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Good for you.. I bought mine at 0.12 and 0.13
BAT is at 0.1933 as I type so those buys now starts to look really good..
Good luck to you masahirox
I did just that added 1k shares @ 3.25
By the end of this year ACRX will prolly be at $5ish or better..
It could happen..
Arena And MannKind Are Associated - Could Something Bigger Happen?
Mar. 7, 2019 1:46 PM ET|2 comments | About: Arena Pharmaceuticals, Inc. (ARNA), MNKD, Includes: UTHR
Spencer Osborne
Spencer Osborne
Growth, value, special situations, momentum
(3,839 followers)
Summary
MannKind is geared toward 'pro-drugs'
Arena is geared toward novel drugs.
Arena and MannKind have a common partner in United Therapeutics.
Passionate MannKind (MNKD) retail investors often contemplate big time buyouts by big pharma, market caps that approach $10 billion, and a situation where the stock goes up to levels which create millionaires. Not a week goes by where there is not some comment about a buyout from Amgen (NASDAQ:AMGN), Roche (OTCQX:RHHBF, OTCQX:RHHBY), Eli Lilly (NYSE:LLY), or some other big ticket pharma with billions in cash looking for something to spend it on. Not a day goes by without seeing someone comment that MannKind is 'massively undervalued'. Meanwhile, the company is piling up losses, cash strapped, and can't seem to ever get ahead of the curve. Let me be blunt. MannKind's pipeline is immature, and the company wrestles with whether to feed the Afrezza machine or sink money into longer term projects to advance its pipeline the beyond pre-clinical stage it seems to be perpetually in.
Arena Pharmaceuticals (ARNA) investors used to be the same way. There were throngs of message board mavericks that saw Belviq as a blockbuster that would have big pharma knocking on the door to buy the company out. Arena, and by extension its investor base, has matured over the years and Arena now finds itself as an established pharma that is actually undervalued in a material way. After All, Arena has $1.3 billion in cash and sports a market cap that is only $2.4 billion. I view Arena as an attractive candidate for a buyout, but getting to the point wherre a big pharma company actually pulls the trigger is hard. If Etrasimod gets licensed without a buyout happening as part of that deal, the buyout window may actually close a bit unless the company can create depth in its pipeline again in a short period of time.
There have been many times over the years that I have laid out comparisons and parallels between MannKind and Arena. Arena partnered Belviq, saw a partner pull out, and ultimately sold the drug off in exchange for a royalty. MannKind partnered Afrezza, saw its partner walk away, and has now spent a few years trying (unsuccessfully) to market the drug itself.
As it happens, these two companies have now become associated with each other through a common partner in United Therapeutics (UTHR). MannKind created a dry powder inhaled version of Treprosonil (TrepT) for the treatment of pulmonary arterial hypertension, while Arena created a novel once per day pill called Ralinepag for treatment of the same condition. United partnered with MannKind in a deal worth $95 million and also partnered with Arena in a deal worth $1.2 billion.
This article is not about creating another buyout rumor in the world of MannKind or Arena. It is about some logical speculation on why these two companies may make a great pair. So as to be crystal clear, I will repeat that there is no whisper out there about Arena and MannKind tying the knot.
Before going to far into this idea, lets establish a simple baseline. Arena would acquire MannKind, not the other way around. I will place the buyout price at $1.5 billion in a tax friendly all stock deal. That is about 5 times the current MannKind market cap, but synergies would provide additional value to both MannKind as well as Arena shareholders. Why did I select 5 times the current market cap? Because it is not necessarily high, and not necessarily low. It is a good round number to work with. Read On.
The first interesting component in such a deal is the fact that the two companies have different business strategies that could complement each other. I see MannKind as mostly a 'pro-drug' type of company. MannKind, these days, is not looking to create new drugs. Instead, it is seeking to formulate existing drugs into an inhaled version that may be able to provide desirable characteristics as well as extend patent life and/or shelf life of a particular brand. I see Arena as a company which creates new and novel drugs that seem to be best in class candidates. Arena is adept at clinical trial design, grasps how to navigate through the FDA process, and is now well versed in the difference between a good deal and a bad deal. A marriage of these two companies, with the $1.3 billion in cash which Arena possesses, would allow for the combined entity to take advantage of the faster development of 'pro-drugs' to provide short term catalysts, whilst driving longer term novel drugs through the FDA process and into lucrative partnerships.
