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Zynga, Inc. Message Board

mylkvveed 70 posts  |  Last Activity: 18 hours ago Member since: Jan 6, 2007
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  • Reply to

    Serious question

    by mass.biotech Mar 26, 2015 3:38 AM
    mylkvveed mylkvveed 18 hours ago Flag

    M.B.,

    I'm not sure how familiar you are with this story, however whether the compassionate care cases that management cites a proof of concept mean anything is probably the key difference between the bulls and bears on this one. IE: the patients were supposed to have a life expectancy of a couple of months, the average survival rate of the 6 compassionate care cases using HART's proprietary scaffold is at 22 months. There are two current survivors however none of the deaths have been linked to the regenerated trachea.

    One death was an auto accident, another alcohol related? a child died in an unrelated surgery. I don't remember them all but you get the point. There is a fly in this ointment though. the lead surgeon in all of the compassionate care cases Dr. Paolo Macchiarini (sp?) has been accused of professional misconduct. if you google search him and read the accusations they are serious and put into question the quality of the survival. He was accused in the recent past and found not guilty but the results of the latest investigation have not be released to my knowledge (and as of the last cc).

    I've pushed to get confirmation that management can corroborate the results of the compassionate care cases they are citing as proof of concept, without relying on Dr. M's word, in case he's not exonerated this time. They addressed this on the last cc and while I wasn't totally satisfied with the answer, the fact other doctors have been involved and can corroborate the results has me less worried about this one.

    Finally the fact the CEO and CFO stepped down from safe positions at the former parent company HBIO, that the CEO founded in order to run HART, and also have significant financial skin in the game including adding during the recent secondary (and after the Dr. issues were raised) gives me some comfort that the compassionate care cases are real and do provide reason to be optimistic about their chance of getting FAD approval.

  • Reply to

    Serious question

    by mass.biotech Mar 26, 2015 3:38 AM
    mylkvveed mylkvveed 19 hours ago Flag

    They are somewhere between device and drug. they've already been granted orphan drug status in the U.S. and expect the equivalent in Europe soon. The distinction between drug and device will affect which path they go through clinical trials.

    They provide a time line in the investor presentation on their website and it was recently pushed back 2-6 months due to an issue that popped up while preparing for their large animal trial. They discussed this on the recent cc. There was some inflammation that showed up on a large animal case that they believe they understand and have a solution for, however they won't know for certain until the trial with the solution is completed.

    Including the additional 2-6 months their current time frame to approval and beginning sales is some time in 2018. I'm not from the medical field and don't remember the exact terminology but this timeline includes expectations of expediated reviews due to the near certain death prognosis of the target patient population and the level of improvement over traditional treatment demonstrated in their compassionate care cases to date.

    I ball parked they triple shares outstanding from 8M to 24M to get to an operating company. Given the recent cash raise is likely to be their most expensive I think this is conservative enough. If you see my recent ballpark valuation (assuming approval) there is a ton of room for error baked into the current share price even considering some pretty conservative assumptions. Of course if they don't get FDA approval the fair value is zero.

  • Reply to

    Serious question

    by mass.biotech Mar 26, 2015 3:38 AM
    mylkvveed mylkvveed 22 hours ago Flag

    In my previous post on this m.b. I put together a valuation for this one "ASSUMING" they get FDA approval for their trachea product. This is a zero if they don't. The information I used comes primarily from an investor presentation HART has available on their website.

    In short they originally projected a fee of between $100K and $200K/ procedure although I think on recent calls they are leaning toward $100K as more likely. This compares favorably to the cost of traditional treatment and management has stated that they've discussed this fee with insurance companies and they are agreeable to it. In fact management has suggested insurance companies may wind up picking up some or all of the tab for clinical trials due to the favorable price and small population of eligible patients for their product.

    That brings up the potential market size of ~7,000 patients per year in the U.S. and E.U. according to their investor presentation. Given their orphan drug status grants exclusivity for 7-10 years (U.S.-E.U.) and their target market has a life expectancy of a couple of months under current treatment, they should get a decent slice of this market (if they get approved).

    If you go on their web site you can see their two primary physical products in the scaffold and bioreactor. Looking at these compared to their projected $100K reimbursement rate it looks like it should be a high gross margin product and management confirmed this on a recent cc. In addition to this management discussed marketing noting that because this product will only be used in a handful of hospitals across the country they will not need an extensive marketing plan and could handle it with a couple of people. IE: this should be a high net margin product as well (if they get approved).

