I still don't see a near-term buyout until the pipeline is proven. No antibody asset has been proven beyond phase I. The market is discounting the price below $5/share due to the weak balance sheet. MACK doesn't have a lot of hedge funds buying, that is indicative of a buyout candidate. Mgmt proved their incompetence when they stated the SI would decrease when the debt was settled. That obviously wouldn't happen until the cash balance improved. They should have done the two simultaneously, as is usually the case.
One analyst has speculated Shire wants to spin off its oncology assets in 2019 or 2020. That timeframe would agree w/mine in terms of a possible buyout by Shire... after MM-121 data.
You can take a look at Shire's acquisition of NPS to get an idea of what they might pay. I don't see more than $12/share at the most... more likely $10.... until the pipeline is more mature. Perhaps Shire would through MACK a lifeline by taking an equity stake, but I'm not counting on it. The next couple months will be interesting because something has to happen soon.
2017 should be a better year. MM-111 was supposed to fill this void (2016) with a significant binary event. Financing should have been taken care of when the stock price was over 8. I don't mind dilution because the co. can buy back shares when they achieve profitability... if all goes well in five or six years and have paid down the debt.
What odds do U give for the two major trial results next year? I think front line PC is 95%, given there are already at least two large academic studies using standard IR.
302 is a bit more difficult to handicap given the small sample size in phase 1, but doxy has already proven efficacy in breast cancer and MACK has proven w/398 that the mechanism of action works. So I'm gong with 75% chance of success.
Yes. From the 10-Q:
As of June 30, 2016, we had unrestricted cash and cash equivalents and marketable securities of $82.7 million. We believe that our existing financial resources, together with anticipated net product revenues and net royalty payments from sales of ONIVYDE and the net milestone payments and reimbursements we expect to receive under our Baxalta collaboration, will be sufficient to fund our operations into the second quarter of 2017. In addition, we have the ability to further manage spending as needed.
They've already guided cash into Q2 2017 on the quarterly report. Odd it was omitted from the oral presentation on the CC, but it was in the quarterly filing.
A couple positive points I noted from the conference call were:
1. Duration of treatment for Onivyde patients is continuing to improve as the mix of patients more closely resembles that in the Napoli study - Mulroy admitted the early mix of patients was a disappointment, causing the duration of treatment to be lower than expected - so perhaps revenues might actually exceed expectations sometime in the next two Q's?
2. Mulroy pretty much stated that the front line PC study would move forward to part 2 based on the information they've accumulated to date.
Unfortunately, no mention of their financial state, except that 700M of Onivyde milestone and royalty payments are still outstanding..
Their timeframe is long.
One public co. I worked for had funds invested 10 years through ups and downs, patiently waiting for buyout that finally came at an inflated price, but it was a rollercoaster getting there.
Here's an article where the final paragraph points out why potential partners could be hesitant on 302 until 2017 data is available:
It's also possible they've got a verbal commitment from Shire to partner 302 if successful and mgmt. is taking their time to get a bridge loan. However Shire has rights to negotiate only ex-US in the 398 partnership agreement so I doubt the up-front payment would provide enough to get MACK through 2018 (121 data)... especially given 2018 data could be delayed into 2019 since the primary endpoint is OS and therefore harder to predict... the longer the better!
I'm wondering what their plan is as well. A partnership to me just doesn't seem plausible until at least we have 302 data in 2017. Mulroy is starting to look like Nero fiddling while Rome burns!
Perhaps they've decided to do a VERY large offering (100M shares)) and they were advised by underwriters that they could only get N per share, where N was significantly below market price... so it didn't matter how long mgmt. waited to do it? If so, it would be a fantastic buying opportunity for retail investors to take another ride like 2012 - 2015. This time around the SP could go from $2.5 to $15 in four years.
The other possibility is they have a potential suitor (Shire?) that will do a buy-in (20%+) after more data is available. They would need another bridge loan.
