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It is nice to see a little movement up.
I don't have time now for full detail, but it would be worth comparing the company today, at $37/share, with what it was like at $80 /share.
-Financial statement stronger.
-A real board with professionals and a chairman who is more than a well-bred Pennsylvanian.
- Better management team (partly because the new CEO is not as handicapped for cash as Arthur was; I still respect how far Arthur took the company.)
- Much closer to CORTI approval
- Additional opportunity thru Novitium
I feel pretty good at $37/share. In fact, I think purchasers at this price are stealing.
Good luck to us all.
Oops. Hit wrong key. Posted Sam message twice.
That's encouraging. We'd like this deal to close and not have the FTC stand in the way or force too much divestiture. This is new for us. ANIP is usually the beneficiary of FTC actions when other cos merge.
JTFM, Do you see anything that either company would have to divest for FTC merger approval?
BB, I doubt that.
CORTI approval was not a condition for the merger.
I believe they are still waiting for government clearance, so it's not up to ANIP.
JTFM, Good point. It all circles back to Pat Walsh. Here's his Bio on the Ampersand web page: https://ampersandcapital.com/portfolio-item/patrick-d-walsh/
I guess we shouldn't take it too personally that Pat doesn't list ANIP on his bio, and that Ampersand doesn't list ANIP as a portfolio company.
https://ampersandcapital.com/portfolio/. We are in the "dozen other" category for Pat. They will get that up to date at some point.
The key point for us is that this is not just a firm of cut-throat outsiders. As for rights to attend meetings, I haven't done a lot of these placements, but it's not unusual to ask for that; it's not an actual Board seat. Also, in this case it was probably thought necessary so that Pat, as ANIP lead director and also Ampersand partner, not be accused of an undisclosed conflict. It's conceivable they just have a junior analyst call into the meetings from Wellesley, but Pat probably fills both roles after disclosure.
All looks good. And we can still buy shares at about what Pat paid.
Casual, that's helpful. Novitium is a mystery. What we do know:
1. ANIP was projecting $15M addition to "adjusted EBITDA" in 2021 if acquisition took place in "mid-2021." We are past that now, but maybe that would be a projection of $40M for a full year on an "as is" basis?
2. We are paying a lot. The upfront cash alone is $89.5M. That is more than 21% of the ANIP market value. They also get 2,466,667 shares, which on a combined basis with outstanding ANIP shares gives them 16% of ANIP. If they hit targets for generics, ANDAs and 505(b)(2)s they scoop another $46.5M cash. So it is really a $200M price.
3. JTFM is more sanguine than I on this, but I think the high Novitium price is what has suppressed the stock price a bit, even with all the good news. It's telling that ANIP could not finance all of this with traditional debt, and has had to use PIPE financing for $25,000,000.
Overall, I'm glad ANIP did the deal with Novitium, but the sellers did not give the company away, by a long shot. Optimism about CORTI and a solid investors' day after approval make the stock a buy at today's price, if yearly adjusted EBIDTA accretion from Novitium really will be at least $40M (less for GAAP) on a yearly basis.
I'm glad JTFM alerted us so quickly to the Cantor presentation and that it could be viewed on the website. What a change from the "old days" when you sometimes could not even get a transcript of a conference call.
It was such a positive event, I bought some more on Friday. Nikhil showed much more confidence and knowledge about the company than earlier, which is to be expected, but still nice to see. When asked, I liked the gracious way he described the company as he found it - well run. Rather than dissing past mistakes, such as consistent overestimates for earnings and the RTF issue, he simply said that he had also found "opportunities." Very nice.
He also was very coy, which showed confidence, about pricing and marketing strategies for CORTI. No question about who is in the crosshairs, and MNK insiders cannot be feeling good.
Did anyone buy today?
It's a great presentation and made clear, just as we hoped:
1. they are staying with the existing "recipe" for the NDAs they purchased, with minor deviation only for required modernization for sterilization, etc.
2. the problem with the first submission was not replication of the molecule, but establishing the manufacturing capability, and that seems to have been addressed satisfactorily.
3. Communications have been ongoing and productive with the FDA, without any controversy.
Very, very positive.
Casual and JTFM,
Good input.
I assume that we are just dealing with non-GAAP numbers. Does anyone ever use real (GAAP) numbers to calculate earnings? This whole concept of calulating earnings and pretending that things like stock-based compensation is not an expense seems to be the culture, but there is a reason for GAAP.
I fully agree.
Although it's interesting that different recipes can be used to make a generic "cake," we bought the recipes for our two cakes, and do not need to go at it differently. This gives us a leg up for the sNDA applications.
