I find it amusing that Jonas's analysis is based on a 15 year model and an estimate of WACC. It's like predicting how tall your newborn will be at age 15.
The story need not be complex. With any new product, there is risk that the buying public will not cooperate. Although the products are not similar, the moniker of "blockbuster" has been affixed to Afrezza as it was to Provenge.
Investors will not know for sure until the August 2015 MNKD ER. By then we will have real numbers to evaluate. 2015 Q1 will have a lot of free samples.
Do you remember the 2008 NFL draft? Two blockbuster quarterbacks headed the round 1 picks. No 1 turned into a hall of fame QB: Peyton Manning. No 2. turned into a horrendous dud: Ryan Leaf. Some said Leaf had more potential. Will Afrezza be the next Lipitor; or will it be Provenge?
It is easy to point out the various differences in details between DNDN and MNKD. The lesson to learn that everyone seems to miss is that MNKD's success is dependent on the market's response to Afrezza. On paper and in the hearts of all diabetic/investors Afrezza is a clear winner. But so was Provenge in 2011. My post was to cause longs to be reflective in thought. What I got was a pack of no-brained pumpers who consider anything negative as a hit on their champion stock.
I am not a diabetic. At AdCom in April, I sat right in front of Sam Finta (Afrezzauser) as he spoke about his experience with Afrezza. His and other very convincing testimonies that day solidified my position on Afrezza. But we as investors must heed the warnings of the price drop after SNY of $4.00 ps. The DNDN story is of a sure winner that went south.
I am fascinated by how YMB collects investors who need constant assurance in their investment choice. Anything to the contrary receives a kneejerk rebuff. It’s almost like observing sports fans and their extreme loyalty to their team. Investing takes a lot of research and judgment. Information from many sources plus or minus is valuable to the investor. But it seems that YMB also is a platform for dumbo posters who will say anything to get the long’s goat.
You do not know that I am very long on MNKD and am prepared to accept the verdict of the market next year. I believe I am right. But the DNDN story gives one pause. My purpose in posting was to reach out to cognitive longs with a cautionary tale. Unfortunately for me, I encountered brainless sports fans as described above.
DNDN's problem right out of the gate was that docs did not want to front the money for Provenge. Understandable since private practice docs are not banks. This could have been solved with a deep pocket Pharma connection. The money issue died down to a small problem. The killer were the competing oral therapies from J&J and Medivation. As DNDN crashed in the last 3 years, many companies had the chance to buy DNDN but declined.
Although DNDN is a financial bust, it receives a lot of credit from the scientific community for its pioneering work. Going forward, their next cell therapy product will not require three apheresis/transfusion sessions. They learned from their mistakes.
Given what happened with Pfizer, investors will not know if diabetics will buy Afrezza in volume until they actually do. Everyone thought Provenge was to be a blockbuster. It was only through the rigor of selling that this was proven to be not true.
What started off as a promising biopharma has now ended in Chapter 11. DNDN filed for BK protection in a prepackaged deal that will wipe out or severely dilute the longs. Why did this happen: DNDN's complex process could not compete with a pill. MNKD must also pass the test of fire before its stock can rise. It is saddled by the history of Exubera. I know, they are completely different. Afrezza users must stay on the product for MNKD to be a success. The repeat buy is what the market is looking for. If this happens, big brother Sanofi will have the brawn to produce and market Afrezza worldwide. If strange things crop up as it did with DNDN, then MNKD's rise may not be smooth.
You are correct. Research people are not business oriented. They will always conclude a research report with a call for further studies. It's a way to seek more funding.
It's a wash sale which prohibits you from buying ICPT 30 days before or after your wash sale date. I know what you want to do. For a few dollars you can buy calls to allow you to buy ICPT in 30 days at a price higher than today. This way, you will benefit if ICPT recovers in price. Dealing in two different instruments (stock and option) does not run you afoul of the wash sale rules. Make sure the option expires beyond 30 days.
Two items stand out from last week's announcements:
The issue if itchiness in NASH surfaced for the first time. Itchiness was also seen in PBC. In neither study did pruritus affect the final outcome. ICPT chose not to disclose pruritus to investors in previous communications as they thought is was a non-issue. If this decision was wrong, the shylock lawyers would have glommed onto this for a quick class action lawsuit. The did it to GALT a few months back but the facts there were more black and white. I have not seen any law firm announcements so it seems itchiness passes the shylock test.
Publication in Lancet is good. But the editors injected their own opinion on safety and need for more studies. The editorial did the most damage as it highlights a potential roadblock to FDA approval. We can only hope that the FDA approves a P3 study that does not take years to complete.
The accounting loss, articles by Forbes and Bloomberg are just noise.
Everyone should listen to the Analyst conference on Monday broadcast from the Boston convention.
DNDN' Provenge is expensive but not more so than it's competitors drugs. The difference is that DNDN's treatment takes three apheresis sessions vs. taking a pill. Cost is not the issue.
This has happened to me four times this year.
I am short the Yelp $60 call expiring today and hedged by the stock (covered call). Will my stock be called away? Options are not traded AH so the only option to protect assignment is it buy stock. Some will do this to avoid a taxable event upon assignment. What a pain.
My take is that the calls will expire worthless.