The second interesting component of such a deal is that the investors of both companies could now take full advantage of the United Therapeutics deal. I have outlined that I see MannKind's TrepT as a bridge drug to replace Tyvaso while United garners FDA approval of Arena's Ralinepag. It is clear that United sees Ralinepag as the future of the space. That being said, if an inhaled version of Ralinepag is approved, United will pay $250 million to Arena. If the inhaled version of Ralinepag uses the MannKind platform, MannKind stands to get $30 million. Royalties for MannKind on Trep T are low double digits. Royalties for Arena on Ralinepag are low double digits. Potentially, royalties to Arena and MannKind on an inhaled Ralinepag will be low double digits respectively. Now, think.
Let's assume that low double digits is 15%. As things currently exist, MannKind will get royalties on TrepT, Arena will get royalties on Ralinepag, and both will get royalties on inhaled Ralinepag (provided MannKind's platform is the inhaled version). By the time Trep T launches, MannKind will receive another $50 million in milestones. Now some assumptions. Let's assume that TrepT gets about 18-24 months for a window before Ralinepag launches and takes over the space. Let's assume that the royalties over that period are $30- $50 million. That means that between milestones and royalties, MannKind stands to collect $80-$100 million over 4 years or so. Now let's assume that upon launch of the oral form of Ralinepag that United begins the formulation for an inhaled version. Let's assume 3 years of oral sales before United brings the inhaled version to market. This would be a strategy to extend patent life and combat generics. Let's assume that three years of oral Ralinepag would generate $1.5 billion and sales and pay $225 million to Arena in royalties. After three years, United moves forward with the inhaled version of Ralinepag. That would kick in (upon approval) $250 million to Arena and $30 million to MannKind. Now lets assume first year sales of inhaled Ralinepag of $500 million. That would generate $75 million in royalties to MannKind and $75 million in royalties to Arena. European approval of Ralkinepag brings in another $150 million to Arena. Second year sales of $750 million would bring in even more royalties.
Here is the bottom line. In this situation MannKind as a stand alone would get:
$12.5 million in milestones in 2019
$25 million in milestones in 2020
$12.5 million in milestones in 2021 and $20 million in royalties in 2021
$30 million in royalties in 2022
$30 million in 2026 if the inhaled version of Ralinepag is approved and uses the MannKind platform.
low double digit royalties on the inhaled version,
Essentially, a cash strapped MannKind will see some money come into the door, but will not see it at levels that really drive shareholder value, and could see its TrepT candidate obsoleted rather quickly.
Here is what Arena stands to get:
low double digit royalties on oral Ralinepag
$150 million with EU approval
$250 million plus low double digit royalties if an inhaled version is approved.
Here is some of the benefit in a combined company as it relates to United.
Combined company (made up of current MNKD and ARNA shareholders) would get $50 million in milestones on TrepT - new benefit to ARNA holders
Combined company would get $30-$50 million in early royalty money from TrepT. - new benefit to ARNA holders
Combined company would get $150 million in milestones with EU approval of Ralinepag - new benefit to MNKD holders
Combined company would get low double digit royalties on oral ralinepag - new benefit to MNKD holders
Combined company would get $280 million with approval of inhaled Ralinepag ($30 million to MannKind and $250 million to Arena)
Combined company would get to double dip the low double digit royalties on inhaled Ralinepag. (15% to MNKD and 15% to ARNA). This could potentially mean that the combined company will have about one tird of net sales of inhaled Ralinepag with zero added cost.
The combined company would also have the financial muscle to give Afrezza a real marketing push before deciding the fate of the drug. If the added muscle can allow the drug to turn the corner, great. If not, then at least it will have had a noble effort.
The synergies outside of the connection with United are pretty impressive. The price point for an inhaled version of a novel drug has now been established at an additional $250 million. Arena, because it had a lot of leverage, was able to generate a deal that made near and long term sense. When combined, there could actually be Technospere value unlocked. MannKind negotiated its United deal from a position of severe weakness. The terms of that deal will be a constant tool used against the company in any future negotiations. If MannKind were acquired by Arena, it would have a new face, new leverage, and could reset the market on Technosphere value.
