosure: I am long on MNKD. I wrote my first PRO article on Mannkind through Seeking Alpha. The stock had appreciated more than 100 percent since my publication in 20013. I strongly believe that the company is still highly undervalued based on conservative valuation models, and the upcoming catalyst would be one of the most powerful seen in the world of biopharmaceutical. References: 1.http://www.nobelprize.org/educational/medicine/insulin/discovery-insulin.html 2.http://www.medtronic-diabetes-me.com/insulin-pump-therapy.13.html 3.http://www.nasdaq.com/symbol/mnkd/short-interest 4.http://openinsider.com/search?q=mnkd 5.http://www.mannkindcorp.com/ 6.http://www.mannkindcorp.com/news-and-events-media-room-photos.htm 7.http://www.forbes.com/profile/alfred-mann/ 8.http://finviz.com/quote.ashx?t=mnkd 9.http://www.nobelprize.org/educational/medicine/insulin/discovery-insulin.html 10.http://www.grandviewresearch.com/industry-analysis/insulin-market 11.http://finance.yahoo.com/q/ks?s=MNKD+Key+Statistics 12.http://www.diabetesforecast.org/2014/05-may/whats-next-for-insulin-no.html 13.http://www.uptodate.com/contents/overview-of-medical-care-in-adults-with-diabetes-mellitus?source=search_result&search=diabetes+treatment&selectedTitle=2~150
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Post by otherottawaguy on Jun 20, 2014 9:17:21 GMT -5
There is a Biotec index fund IBB, it didn't show anything interest vol wise out of the gates, but is showing a nice 1% upward climb that has yet to abeit.
OOG
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Post by otherottawaguy on Jun 20, 2014 8:44:15 GMT -5
I am watching three biotecs this morning showing what looks to be abnormal opening volumes. MNKD opened with 500K which is a big opening, but one usually associated with some sort of news. Additionally I am watch EXEL and it showed a 250K open which is very odd, on no news. And the last one UNIS, WOW, opened with 250k which is about 25% of the avg daily vol and again on no news.
All three resulted in drops of about 1% for MNKD, EXEL and UNIS.
Wondering if anyone else has noted this in their favourites, and if they can proffer an explanations? Triple Witch Friday?
OOG
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Post by otherottawaguy on Jun 20, 2014 8:17:17 GMT -5
Settlement Date-Short Interest-Avg Daily Share Volume - Days To Cover 5/30/2014 68,246,601 11,207,127 6.089571 5/15/2014 68,035,239 6,058,257 11.230167 4/30/2014 65,647,607 4,865,107 13.493559 Read more: www.nasdaq.com/symbol/mnkd/short-interest#ixzz35BWpD8cV
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Post by otherottawaguy on Jun 18, 2014 8:12:10 GMT -5
Sean:
Just to offer the contra argument here, could this also lead one to believe they are combining to fight off an even greater threat such as Mannkind partnering with a competitor?
OOG
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Post by otherottawaguy on Jun 18, 2014 8:06:20 GMT -5
It seems strange to me to have a Canadian Partner as they would not be able to sell here in Canada until it got the thumbs up from Health Canada. Is there actually a Canadian company in the diabetes space that isn't a subsidiary of one big international players?
OOG
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Post by otherottawaguy on Jun 17, 2014 12:41:41 GMT -5
Replay is now up...
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Post by otherottawaguy on Jun 17, 2014 9:36:34 GMT -5
I assume this came from todays investor conference?
OOG
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Post by otherottawaguy on Jun 17, 2014 8:00:00 GMT -5
Just in case you don't read the other board....
We had been discussing this on another thread but thought that I would through it up as a fresh topic. I went to the following website and downloaded the data avail for 15 May, not sure when its scheduled to be updated.
www.sec.gov/foia/docs/failsdata.htm
The link to the most recent data is at the bottom of the page. I downloaded the file and filtered for MNKD and MNDKW and it shows about $55M or about 6.5M shares as not being delivered (OOPS).
SETTLEMENT DATE CUSIP SYMBOL QUANTITY (FAILS) DESCRIPTION PRICE Value Tot Val 20140515 56400P201 MNKD 49098 MANNKIND CORP 7.01 344176.98 20140516 56400P201 MNKD 20398 MANNKIND CORP 6.93 141358.14 20140519 56400P201 MNKD 697030 MANNKIND CORP 7.02 4893150.6 20140520 56400P201 MNKD 524529 MANNKIND CORP 7.39 3876269.31 20140521 56400P201 MNKD 676827 MANNKIND CORP 7.57 5123580.39 20140522 56400P201 MNKD 957834 MANNKIND CORP 7.81 7480683.54 20140523 56400P201 MNKD 588515 MANNKIND CORP 7.76 4566876.4 20140527 56400P201 MNKD 790828 MANNKIND CORP 7.77 6144733.56 20140528 56400P201 MNKD 812852 MANNKIND CORP 8 6502816 20140529 56400P201 MNKD 986391 MANNKIND CORP 8.17 8058814.47 20140530 56400P201 MNKD 385782 MANNKIND CORP 8.55 3298436.1 MNKD Shares 6490084 $ Value 50430895.49
20140519 56400P508 MNKDW 44 MANNKIND CORPORATION WARRANTS 2.98 131.12 20140520 56400P508 MNKDW 44 MANNKIND CORPORATION WARRANTS 3.16 139.04 20140521 56400P508 MNKDW 44 MANNKIND CORPORATION WARRANTS 3.24 142.56 20140522 56400P508 MNKDW 3441 MANNKIND CORPORATION WARRANTS 3.35 11527.35 20140523 56400P508 MNKDW 6991 MANNKIND CORPORATION WARRANTS 3.38 23629.58 20140527 56400P508 MNKDW 8286 MANNKIND CORPORATION WARRANTS 3.3 27343.8 20140528 56400P508 MNKDW 200 MANNKIND CORPORATION WARRANTS 3.47 694 20140529 56400P508 MNKDW 1884 MANNKIND CORPORATION WARRANTS 3.51 6612.84 20140530 56400P508 MNKDW 2807 MANNKIND CORPORATION WARRANTS 3.74 10498.18 MNKDW Shares 23741 $ Value 80718.47
Enjoy the ride,
OOG
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Post by otherottawaguy on Jun 16, 2014 12:09:11 GMT -5
MannKind: Does Greed Devour The Brain?