At any rate, the market cap should could go to
- $1B on successful 302 trial and funding through 2018
- $1.25B on 302 partnership
- $1.5B on 1st line PC data.
Not sure. The lack of insider purchases could have something to do w/the June options grants. Porter was granted options on 43K shares at an exercise price of $6.22.
Sometimes when a dilution is well telegraphed (expected), the stock price rises immediately thereafter. It removes uncertainty for investors. The funds could be picking up shares around 5, where they expect the secondary price to be.
That's mainly due to no 121 deal, lower-than-expected Onivyde sales, and poor management of operating funds.... meaning when the price is flying, dilute and build a strong cash balance. When mgmt. did the ATM at $11, that was the time to do a 10M share dilution. I see the problem as Mulroy making promises he shouldn't. A CEO should always leave open the possibility of dilution if the stock price soars.... but Mulroy promised shareholders non-dilutive funding. Now we're lucky to get $5/share on a dilution.
I give Mulroy an A+ on the Baxalta deal, an A on getting Onivyde through approvals, but an F on managing funds to support ongoing operations.
I own CSIQ... great management. When the stock price spiked to $30 on ITC extension, then rushed an ATM and immediately began issuing shares... and stopped when the stock price dropped below $24. That was smart, given solar is now out-of -favor and the stock price is around $14 now.
TSRO's PARP inhibitor posted knock-out results. It would be a huge market if Onivyde demonstrates strong synergy w/PARP inhibitors... it's a few years away... but good thing about this trial is that it's really more like a phase II trial when you consider its duration (3 years) with PFS as a secondary endpoint.
PFS was met across all 500 patients with the once-daily PARP, with those testing positive for the BRCA mutation seeing a median PFS of 21 months for those on Tesaro’s candidate, compared with 5.5 months for the control group.
IMHO the best scenario would be for Shire to take a 20+% interest in MACK. That means a lot of dilution, but the shares don't enter the float. Shire would also negotiate additional rights to the pipeline. In return MACK gets at least $200M.
That might require that Mulroy has to go and Yassar move up to CEO, with a mandate to ultimately sell MACK to Shire. MACK's board is made whole on previous stock purchases via stock and stock option grants. The takeover price could then be lower than some of Porter's open market purchases..
I agree it would be awful, but I don't where the "non-dilutive, non-debt" source of funds would originate.
US rights to Onivyde could be partnered, but I'm betting mgmt. is loath to do that given they've already spent considerable time and money to develop their own sales force.
MM-121 is unlikely to be partnered after Patritumab's failure and considering MACK couldn't come to terms w/potential partners last year.
MM-302 is too close to data to be partnered. Too much value would be lost.
MM-141, 151 are targeted toward subpopulations, so unlikely to be partnered so early in the clinical cycle, at least for any significant up-front payments. I think Shire has first right of refusal for 141.
If 302 is successful (likely?), I'm confident it will be partnered. Shire has first right of refusal. The question would be whether MACK partners away all rights (US + ex-US, all indications) to gain enough funds to allow Onivyde sales to increase.
The alternative would be to put the company up for sale, but that's unlikely before at earliest the end of 2017 after 1st line PC data available. I'm betting mgmt. wants to wait for MM-121 in 2018 before considering selling the company.
29% growth so early in the sales cycle seems really low and was significantly below analyst's expectations, resulting in all the subsequent downgrades. Analyst's were looking for 70% growth (17M).
No estimate was given for how long cash on hand, plus milestones and revenues, could fund operations to a future date. I'm guessing that means a secondary offering is coming. Hopefully mgmt takes advantage of the soaring biotech market and does it soon so they can at least get $5/share.
It's very unusual for a small biotech to defer from providing that type of guidance, even though they are always careful to use words stating cash will fund operations to a certain date without locking out the possibility of raising cash before then. Obviously no company would let their cash reserve get to zero before raising new funds.