In simple terms, there are some very real synergies that could exist between MannKind and Arena. These synergies are more pronounced because of the respective deals with United Therapeutics. Taking things a step further, a combined MannKind and Arena could be a tempting target for United down the road in a way that neither company could ever be as separate entities.
The beauty in a combined company is pretty simple. MannKind provides a platform that can advance multiple inhaled drug candidates quickly which can lead to more modest deals in volume, while Arena possesses the platform that can advance novel drugs which command billion dollar deals. The issue with MannKind as a stand alone is that you need a lot of things to go right to get appreciation. The issue with Arena is that the time and expense of bringing novel drugs to market means years of waiting, and if a drug does not take off (Belviq for example), it is a long healing process for the stock. These companies can actually complement each other in several ways, whilst also providing a bit of vertical integration (think pill, extended release pill, inhaled formulation).
The other beauty in this is the substantial savings that could be realized in overhead. Combine offices, trim upper management, add toll processing to MannKind's Connecticut plant, and keep trimming costs where necessary.
I am sure there will be passionate fans of each company that want to go it alone, want a different valuation, or simply want nothing to do with the other company. Take your emotion out of the equation. Both companies feel that they are undervalued and both feel they have potential. It happens to be that these companies can actually complement each other in many ways beyond the brief outline I have given. I think that contemplating something like an Arena and MannKind combination is far better than speculating about a buyout because the latest hire came from some big pharma company. People that will toss out high valuations on a company out of thin air are a dime a dozen. Rarely do you see any of these people put together any compelling scenario to justify an imaginary market cap of $8 billion. Here's what I will say. Combine an Arena with a MannKind and you create an Arena which can now move more quickly, and a MannKind which can finally possess leverage and gain credibility with analysts and institutional investors. As separate companies these entities have a market cap of $2.7 billion. Combine them and you could see a $4 billion dollar market cap instantly, a $5 billion market cap unlock within 12 months and healthy annual growth from there. After the market cap reaches $5 billion, you can begin ton contemplate the next deal, but do yourself a favor and keep it realistic.
Let me be frank. I see Arena as a company with great potential even it is is a standalone entity. In my opinion the $1.2 billion dollar deal for Ralinepag is not as big as the possible deal that the company might ultimately land for Estrasimod. In fact, I am so bullish on Etrasimod that I can see it being a trigger for bigger M&A activity anyway. My worry with Arena is what the story might be after an Etrasimod deal. The deep pipeline with massive potential will no longer be quite so deep. Certainly Arena will be cash rich, but then the speculation begins about what the company might do with its money anyway. In this environment share buyback programs and dividends are not quite as sexy as some good old acquisitions.
On the MannKind side of the equation, I see a company that has pretty much been a day late and a dollar short for quite some time. It is a company with some pretty compelling products, but it struggles with finances and seems to endlessly be in a cycle of two steps forward and then two steps back. As a standalone I worry for MannKind. It has the potential to be a pretty good story, but lacks the financial muscle to get there. The company is burning through cash and shares and even with its latest deal still can not seem to impress the street. The window of time where the company has to begin addressing its 2021 debt picture is fast approaching and is simply another cliffhanger which MannKind investors will need to endure. For MannKind the struggle is real. Very real. This company has to get something moving and has to find a way to deliver some shareholder value. Teaming up with a player like Arena might well be the answer. In my opinion United got what it needed from MannKind for a song. Despite the frustration of a deal that only supplied 2 quarters worth of up front cash to MannKind, the best possible thing that came from that deal was actually the fact that United bought Ralinepag from Arena the possibility that Ralinepag might have an inhaled version.
Let me make it perfectly clear. This proposed marriage has not been telegraphed. The hints that made contemplation of this exist within the structure of the respective deals each company has with United Therapeutics. United was already in the inhaled drug business prior to its TrepT deal with MannKind. Arena could see that and placed a $250 million dollar price tag on an inhaled version of Ralinepag. In my mind that dollar figure is to big to ignore. I can picture Arena executives re-thinking what having an inhaled drug platform might mean, especially with its pipeline. Some of its drug candidate might do well with the fast acting attributes of the MannKind Technosphere platform.
