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Sorry for the double posting of last.
Organon is in a great position. Prepaying $100M opened my eyes as to the confidence they must have while paying that huge dividend.
I know people hate to thiink of MNK, but I wish I knew what the plan was at that company. Acthar is such a valuable franchise. Do they go it alone, seek a partner for more testing, or sell it? A real strong partner with post-bankruptcy MNK or a new owner of Acthar, is serious competition.
I think you know I discount Libigel, which is probably my ignorance but seems to be the ignorance of the investment community as well. And I'm sceptical about what we will get from Novitium. Corti is the transformational product. It must succeed, or we issue more stock to keep going. I think ANIP will pull it off, but I'd be so happy to hear that we have a stronger partner on our team, or maybe just owning the team.
Organon is in a great position. Prepaying $100M opened my eyes as to the confidence they must have while paying that huge dividend.
I know people hate to thiink of MNK, but I wish I knew what the plan was at that company. Acthar is such a valuable franchise. Do they go it alone, seek a partner for more testing, or sell it? A real strong partner with post-bankruptcy MNK or a new owner of Acthar, is serious competition.
I think you know I discount Libigel, which is probably my ignorance but seems to be the ignorance of the investment community as well. And I'm sceptical about what we will get from Novitium. Corti is the transformational product. It must succeed, or we issue more stock to keep going. I think ANIP will pull it off, but I'd be so happy to hear that we have a stronger partner on our team, or maybe justowning the team.
IMHO, there is value in looking at related companies. That's why I still follow MNK, our sole competitor for CORTI. Let's switch to OGN, the women's health care spin-off from MRK that I recommended a while ago. The stock has held up very well, paying more than a 3% dividend and prepaying $100M of debt to MRK which it assumed in the spin-off.
So what's the ANIP connection? When you parse through the postings on this Board, there is a subliminal, if not direct, hope from most of us that ABBV will acquire ANIP. As we know, ABBV is pretty desperate to replace Humira, its blockbuster that goes off patent soon. ABBV needs revenue, and CORTI (with ANIP) fits in 100% for that model. So does MNK fit for ABBV with its Acthar, but let's hope not, although it's naive not to think ABBV is considering purchase of any revenue source.
OGN connection? A big push from them in 2023 will be a Humira Biosimilar. They won't be the only ones to pressure ABBV margins.
So -- you can speculate. OGN (women's health care, Humira biosimilar, maybe Libigel for the OGN mission for women), ABBV (losing Humira patent exclusivity, needing repalcement revenue, maybe Libigel but definitely CORTI, either from ANIP or MNK).
In the Ouija board of speculation, a lot of the pieces fit. Definitely for OGN (if you are a widow or orphan), probably for ANIP (if you can handle the stress). ABBV has the cash to do something, probably overpriced, but one of these other two will benefit.
This is what I wanted to read.
"Now, turning our attention to forward-looking guidance, due to increased Cortrophin launch visibility and momentum, we are providing total company guidance with today's release. On a total company basis, for the projected 12 months ended December 31, 2022, we currently anticipate net revenue between $295 million and $315 million, representing approximately 36% to 46% growth as compared to the $216.1 million recognized in 2021. Research and development expenses between $16 million and $18 million, adjusted non-GAAP EBITDA between $54 million and $60 million, adjusted non-GAAP diluted earnings per share between $1.34 and $1.62.
"In addition, we are providing the following purified Cortrophin Gel specific measures: Net Revenue between $35 million and $40 million, and direct selling, general and administrative expenses between $42 million and $46 million. In addition, we currently anticipate between 16.9 million and 17.0 million shares outstanding and an effective tax rate of approximately 24% prior to any federal tax reform."
JTFM, This is the way I see it. However, I do believe that anyone expecting a big CORTI surprise this quarter will not be happy.
That comment from MNK that there is usually unfavorable 1st qtr. seasonality for Acthar surprised me, but it makes sense that the indications flare more in warm weather. We newcomers to CORTI , including this part-time farmer who is always looking at the sky (or the ground) may not have factored in seasonality for a drug.
As for Sammy and Chad, they got paid enough in cash for that company. You know I believe we gave away too much stock to them, but maybe (I hope) I'm wrong.
Regards. Expecting hail this PM, and I also need to finish handicapping the Derby.
Bought some more shares a minute ago. I may as well go down with flags flying.