  • Reply to

    Informative Conference Call

    by mylkvveed Mar 19, 2015 12:14 PM
    mylkvveed mylkvveed Mar 20, 2015 1:59 PM Flag

    If you look at the scaffold and bioreactor it looks like this should be a very high gross margin product at their projected reimbursement rate of $100K/ procedure. Management confirmed this on a recent cc. Because only a few facilities will be doing these procedures they won't need a huge marketing budget which was also confirmed on a recent cc. The total U.S. and EU market for their product is ~7,000 cases/ year.

    I ballpark they'd triple share outstanding to get to an operating company. The just completed fund raising will probably be their most expensive so I'm probably conservative enough on this one. When I first got interested in this one I found "JAZZ" as one product biotech comparable for ball parking margins. I had guesstimated 25% before looking at JAZZ and that's where they came in. Looking at the scaffold, bioreactor and knowing they don't need extensive marketing I'm probably plenty conservative on this one as well.

    If we assume they'll get to half of the projected total market or ~3,500 patients a year for ~$350M/ year revenue run rate and at 25% net around $87.5M net income you get ~$3.64/ share in earnings at 24M shares outstanding. There will probably be plenty of hype around the stock at that point, particularly if the esophagus is on it's way. I'll ballpark a 30X multiple which again is probably on the conservative side for a share price of ~$109. Assume the projected approval slips to 6 years from now and give and give this one an appropriately conservative discount rate of 15% and you have a present value of $47.00/ share. Even if you double the time frame to 12 years you get a present value of $20/ share.

    "IF" they get approval the time value of money is more than baked into the current share price.

  • Reply to

    Informative Conference Call

    by mylkvveed Mar 19, 2015 12:14 PM
    mylkvveed mylkvveed Mar 20, 2015 9:01 AM Flag

    Micro cap in developmental stage and not in clinical trials yet so this one is not on many radars. My guess is it will remain the handful of us posting now until they're into clinical trials and "hopefully" on their way to approval and a real business.

    The good news is there are some knowledgeable people posting here including our resident bears so we may not have volume but we get a higher quality than most yahoo mb's.

  • Good questions from Mark Landy and John Ajay, you hit my issues. I'm more comfortable they can substantiate the compassionate care cases without relying on Dr. M's word but not totally sold. I detected some hedging on their part. I didn't like the qualification that they could independently verify "many" of the results. I also wasn't comfortable with corroboration from the hospitals (relying on Dr. M????) but did like the fact that other doctors were involved and can corroborate.

    I would have liked a better explanation of why the control issues were not already dealt with. My sense is this is S.O.P. and already baked into their time frame but they brought it up to enhance the explanation of the 2-6 month delay in starting clinical trials. Not anticipating this and needing time to enhance controls isn't much better of an explanation. I don't think either case is a game changer but a reminder to "trust but verify" management talk.

  • Reply to

    Cash balance

    by investinbiotech Mar 9, 2015 10:21 AM
    mylkvveed mylkvveed Mar 9, 2015 10:46 AM Flag

    They had $7.7M cash end of Q3 with a cash burn rate of ~1.9M/ qtr which would leave about $4.6M left of that money. They just completed a secondary raising ~$8.5M to get them to ~$13M cash right now. That should get them into clinical trials before they have to raise cash again.

    Given issues with lead Doctor on compassionate care cases and common knowledge they needed to raise cash the fact they were able to do so was a huge relief and sign of confidence as reflected in the stock more than doubling since they announced the secondary even though it was highly dilutive.

    The big issue left is the verdict on the allegations of professional misconduct for Dr. M. It was supposed to be rendered at the end of February at the earliest. I haven't seen anything but judging from the run up in HART lately, either a favorable verdict is expected or it is expected management can validate the results of compassionate care without relying on Dr. M's word.

  • Reply to

    S and M

    by jbpenco Feb 27, 2015 4:59 PM
    mylkvveed mylkvveed Feb 28, 2015 9:42 AM Flag

    No doubt about it HART is a thinly traded micro cap and it doesn't take much to move the stock. That said, relatively speaking it was a ton of volume (for HART) in a short time. Obviously someone wanted in and in a hurry. Did they know something? We'll find out soon enough.

  • Reply to

    S and M

    by jbpenco Feb 27, 2015 4:59 PM
    mylkvveed mylkvveed Feb 27, 2015 7:49 PM Flag

    No volume and treading water until the last couple of hours,when volume went ape shy t. It looks like someone is expecting good news and couldn't wait to get in. The verdict on Dr. M was supposed to be end of February at the earliest. Maybe someone got wind of the results of the investigation? Pure speculation on my part but at least there is some logic to it.