The next question is how we might know something is brewing. The answer to that is simple. Pay attention to what United Therapeutics does with Ralinepag and how quickly it delves into discussing whether or not inhaled Ralinepag is a front burner item on the agenda. Pay attention to Arena, masters of clinical trial design, and see if they begin to explore the inhaled front on other drug candidates. Here is the bottom line. When Arena had $600 million in cash and was advancing several pipeline candidates, no one really thought much of the cash. Now with $1.3 billion in cash, the natural question will be what Arena plans to do with it. It can bring forward several novel pre-clinical candidates, but it could also enter the pro-drug business complete with shorter clinical trial timelines, and quick deals.
Speculation can be fun. It can give an investor an escape from the reality that Wall Street gives us every day. What I am trying to present here is something that can make great business sense and to challenge readers to think more deeply on the problems and attributes different companies have and what it might take to solve them. It is my hope that this article gets people thinking, creates some good dialogue, and even gets passionate investors to look beyond the borders of these companies as stand alone entities. Stay tuned!
Is it Thursday yet? I am looking forward to see their financial report this could take us close to $1 or even in dollar range if their fins is good.. For now I'll take the 3% green..
Exactly why I choose to invest on BAT plus Brendan Eich is a genius..
Oh boy! Daylight robbery by the market makers and a classic moved by them :)
I don't know why people fall for it tho I guess only those who've done little DD before getting in the stock..
MNKD: A Head Start to 2019; Q4 and Annual 2018 Earnings Results
Zacks Small Cap Research•March 5, 2019
By Brian Marckx, CFA
NASDAQ:MNKD | NASDAQ:UTHR
READ THE FULL MNKD RESEARCH REPORT
Financial Update
The results for Q4 and the full year 2018 from MannKind Corp. (MNKD) were a pleasant surprise. Not only did the company beat earnings expectations but also reported gross profit for the first time. Product margin was 13% in the quarter and, if not for a $2M amendment fee paid to Amphastar (to reduce MNKD’s insulin purchase requirement by $11.5M), product margin would have been a very healthy 48% (according to our calculations). Importantly, management is guiding for product margin to remain in the black every quarter in 2019 (and, presumably, going forward from there). Notably, fourth-quarter 2018 Afrezza sales came in 19% higher than our estimate. MNKD also received a milestone payment of $10 million, which reflects $6.4M under the United Therapeutics (UTHR) license agreement, $3.8M from the UT research agreement and $0.1M from the Cipla marketing and distribution agreement.
On the earnings call, management shared results related to Afrezza’s quarterly prescription growth since 2017. The fourth quarter of 2018 marks the eighth consecutive quarter of accelerating prescription growth. Management mentioned that since initiating the DTC campaign in January 2019, there has been an increase in copay savings card downloads (Q1 2019 had as many downloads as all of 2018). Meanwhile site visits to the Afrezza website was up five-fold. This offers a positive outlook for 2019 and we expect this momentum to be maintained in the coming year as the DTC campaigns complement their sales forces’ efforts in building awareness at the physician level.
Annual revenue from Afrezza came in just better than $17 million primarily due to higher product demand and a favorable mix of sales of the higher priced 12-unit cartridges. Also noteworthy is that accelerating sales of the 12-unit (as well as 8-unit) cartridges is indicative of ‘stickier’ demand from patients (particularly T2D) reflecting them having honed in their specific titration. R&D expense in 2018 came in at approximately $9 million. We model R&D spend to more than double in 2019, reflecting assumed progress in the development of TreT as well as Dronabinol. Selling expenses were $47 million related to Afrezza’s commercial operations. General and administrative expense came in at $32 million for 2018. We expect SG&A expenditures to increase on an absolute basis in 2019 as the company continues to invest in Afrezza adoption initiatives but, on a percentage of sales basis, expect SG&A to fall as compared to 2018.
MannKind’s balance sheet was strengthened with the recent capital raise and Q4 milestone payments. Management is guiding for the current cash balance, which stood at $72 million (cash and cash equivalents) as of December 31, 2018, to be sufficient to fund operations until mid-2020.