Judging by the stock action, it looks like the wheels have really come off. I wonder how Guggenheim feels after covering the $50/share capital raise.
I guess we just hold on at this point, but the teens are not inconceivable. Catty's good judgment prevails.
Just read the MNK 10-K that was filed March 15 for calendar 2021. Although in Ch. 11, MNK still files. The comments on Acthar (and ANI competition) made this wortthwhile. Major takes:-
-Net sales of Acthar Gel for fiscal 2021 decreased $174.3 million, or 22.7%, to $593.6 million. They say this was driven primarily by the marketplace, mostly COVID-19, and that sales force was unable to have as much face time with physicians as in normal times.
- They expect 1st qtr to be low, a tradition for the product because treatable indications are not as frequent as in warmer times of the year.
- They are putting a lot of hope on their ongoing development of a self-injection device to make it a more patient-friendly application for single unit dosage indications. Easier application will also help them with their ongoing studies meant to promote and differentiate the product.
- They definitely point out that ANI - they name it specifically, and don't just refer to a "competitor" - does pose a competitive threat. They do not get into specifics about how they intend to address that.
Overall, what caught my attention the most was the reference to 1st quarter sales traditionally being weak because indications flare up more in warm weather. I never thought of that, but it could be a problem for our 1st quarter launch, in addition to our being new kids in the game. I wasn't expecting chart busting results for our 1st quarter anyway, but seasonality could affect our results and should be discounted as something "normal" for the product.
JTFM, I think I'd be happiest if Samy became the CEO. He knows how to make a deal. All those shares Novitium holders got were for free, on top of the 90 million cash. His team's all in cost for shares after a merger was the deferred capital gain taxes.
Honestly, this is just not hindsight. I still can't fathom, with the company on the cusp of CORTI approval, that they would go so heavy in debt for Novitium. Why not wait until there is real cashflow from CORTI? I smell major write-offs. There is a reason why Carey sounds so glum. They will be back to the well for capital within a year unless they hit it out of the park with Corti. Interest rates going up.
Nice aticle, JTFM. Way over the bandwidth of Seeking Alpha without a better lead-in. Your conclusion - This is not reflected in share price of ANIP or AbbVie - should have been the lead-in. That's what these readers want. A BUY recommendation.
So, continuing my admiration of your extraordinary scholarship, good work, but I think there is a real reason this is not in the share price for ANIP - not gonna happen.
What is appealing for ANIP, and I have to stretch, is that after this over-priced acquisition of Novitium we have a lot of insiders owning shares now, almost 30%. Hopefully, Samy and team, who got 2.5 million shares at pretty close to today's price, will be with us for a long haul, but he and his team score big on any private deal over $35. Don/t forget, they already pocketed $90 million for this hocus pocus that Novitium would be "immediately accretive to earnings." Very clear that Novitium was a desperation move. Not selling now, and maybe it's worth buying a little more at today's price, but female testosterone as an add on for value is fantasy. It's all about Corti, and whether we can outmaneuver MNK.
Just looked at the Proxy. There is no reason to be paying an average of $400,000/year to NINE directors. Reducing the director count would require a change in the articles, so my decision is simply token protest.
I'm voting in favor of Pat Walsh, Nikhil, Samy, and Brown (largest shareholder group). To make it an odd number, Nash has a medical degree.
Against the other four. Why not save $1.6M?
It's never been a popular view on a Board mostly of cheerleaders, but Acthar is the name brand, and if its pricing is brought in line would still be a first choice for people already getting treated by it. Will the government stampede to it. Sure, if they want to price it at a ridiculously low price. Just review the new, sub-cost, pricing for Acthar arranged in the settlement of its Medicaid litigation.
Bottom line: the success of Corti will depend on how good MNK is at selling Acthar, and its realtively new subscription model pricing. MNK management is very smart, inherited a pile of problems, screwed shareholders, and has a big ownership stake. ANIP will have to be very good (or very low priced) to compete successfully for the "transformation." It's possible, but not a slam dunk.
As for Libigel, what can I say about this chimera, except to call it a brilliant bit of speculation by posters I like, but it is not in the ANIP future. We may be seeing the future now, an overpriced acquistion, a pile of debt, and no sales. When you miss make-believe non-GAAP numbers this badly, there is no bright horizon. Big loss (again.)