LD
Two NDAs actually - one for purified corticotropin gel and one for corticotropin zinc hydroxide.
To use RG's good analogy, these are the "cakes" we own. I'm just questioning whether we are using different recipes than Merck, which would be the case if we were making a generic. I'm assuming (hoping) we bought the Merck recipes and are using them, but cannot tell from what I've read so far.
RG, Thanks, but I'm not sure this discussion of how to create a generic relates to the ANIP application for an sNDA for an NDA that it owns. We are not creating a generic, which is the ANDA process.
We own the NDA. For $75M I have to assume we were not left with the task to reverse engineer the molecule from scratch (as if we were creating a generic) but we must have been given technical know-how. I also have to assume we obtained samples of the molecule as produced by Merck so that we could demonstrate to FDA we were replicating what it had approved.
Are these fair assumptions? If so, the task for our sNDA is two-fold. (1) Prove that we are producing the same molecule as Merck and (2) demonstrate we can do that on a consistent basis. I am assuming that ANIP has concluded it has satisfied #1 and that establishing #2 was the hang-up. Otherwise, the resubmission would not have been so quick. If #1 is a problem, i.e., we are not the same as the Merck molecule, we could face the spectre of required safety testing for a new NDA. That's hopefully not going to happen, but replicating that molecule is critical for an sNDA piggybacked on the ancient Merck NDA.
That's a helpful update on analyst sentiment. A few comments:
1. At the last conference call, the only analyst present was stalwart Elliot Wilbur of Raymond James. Hopefully, a few more show up for the next call.
2. Schwab continues to assign an "A" (as it has for years) rating of "Strongly Outperform" to ANIP.
I think we all would differ with Schwab on some of these after our roller coaster of the last few years, but the Schwab overall "A" breaks down as "A" for Valuation, Stability, and Sentiment, and "B" for Quality, and "C" for Growth.
3. Fidelity, on the other hand, assigns a "Bearish" 2.8.
Moral of the story, I think we all know better than these algorithms.
The chemistry is way beyond my simple brain. In the last few years I have heard so much speculation (mainly from MNK investors jealous of the Acthar monopoly) that duplication is impossible, it has always seemed like a real risk to me.
When you think of it, none of us really knows the quality of the replication know-how that Merck sold to ANIP for $70M.
None of us knows what is in the freezer for a test sample and how perfect the ANIP molecules are.
If this is not a duplicate molecule, it's hard to think the FDA would issue an sNDA. ANIP must be convinced it has a perfect duplicate, and the teams of specialists who have checked and rechecked must think the same way. We will know by October 29.
BB, I just ride on JTFM's coat tails, but you're welcome. As for stock price in the short term, I would not want to be shorting ANIP with October 29 PDUFA so close, but it's impossible to forecast with such low volume.
Catty, Bitcoin has all been sold with a good profit, and I've redeployed some of that into ANIP, which I think has a much better chance of doubling than Bitcoin at these levels.
JTFM and everyone else,
I think it's a safe bet they have reproduced the molecule, the critical first step. If they had failed in that, I doubt they could have resubmitted the sNDA so fast. If they had had to reengineer their version of the molecule, they would not have been able to assemble the proof of capacity to manufacture stable quantities in such a short period of time.
So, I'm concluding the RTF letter was simply due to a concern about documentation that they could manufacture in stable quantities, and that there is little risk to what I originally thought would be the hardest part: reproducing the molecule.
JTFM, Thanks. It's Slide 13, the first step to approval, that has always troubled me - reproducing this complex molecule. ANIP has always been clear they have done that. If we take that as a given, the path to approval then requires only proof that they can "manufacture", i.e. produce commercial quantities of consistent product.
I wonder if, by assigning the 120 day PDUFA target, the FDA has already acknowledged satisfactory accomplishment of that critical first step. If so, odds are very good, after all this homework, that ANIP can establish the rest. October 29 is so important for us.
Better Link than the Chrome extension (sorry) to the FDA document describing PDUFA goal dates.
See top of page 5 for the applications which will qualify for 120 day review.
https://www.fda.gov/media/99140/download
PDUFA goal date: October 29, 2021.
This is a good link for those of you who want to keep track of our Corti application:
https://www.rttnews.com/corpinfo/fdacalendar.aspx?PageNum=5
Maybe one of you has an informed answer with a regulation cite. Why did the FDA establish such a fast (120 days) date? Is our application considered an original manufacturing supplement (top of page 5 of this document: PDUFA REAUTHORIZATION PERFORMANCE GOALS AND PROCEDURES FISCAL YEARS 2018 THROUGH 2022.) chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/viewer.html?pdfurl=https%3A%2F%2Fwww.fda.gov%2Fmedia%2F99140%2Fdownload&clen=268828&chunk=true
That's the only type of application I have found with a 120 day goal for FDA decision.