Afrezza picking up steam…
MannKind kicked off the year with a substantial ad campaign focused on getting diabetic patients to adopt Afrezza. The “Unexpected Moments” commercial highlights the fact that since it is difficult to remain regimented to inject insulin before eating, Afrezza offers diabetics dosing flexibility at mealtime. Afrezza’s flexibility in this regard relates to its superior time-action profile as compared to injected insulin, a benefit that we believe will drive patient switching and repeat prescriptions.
While the pilot DTC campaign in 2017 was aired in a dozen markets, the current ad commenced in the second half of January across national cable networks and local TV stations. Additional marketing initiatives began in February. MannKind intends to remain flexible on overall spend on the campaign as the marketing push continues.
These ads seem to be a step in the right direction for the company. On the earnings call (2/26/19) management stated that it already resulted in a significant spike in copay card downloads (in one month got as many downloads as a normal year), while hits to the Afrezza website was up five-fold. We continue to expect Afrezza demand to benefit from the DTC campaign as well as the company’s other sales, marketing and reimbursement related efforts and model sales of the product to increase nearly 80% in 2019.
Evidence supporting the benefits of inhaled insulin…
The American Diabetes Association’s (ADA’s) Professional Practice Committee (PPC) updates the Standards of Care annually as they determine new evidence supporting/opposing care in diabetes. As a result of evidence from the STAT study, the ADA recently updated their position statements on the management of diabetes in adults. In their statement, they mentioned that
“… supplemental doses of inhaled insulin taken based on postprandial glucose levels may improve blood glucose management without additional hypoglycemia or weight gain…”
Although this guidance represents the ADA’s current thinking on this topic, policy makers are not expected to merit it immediate incorporation. They are of the opinion that since the evidence is still emerging, results from larger clinical studies may be required to provide clarity on this issue and refine the recommendations.
Additional Afrezza trial data forthcoming…
Dr. Phil Levine initiated a trial in T2D patients whose HbA1c levels were not within recommended guidelines when treated with oral agents, basal insulin or GLP-1 for 6 months. About 40 subjects were treated with Afrezza and we anticipate the interim results of this study in Q1.
Pediatric study data could also be available in the relative near term. As a reminder, cohort 1 (ages 13 – 17) of their ongoing (safety and PK) pediatric study completed in September 2018. MannKind is guiding for cohort 2 (ages 8 – 12) to complete in the coming months and, if all goes well, to commence a Phase III pediatric study before current year-end. Assuming eventual positive results of the Phase III study, this could significantly expand the market for Afrezza and provide a meaningful complementary revenue source for MannKind.
International expansion…
MannKind is also looking to expand in international markets including Brazil, India, Canada and Mexico. MannKind received GMP certification, a prerequisite to regulatory approval, and anticipates receiving ANVISA (Brazilian regulatory authority) marketing approval by mid-2019. MannKind has an agreement with Biomm for distribution of Afrezza in Brazil and with Cipla for the Indian market. The company is currently seeking clarity on a regulatory pathway for Afrezza in India. One potential option may be to utilize existing data and then to conduct a post-marketing study in that country.
TreT Update…
As a reminder, in September 2018, United Therapeutics entered into a worldwide exclusive license and collaboration agreement with MannKind for the development and commercialization of a dry powder formulation of treprostinil called Treprostinil Technosphere (TreT) for the treatment of PAH. UT has undertaken the responsibility for global development and regulatory and commercial activities. As per UT’s 10-K, they plan to commence a clinical study (called BREEZE) during the first half of 2019 to evaluate the safety of switching PAH patients from Tyvaso to TreT, as well as a PK study in healthy volunteers. The FDA has indicated that these two studies, if successful, will be the only clinical studies necessary to support FDA approval.
While MannKind has agreed to manufacture clinical and initial commercial supplies of TreT, UT will be manufacturing long-term commercial product. Per terms of the agreement, MannKind received an upfront payment of $45 million and is eligible to receive milestones of up to $50 million upon the achievement of specific development targets. $6.4M of the upfront payment was recognized as revenue in Q4’18 while another $30.8M is expected to be recognized in 2019. Management noted on the Q4’18 call that they expect to achieve the initial milestone under this agreement in Q1’19 and had previously mentioned that they anticipate receiving a total of $25M in UTH milestones during 2019.