My guess with numbers like this is that they will need another capital raise, in spite of the brave talk. Guggenheim bought most of the last one at $50 and spread it into mutual funds they manage, probably in small enough doses so as not to trigger complaints. In exchange they got a 6 month exclusive, and loyalty after that, for future capital raising transactions.
Amazing that Wall Street can get away with shennanigans like this, but how smart does ANIP look to have raised money at $50/share. Pretty smart.
And how smart do we bagholders look now not to have sold at $40+?
I know, Corti is going to change the world and we have the world class team, etc., etc. Bullshit.
Looks like ANIP has done its typical Lucy stunt with Charley Brown (aka/investors). Put the football on the tee, and yanked it away just as Charley charged.
The underwriters for the most recent raise bought at $50 with the money in mutual finds they manage. In exchange, they got a 6 month exclusive deal on any other capital raising by ANIP.
$50 to today's price? Owners of the mutual funds they manage won't notice. Glad they ponied up the money to keep ANIP on track for its "tranformational" future.
Thanks for the news release. I like the resource they have established to answer questions and drive demand.
Per the release, "Cortrophin In Your Corner" is available (Monday–Friday from 8 AM - 8 PM ET) at 1-800-805-5258.
Anyone buying? Lots of optimists here.
This better be a happy New Year. I bought some more. Price at $45 is a gift, IMHO. Guggenheim did not soak up most of the last $75M stock issuance to be generous.
Facts:
Guggenheim runs lots of mutual funds. A reasonable thought is that ANIP shares at $50 ended up in them. In connection with soaking up the $75M, Guggenheim also negotiated a 6 month exclusivity right for anything new ANIP might offer to the public.
Guggenheim is not stupid and does not have stupid lawyers. No way they would have coupled the 6 month exclusivity deal while also selling to their mutual funds at $50 unless they were very, very comfortable with valuation.
That's it for me in 2021. Very comfortable for 2022. We are in a good position.
Happy New Year. Actually, I prefer to wish "Happy Dying Year." Resolutons for 2021 are long dead for most of us, and resolutions for 2022 have not kicked in yet, so live it up.
For 2022, ANIP is one of the best ideas you can have, IMHO. I'm a believer in the decisive governance and management changes which Chairman Pat has orchestrated. He's the real deal.
My hope: the weenies who play with the price can get it back to the low 40s. I doubt they can do that with any meaningful volume, but there is still opportunity to buy at this great valuation.
Happy Old Year (and a good one for 2022 if your resolutions are not too ambitious).
LordD
After a few minutes of "reflection" when it dropped close to $40, I got over the complaining mode about the stock price.
Just buy more.
This stock used to be at $80 with a lot less going for it than now.
LD
Stock is going nowhere for now. They got me again.
Guggenheim customers bought 1.2M of the 1.5M shares ANIP recently sold at $50 per share. Within a month, the shares have dropped $10.
By deivering these buyers, Guggenheim got first rights for 6 months on any future ANIP deals.
I've never done business with Guggenheim, but would be leery after seeing this.
My math was off and too high.
1.7M shares x $7 = $12M of saved taxable income.
What I don't understand is that they got more shares than that in the deal.
I think they have taken an agressive tax position that the lock-up is a tax restriction on the other shares. Maybe there will be subsequent filings to make this clear, but the bottom line for me is that I have always felt the brokers would swing pricing a bit to help these guys on taxes.
according to SEC reports, Sami and Chad now own 1.7M shares of stock, at a little more than $43/share.
The small volume trading that brought the price down by $7 from the recent $50 offering has reduced their taxable income by $20M. That saves $7.5M in taxes for them (and reduces the ANIP tax deduction by that amount).
Hard to say if this was orchestrated, but I have added some more at $43 to recover the dilution from the offering and have added a little extra.
JTFM, really good analysis, and SLVR makes an excellent point about the 10 year data adding extra defense in this litigious society.
The 30 days for underwriters to pick up another 225,000 shares @ $50 each. Not clear if that has been exercised, but very bullish if so.
I'm also wondering who the buyers were for the $75M at $50/share.
Guggenheim delivered those buyers for 1.2M of the 1.5M shares. Good job by them, and their customers are either long term optimists or a bit annoyed.