Jun. 16, 2014 11:33 AM ET | 27 comments | About: MannKind Corporation (MNKD)
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary •No matter what they tell you, insider sales remain insider sales. •Option exercises are not the same as open market stock transactions. •MannKind's shares are largely a speculative bet on a binary event by emotional speculators. •According to bullish speculators, nothing can go wrong and the stock should fly high into the sky. •Always remember: Be fearful when others are greedy.
MannKind (MNKD) continues to polarize investors. The biopharmaceutical company intends to play big in the diabetes field with its new insulin drug Afrezza, and has got lots of people excited. According to company information, Afrezza is a rapid-acting inhaled insulin drug aimed at treating one of most prevalent lifestyle diseases, diabetes:
“ AFREZZA® (pronounced uh-FREZZ-uh) is a first-in-class, ultra rapid-acting mealtime insulin therapy being developed to improve glycemic control in adults with Type 1 and Type 2 diabetes mellitus. It is a drug-device combination product, consisting of AFREZZA Inhalation Powder single-use dose cartridges and the small, discreet and easy-to-use AFREZZA inhaler. Because of its unique pharmacokinetic profile, AFREZZA may be a promising new therapy for patients with Type 1 and Type 2 diabetes, as it has been shown in clinical studies to control post meal-time glucose levels, cause less weight gain and have lower risk of hypoglycemia than current standard insulin therapies.
The biopharmaceutical company does seem to have a solid product in its pipeline. According to the American Diabetes Association, diabetes is a disease affecting millions of people just in the United States, and it is only going to get worse (Source: Fast Facts - DiabetesPro): •29.1 million people (adults and children) are affected by diabetes in the United States alone, of which approximately 21 million have been diagnosed with diabetes (8.1 million remain undiagnosed). •A whopping 86 million people aged 20+ have prediabetes. •1.7 million Americans over the age of 20 are diagnosed with diabetes every year, and the trend is likely going to continue. It is expected that as many as 1 in 3 Americans will have diabetes in 2050 if the trend is not reversed in the near term. •$0.10 of every healthcare dollar is spent on treating diabetes. •Diabetes is one of the leading causes of death for Americans.
Accordingly, the domestic trend with respect to diabetes certainly indicates attractive market potential for a new insulin drug, and it is easy to accept the bull case for Afrezza and MannKind.
(click to enlarge)
(Source: MannKind Corporate Presentation, Goldman Sachs Healthcare Conference, June 12, 2014)
Momentum purely driven by speculators
Let's be real, if you are buying now or have been buying MannKind shares recently in anticipation of a positive FDA decision regarding Afrezza, you are a speculator and not an investor. Nothing wrong with that, but it is speculators who largely contribute to asset price inflation and the creation of bubbles, not investors. And speculators clearly have been driving MannKind's recent surge in its share price.
With the approaching FDA date on July 15, 2014, MannKind's share price really kicked into gear lately. As SA contributor Quoth the Raven quite succinctly pointed out in his MannKind article, emotions have largely been driving MannKind's share price over the last month.
MannKind shares are up 71% since the company quoted at $6.16 on May 8, 2014. This is a solid plus for a five-week performance measurement period considering that the company has not presented any tangible results just yet.
(click to enlarge)
(Source: StockCharts.com)
Insider transactions
I recently wrote an article about MannKind's insider sales (here), which received some flak from investors who obviously hold a long position in the stock. Fair enough, I don't expect anyone to agree with me. The latest article on the bull front particularly criticized me for the way I pointed out insider sales transactions (see article here).
As reference to the criticism and as a general note, I do not equate option exercises with open market transactions at the prevailing market price. When you have a bunch of insiders who exercise their options and who immediately pocket substantial gains, that indeed leaves a bad taste in my mouth.
In addition, I'd like to emphasize, since the question also came up, that it makes no difference to me whatsoever if insider sales are enacted based on some automated schedule or not. Speculators can rationalize as much as they want: At the end of the day, insider sales remain insider sales, which means insiders think they get a good deal by selling their shares to you.
Be fearful when others are greedy
Probably the best investment guidance I have ever heard relates to Warren Buffett's quote "Be fearful when others are greedy and be greedy when others are fearful". This investment advice cannot be repeated enough. Fear and greed are the two primary drivers of share prices, and MannKind's share price certainly runs high on hopes and greed.
Conclusion
While I acknowledge that Afrezza is an interesting drug and treating diabetes is an attractive market, I stand by my previous assertion that MannKind is a highly speculative play on FDA approval. One can easily see the existence of speculators by recognizing the amount of bullish articles on MannKind and the euphoric language used in such articles.
The latest article, which criticized my factually correct, negative stance on MannKind, concluded euphorically that "future research studies will demonstrate that it reduces the likelihood or onset of long-term complications more than its competitors" and "MannKind will form a meaningful partnership with a major pharmaceutical company that will have terms that are highly favorable to MannKind".
One has to admire the implied certainty with which the author describes (inherently uncertain) future events as completely riskless endeavors. If hopes and euphoria determine the rationale, disappointment won't be far away; this has been proven over and over in the history of the stock market.
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