  • mylkvveed mylkvveed Feb 26, 2015 12:38 PM Flag

    I believe stav is on a phishing expedition and is referring to his shops own video.

  • Reply to

    Welcome William Lawrence Hawkins!

    by mylkvveed Feb 20, 2015 8:38 AM
    mylkvveed mylkvveed Feb 20, 2015 2:23 PM Flag

    I graduated from a NJ University Cozy, however I doubt it's the one you are referring to. Princeton I presume. I think you mentioned you are a physicist, which would go to Princeton as your preferred frame of reference. Princeton, would however be the only other school in NJ offering my degree.

    In regard to pigs being a good choice for the large animal study's, it occurred to me after my post that another benefit would be some good BBQ if the study doesn't turn out well.

  • Reply to

    I avoid

    by te_st_5674 Feb 20, 2015 12:00 PM
    mylkvveed mylkvveed Feb 20, 2015 1:53 PM Flag

    I'm sure you are aware I took my stake long before the Texas advisor showed up. I will agree his obvious optimism is no more reason to buy than your pessimism is a reason to sell. I mainly brought him up to give you another even more lost soul than myself to save.

  • Reply to

    Welcome William Lawrence Hawkins!

    by mylkvveed Feb 20, 2015 8:38 AM
    mylkvveed mylkvveed Feb 20, 2015 1:22 PM Flag

    We can add my home state of New Jersey to the list of 13G filers and new 5%+ owners

  • Reply to

    Welcome William Lawrence Hawkins!

    by mylkvveed Feb 20, 2015 8:38 AM
    mylkvveed mylkvveed Feb 20, 2015 12:53 PM Flag

    Oops just noticed the math on the last post doesn't add up. I must have added an extra digit to share bought on my calculator. His price tag is more like $2M and a lot further from the $6M dollar man than I supposed in my last post.

  • Reply to

    Welcome William Lawrence Hawkins!

    by mylkvveed Feb 20, 2015 8:38 AM
    mylkvveed mylkvveed Feb 20, 2015 12:49 PM Flag

    The mid point of the post secondary trading range is ~$2.63 so that would get his price tag to around $5.4M. McNaughton's form 4 filing shows average prices of $2.59 and $2.91/ share on the two days he accumulated his 14K shares after the secondary.

    There was a post on this message board that got deleted suggesting someone took a 6M stake and this person was supposed to be a Dr? or run a fund specializing in the medical field? I can't remember exactly, however it would only take a little higher average price than my mid point ballpark to get to $6M. Maybe the author of that post let out more than he should have? I did find a Dr. William N Hawkins in Texas in a google search. Is William L Hawkins a relative?

  • Reply to

    Welcome William Lawrence Hawkins!

    by mylkvveed Feb 20, 2015 8:38 AM
    mylkvveed mylkvveed Feb 20, 2015 12:02 PM Flag

    As far as I can tell he's the only person running Prosight and its listed as $34M AUM. My guess is it's for himself-family, and created for tax advantages? The secondary had a 4.98% max ownership threshold so I believe the 788,900 shares were acquired after the secondary in the open market. I couldn't tell you the exact price but it's likely between $1.75 and $3.50/ share. I'm sure multiple buys as well.

    It's also possible he just recently tripped the 5% ownership threshold that triggered the 13G filing so he may not be done. If he goes past 10% ownership I believe he'll need to file a Form 3 initially, and form 4's after that. I was hoping to see some sort of medical background or expertise in the medical field however a google search did not turn up anything beyond info above and address.

  • Reply to

    Welcome William Lawrence Hawkins!

    by mylkvveed Feb 20, 2015 8:38 AM
    mylkvveed mylkvveed Feb 20, 2015 10:57 AM Flag

    Per 13G filing, yes it is.

  • Newly minted 7.9% owner. A new soul for te_st to save.

  • mylkvveed mylkvveed Feb 18, 2015 9:38 AM Flag

    I believe they would still have to file a form 3 but not positive. The 4.98% threshold was clearly spelled out. I don't know if there is a way to waive it or not. It doesn't appear as there is any reason for the preferred shares except maybe to get around authorized shares available? I don't see any purpose to them, except to be converted to common.

  • mylkvveed mylkvveed Feb 18, 2015 8:42 AM Flag

    The preferred shares were limited to 4.98% max. ownership as converted. $6M would get them to ~25% ownership and require a form 3(?) filing. I think they have 10 days to file so if you are right and they found a way around the 4.98% threshold we will know soon enough.

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