To steer customers into a bad short term deal like this, Guggenhaim must be pretty convinced all will work out well. I note that it got a 6 month first refusal right to be lead managing underwriter, lead initial purchaser, lead placement agent and/or lead arranger in connection with any future ANIP equity offering in that period. Hmmm. What's next, I wonder?
(Data from the November 5 prospectus. Speculation and judgments, just mine.)
I'm not that smart at trading.
I've been honest over the years that ANIP has not been a money maker for me , and I still wonder why I wasn't selling at $80.
Noone bats 1000. I think we are finally on the right path.
If the story is right, and most of us have followed it closer than Wall Street, we have a double by the end of next year as we become more visible.
LD
Smile, I wouldn't worry about that. They raised $75M in a day at a good price. We should be happy, especially when we got the chance to replace dilution by buying shares at less than that.
I am curious who the buyer(s) were to buy $75M in one day for $50/share. These must be institutional buyers. That is encouraging.
Oh well. I never get the lowest price, but $46/share is still ok.
Looks like it's full speed ahead for the merger. Like any divestment we probably had to give away some to the opportunistic buyer. (ANIP has been in that role in the past.)
Not much we can do about meddlesome bureaucrats in the FTC who make their living harassing small businesses while the big culprits go free. Deal is ready to close. That's the story.
Now, for your last observation about institutions and share price, my raspberries to them. The $75M offering was placed in a day at $50. I was happy to take a $4 present and bought some more just now at $46. If ANIP executes the way we project, I expect this to be a great buy.
Thanks, Silver. Please don't do too much on my account, but it is interesting how these normal matters, when out of whack, affect health so much. Whether testosterone or corticotrophin, rebalancing nature for persons who have lost that balance has great value, on whatever measure value is determined.
I've read that andropause also makes it harder to lose weight as you get older. I'm not sure if this is only for men. Is this relevant for ANIP?
JTFM, Unless I get bit by a rattlesnake or fall off my horse, I'll be buying some extra to prevent dilution.
Simply for musing and not investment advice, do you think this will drift below $50?
It's a great presentation. The only thing "missing" is on Slide 18.
Although technically not part of the Executive Team, our Chairman, Pat Walsh, led us from the desert to the Promised Land. Thank you, Pat.
RG, Thanks for the quick heads up on this.
JTFM,
I included the unvested restricted shares already issued. For all practical purposes, executive shares will vest.
issued shares 12,740,853
Novitium shareholders 2,466,667
Novitium PIPE (to Ampersand) 736,811
Restricted stock 627,991
total shares before new shares 16,572,322
Bottom line is that this is not a dilutive giveaway. At $50/share most of us would have been clicking our heels a month ago and will not add to the short term pressure of added debt and related covenants.
Very smart move by them. Your knowledgeable input has really helped.
I read the preliminary prospectus and am 100% on board with this:
1. We are on a ship with some captains who seem to be capable. Ultimately, any investment in a public company where you are a passive owner requires trust. Our captains have been decisive and the market is agreeing with their judgment.
2. If this sells at $50/share, it's a "cheap" raise of $75M and, realistically, much better than borrowing for ANIP with its current debt load.
3. Before this new raise, and disregarding options exercisable at $50.30, and assuming Novitium and full conversion of the Ampersand Pipe preferred shares, we had about 16.6M shares outstanding or committed, meaning that we, as part of the outstanding 12,740,853 shares, owned 77% of ANIP.
4. If 1,500,000 shares are sold in this new offering, we own 70% of ANIP, but it will have an additional $75,000,000 cash for CORTI needs.
This is a great deal for us. Let's hope nothing crazy occurs in the overall market before we get this new capital.
Also encouraging, but I would feel OK anyway, is that I don't see any dilution protection for the 3,203,478 shares to be issued to Novitium owners and Ampersand. That shows confidence and fair dealing on their part.
JTFM. Agreed. They will all be insiders. Usually when a fixed number of shares is issued in a deal there will be dilution protection. That's also the case with option awards.
Normally, I'd rather see a company issue debt instead of dilutive equity. However, ANIP has borrowed about as much as it can, so this is the way to raise money. Still, you'd like to think your insiders take the same dilutive hit the outside shareholders do. So I'm just curious. Impossible to make a judgment until you know how much will be issued and at what pricing.
Do Novitium owners get diluted or will their shares be adjusted ? Deal hasn't closed yet.
It was a Barron's Roundtable article in 2017 that introduced me to ANIP and this wild journey.