I'm with you. Is Elliot still rating this $40? I've never been impressed with his questions, and hope we attract a better class of analyst.
Hot off the press. Latest presentation, dated September 20.
https://s25.q4cdn.com/644219006/files/doc_presentations/2021/09/Ani-Pharma_09-20-21-FINAL.pdf
Hardly any volume, and it hasn't been hard to pick up more shares. I hate to think I am supporting the price, but it doesn't take much, so do not think "smart money" is buying.
Catty,
You should be drinking champagne with all that cryptocurrency (but today looks like a bad day).
I feel very good about ANIP at this point. I think the CVRs will be a zero, unfortunately, but the new management is focused. In fact, if the price goes down a bit more I will buy more. I think some of the weakness is that people are doing the math and realize that ANIP will have to issue a lot of stock to the Novitium owners (2,466,667 shares) which is significant dilution for a company with only 12,700,000 + shares. It will also have to pay $90 million, not insubstantial for a company with market value of only $370 million. Future profitability for ANIP owners will be further diluted by $46.5 million in earnout payments. In addition, we can expect that key Novitium employees who are not its owners will get grants and options.
The weak price is simply investors unsure about the value Novitium brings for what ANIP is spending and, of course, whether the sNDA for Corti is approved.
If pessimists are right, we are in the toilet, but I think the risk reward justifies additional investment.
It's a bet. $1, and more than one bourbon when we get together at the Farm in SC.
Delay because I've been tied up on farm matters, so I will rely on your science to cover farming expenses. ANIP will be a winner.
As for farming, it's much harder to make money from dirt instead of selling it, but it's too damn beautiful to develop.
LD
You opine, "If I am right, we will see activity in 2022, in order to launch in 2023"
I think the CVR issue is big enough they will postpone past 2023.
Like the two gentlemen in "Trading Places", should we bet one dollar?
JTFM, The $2.5 million expense loophole, which would allow ANIP to disregard CVRs, applies only to the sale of Libigel product. That right of CVR holders to get 5% up to $50 million was hollow from Day One, because there is no way ANIP could have marketed Libigel without spending $2.5 million first.
The $2.5 million loophole does not apply to the type of transaction more likely to occur, a "sale" to another company, which would include transfer of IP rights. CVR holders get 2/3 revenue during the 10 years in that scenario, subject to the $50M cap. That's real money - $50M - for a company the size of ANIP. I think a business decision could have been made that:
1. ANIP was not in a position to spend lots more for Libigel testing and submissions and would not be going it alone, i.e. the scenario with the $2.5 million loophole. It would have to get a partner and sell IP rights, but having to pay 2/3 of sales proceeds up to $50 million made that a poison pill.
2. ANIP would be more prudent to wait out the 10 years before selling IP rights and combining with another company for joint venture manufacturing, and to focus instead on the $70M purchase of Corti.
3. As for the requirement to act in good faith for CVR holders, a case could be made that the Board has breached a duty to the CVR holders, but the business judgment rule and the company's lack of resources during these 10 years would probably be a good defense, and any suit by CVR holders, if they sue after the 10 years, could be settled. Directors, including Brown, would be indemnified, and there is undoubtedly E&O insurance protecting the Board.
That's my take. The good news is that we could speculate there is some life for all ANIP shareholders with Libigel, but CVR holders are out of luck for their special deal due to the 10 year clock.
CVR holders: do you think ANIP has acted in good faith since 2013?
The last sentence of that CVR description I copied concludes with the following:
Under the contingent value rights agreement, the combined company's only obligation will be to act in good faith in connection with: (1) any continued operation of, development of or investment in the LibiGel assets; (2) pursuing, negotiating or entering into one or more LibiGel transactions; and (3) the terms and conditions of any LibiGel transaction.
I am not looking for clients, but when I read JTFM's persuasive analysis, I understand your pain, even though I don't have any CVRs.
Thoughtful, as always. Thanks.
JTFM, Have CVRs caused a delay in monetizing Libigel? I've speculated before on this, thinking that in a company with limited cash to pursue opportunities, why not wait until 2023 for a Libigel "sale," defined as any transaction involving Libigel and the IP rights within 10 years of the merger.
Lots of speculation on this Board about what the CVRs provide. Here is a full text description of the CVRs from the 2013 merger proxy, with my highlights. I hope this helps, and I wonder if we might see more value from Libigel when the 10 year rights expire in 2023.