MNKD also entered into a research agreement with United Therapeutics to develop other candidates for which it received $10M upfront. MNKD is eligible to receive $30M upon achieving developmental milestones as well as double-digit royalties on net sales of the product. MannKind recognized $3.8M of the upfront payment as revenue in Q4’18 and expects to recognize nearly all of the rest in 2019. Additionally, we expect to hear from MannKind’s partner, Receptor Life Sciences, on the development of Dronabinol, an inhaled therapeutic for cancer pain.
Valuation
We use a sum-of-the-parts methodology to value MNKD, applying a P/S multiple to the Afrezza portion of the business while using DCF to value the UTHR collaboration related to TreT. Our model and valuation are subject to updating, including incorporating other collaboration candidates, if and when we feel there is enough information with which to base reasonably-confident assumptions (including related to RLS) – which could provide upside to our current target price.
Not too late for you masahirox still early in the game..
Nice! Not own as much but still own a decent position..
Yup gotta love it.. Follow the trend and the trend is your friend :)
GO ACRX! keep them green coming..
Now watch MMs are going to let it her run..
Yup I really like the personnel behind this project this is why I got some at 0.12 and some at 0.13 so I am enjoying the ride.. I hope this is going to be one of my highest ROI ever in the blockchain/crypto space..
Will looking to add more because this only the beginning..
Do you own shares DRoe?
The chart is a beauty with no gaps to fill except the RSI is steaming..
Exactly Bob huge potential on ACRX ..
Nice close..
After some readings over the weekend and took position today ACRX could get EXEL-like in the making when I got in on EXEL at $3something/share way back then but sold too soon..Atleast that's what my instinct tells me
Good signs whenever the insiders are buying..
Market is down but AVGR is up..Gotta love it
Starting off the week with the green again..Nice!
If that's the case we are looking at 600% return of investment.. I will be happy if I doubled up my money let alone 600% ROI..who wouldn't want that right d-train?
Hey Jinxter GTFOH :)
A very nice week for AVGR and its shareholders..
Would love to see the uptrend going but as always the RSI worries me..
Let's see if closes at .70 as power hour is approaching..
Patiently waiting here..Once approved its off to the races and who knows how high it can go..
True like I said you are experiencing FOMO (fear of missing out )..
Haha you sold yesterday at 0.65 now you bought back at 0.675? Dude you are experiencing FOMO
Lots of shorts and the likes wanted MNKD to go bankrupt but yet MNKD refused to and now MNKD starts to show its muscle..
Like the $4 target that would give me over 200% ROI.
Yup a lot of interest in this stock..This will head to $1 sooner rather than later it might pulled a bit because of the RSI but it will run harder the next time it does..
GO AVGR!
Good close.. I'll take 2.6% any day..
Here we go again..
I keep seeing those big orders just like yesterday..
The only thing that worries me right now is the RSI other than that AVGR have potential to run to $1
It was a fun day today now we to watch the RSI other than that keep 'er rolling..
Although the 3 insider buys a little over a week ago are not huge money still insiders buys so what's that tell you?
How I wish I found this stock a month ago but I can't complain much because we are on the ground floor still..
Smoking hot now at $0.61
Already looking great on your buys..Thinking this could to $1 after their financial report coupled that with FDA approval..
Just chugging along..inching in to $0.60
That'll be great d-train double the money from here..
Did some readings last night and I like what I've read..
Just barely got in.. Looks like they have potential
MNKD is inching in on $2.. Still own or sold yesterday?
And the upside continues..f yeah! any analyst upgrades aside from last week's?
Just hit the high of the day at $1.80..keep 'er going
I like the price action today.. Glad I got back at $1.37 a few weeks ago.. I hope MNKD is heading for a bull run..
OT--
Not only it's an awesome browser Moneymaker but you also get paid when you watch the ads that you're interested in.. When you download the browser you get 40 BAT(Basic Attention Token).. BAT is 0.13 so thats about $5something..