Contingent Value Rights Agreement
BioSante plans to enter into a contingent value rights agreement with Computershare Inc., as rights agent, for the purpose of establishing the terms and conditions of the CVRs and the procedures by which payments, if any, will be made to the CVR holders. The form of the contingent value rights agreement is attached as Annex G to this joint proxy statement/prospectus and is incorporated by reference into this joint proxy statement/prospectus. BioSante and ANI urge you to read the form of the contingent value rights agreement carefully and in its entirety.
Material Terms of the CVRs
The CVRs will not be certificated and will not be attached to the shares of BioSante common stock. The CVRs will be nontransferable, subject to certain limited exceptions as set forth in the contingent value rights agreement. The CVRs will not represent an equity or ownership interest in the combined company or otherwise, and CVR holders will have no voting or dividend rights. The rights of CVR holders will be limited to those rights expressly set forth in the contingent value rights agreement.
Pursuant to the contingent value rights agreement, CVR holders, under certain circumstances, may have rights to receive a portion of the net cash proceeds actually received by the combined company in connection with a LibiGel transaction and 5 percent of the net revenues of the LibiGel product by the combined company. A "LibiGel transaction" for purposes of the contingent value rights agreement means a full or partial sale, license, transfer or other disposition entered into by the combined company with respect to the LibiGel assets. The "LibiGel assets" for purposes of the contingent value rights agreement mean the intellectual property rights and know-how and related assets, that currently are or have been used in the research, development and manufacture of BioSante's LibiGel product, a proprietary transdermal testosterone formulation subject to a license agreement with Antares Pharma Inc., including all BioSante generated regulatory filings, clinical and non-clinical safety, efficacy and pharmacokinetic data, compiled by or on behalf of BioSante in connection with the development of the LibiGel product. The "net revenues" for purposes of the contingent value rights agreement means the direct sales of the LibiGel product by the combined company (including to a distributor or through a sales agent) minus discounts, selling commissions, credits, rebates, write-offs, and sales tax and VAT.
Subject to the terms and conditions of the contingent value rights agreement, if the combined company consummates a LibiGel transaction within the 10-year period following completion of the merger, CVR holders will be entitled to receive cash payments equal to such holder's pro rata portion of 66 percent of the net cash proceeds actually received by the combined company in connection with such LibiGel transaction during the 10-year period following completion of the merger. If the combined company does not consummate a LibiGel transaction during the 10-year period following completion of the merger, no cash payment will be payable to CVR holders for any LibiGel transaction.
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Table of Contents
Subject to the terms and conditions of the contingent value rights agreement, if the combined company realizes any net proceeds from sales of LibiGel product within the 10-year period following completion of the merger and does not have more than $2.5 million of "development expenses" between the date the contingent value rights agreement is signed and the first sale of LibiGel products, then CVR holders will be entitled to receive cash payments equal to such holder's pro rata portion of 5 percent of the net proceeds from sales of LibiGel product during the 10-year period following completion of the merger. The "net revenues" for purposes of the contingent value rights agreement means (i) all legal, regulatory and other out-of-pocket fees or expenses relating to obtaining any governmental or industry approvals required or deemed advisable for sale or distribution of the LibiGel product, (ii) any costs of development or costs relating to the conduct or completion of any clinical trials, safety studies or other research studies or costs of otherwise obtaining any needed efficacy, safety or other data in respect of the potential sale or distribution of the LibiGel product, and (iii) all out-of-pocket costs incurred or payable after the Effective Time in connection with or relating to the contingent value rights. If there are more than $2.5 million of "development expenses" between the completion of the merger and the first sale of LibiGel products, then no cash payment will be payable to CVR holders for any sales of the LibiGel products.
The maximum aggregate amount payable to holders of contingent value rights is $50.0 million.
Under the contingent value rights agreement, the combined company's only obligation will be to act in good faith in connection with: (1) any continued operation of, development of or investment in the LibiGel assets; (2) pursuing, negotiating or entering into one or more LibiGel transactions; and (3) the terms and conditions of any LibiGel transaction
I noticed that I get MarketEdge reports for free with my Schwab account. Here is the Friday 9/10 summary if you are a trader. I underlined one part which confirms that although the short term trading scenario looks bleak, the stock seems to be under accumulation:
The current technical condition for ANIP is weak. Although the stock has pulled back from higher prices, ANIP remains susceptible to lower prices. The stock has underperformed the market when compared to the S&P 500 over the last 50 trading days. ANIP's chart formation indicates the stock is in a strong downward trend. The stock is in a short-term oversold condition based on a Slow % K stochastic reading of 20 or lower. Over the last 50 trading sessions, there has been more volume on up days than on down days, indicating that ANIP is under accumulation. The stock is trading below a falling 50-day moving average which confirms the weak technical condition of ANIP. The stock is trading below its rising 200-day moving average which is bearish.
I agree about the politics and testosterone treatment for women fits perfectly with that.
In fact, (somewhat off-topic) that's why I have invested much more in the Merck spin-off, OGN, with its international markets and emphasis on women's healthcare, e.g. reversible 3 year birth control implants, fertility assistance (will be huge for China), help with pre-term labor, treatments for abnormal postpartum bleeding, etc.
Our Libigel discussions keep educating me more. Considering where ANIP is with Libigel, maybe there's some profit down the line, but if there were something there, except for testing that did not lead to an approved product, a deal would have been announced long ago. Our ANIP future is Corti and Novitium. For all of us, I hope I'm wrong, but facts are facts.
Agreed about Scream Cream not being testosterone. (I just loved the name and thnk it's good to have a laugh.) There are other non-FDA testosterone products, however, as you all note.
So the real question is how much are ANIP's rights really worth, considering no one seems to have offered anything for them. Unlike Corti, this does not seem like such a complicated molecule to produce in one form or another, considering what's already available on the internet, but I'm no chemist.
I just don't see a lot of value or big moats to prevent competition, which is why this probably has gone nowhere.
This is getting clearer to me. Does this make sense?
1. If she goes on the web, a woman can buy a product such as Testo-Creme. https://www.forresthealth.com/testo-creme-for-women.html?gclid=EAIaIQobChMI1qPlhMb08gIV9GpvBB0H1gYtEAQYAyABEgLdw_D_BwE
There are dozens on the web. (My candidate for best name is ScreamCream.)
None of these are FDA approved; some sites have orders approved by online doctors.
2. The advantage of Libigel is that although it flunked getting FDA approval for its intended purpose after comparison with placebos, it does have unexpected data about female testosterone helping women with cardiovascular issues. Someone else may have data about female testosterone helping with breast cancer, (but not ANIP??).
3. The Libigel "advantage" then is that it does have some testing, and either it or a partner gets a head start for FDA approval with more testing.
If these are true assumptions, I can see why Arthur did not deploy cash into Libigel development. There is nothing really unique to Libigel formulation, but with a lot more expense for testing there could be an FDA-approved product that would more effectively compete with products sold online right now.
.
Quick Google shows all of these female Testosterone creams on the market.
What is different about Libigel?
https://www.google.com/search?q=female+testosterone+cream&rlz=1C1NHXL_enUS925US925&oq=female+testosterone&aqs=chrome.2.69i57j0i512l9.9717j0j7&sourceid=chrome&ie=UTF-8
Wow. That is one fascinating and relevant description of what Dr. Davis will be discussing.
"Studies are needed to 'establish the longer term cardiometabolic and breast safety of testosterone therapy for women.'"
My questions.
1. What are the testosterone treatments on the market now, and how does Libigel differ?
2. Is the ANIP data showing positive cardiovascular effect with Libigel secret? It almost seems that discussion of that specific data would be necessary for the topic Dr. Davis is discussing.
LD
Anyone buying today for $28/share?
For all of us, I hope I'm not right about Libgel. If there is something ANIP can commercialize, maybe this is the reason for the delay:
1. Arthur did not have a lot of spare cash after spending $100M or so for Corti, and decided he could not be doing everything at once. So Libigel got moved to a back burner.
2. Maybe Arthur also wanted to wait out the CVR period before commercializing. CVR holders would have gotten a lot of money, and Artnur could have been penny pinching.
Libigel not dead in those scenarios, but just on a back burner.
JTFM, Although the theories are well articulated (and brilliant), at this point I have to assign ZERO value to ANIP shareholders making any money from Libigel. After all these years there would have been something to seize on other than articles in Seeking Alpha. The only wildshot possibility is that they are waiting for CVR rights to expire, but I think ANIP simply has discounted the possibility of building on what it has to make any money. Maybe the IP rights are not good enough, or maybe it would just cost too much money to exploit and no other big partners are interested.
Off topic, but related for those who want a good play on women's healthcare, I return to Organon (OGN), the recent spin-off from Merck. As expected, shares dropped from 34 as Merck shareholders shed themselves of the small amount of shares they received in a tax-free spin-off. Price has bounced back to that level. Road shows are scheduled, and analysts project low-mid 40s for share price. In the meantime, shareholders get a dividend of more than 3% (announced after the 1st quarter of separate operations). Great products - ranging from fertility assistance to safe and enduring birth control. Markets are 80% overseas. There is more on Seeking Alpha, and I'm adding more of this in addition to ANIP. Hopefully both companies outperform.