In this article, I give a summary review of the earnings call of 2 companies that I follow on a regular basis and have written prior articles about. Both companies issued good reports, exceeding and/or beating consensus estimates. Afterwards, I list the key highlights from these reports and give additional commentary as to why I believe both companies will have continued and future success.
MannKind Corporation (MNKD) is a biopharmaceutical company that focuses on the discovery, development and commercialization of therapeutic products for diabetes and cancer in the United States, Europe and Asia.
I have written 2 articles on Mannkind recently where I mention some of the shannagins related to the company, and how I feel the company is a good short squeeze candidate that will eventually succeed with its drugs in clinical trials.
Q4 2011 Earnings Call February 22 Key highlights:
The net loss for the fourth quarter of 2011 was $36.4 million or $0.30 per share based on a weighted average of 122.4 million shares outstanding compared with a net loss applicable to common stockholders of $38.3 million or $0.33 per share on 114.9 million weighted average shares outstanding for the fourth quarter of 2010.
Mannkind beat the consensus street estimates that called for the company to show a loss of $0.27 a share for the quarter.
The key remarks came from Alfred E. Mann, The founder, majority owner, and Chairman and CEO of the company;
Many of our long-term stockholders have expressed concern about the loss of value of their investments. That is certainly understandable given that MannKind's stock has dropped by about 3 quarters since the CRL. I have shared in that loss of value. In fact, my loss has been the greatest of all. I had personally invested $575 million to purchase what is about 40% of MannKind and the current value of that equity is but a fraction of my actual cash investment, yet I expect that loss to be reversed by developments over the next couple of years. I am certainly continuing to hold my stock and I'm even converting some of my loans with the company into stocks so as to maintain my ownership position.
I remarked in my first article I wrote about Mannkind entitled "The Curious Case Of Mannkind Corporation," that Alfred Mann is the kind of person who does not fail, and will do what it takes to ensure Mannkind sees future success. I would not advise joining the large amount of short sellers who are betting against Mannkind, as I strongly feel the shorts will eventually get seriously burned.
Mannkind's lead drug, AFREZZA which was originally rejected by The FDA, is a drug indicated for adult patients with Type 1 and Type 2 diabetes mellitus for the control of hyperglycemia. It is a drug-device combination product, consisting of AFREZZA inhalation powder which is pre-metered into single use dose cartridge light inhaler. l remarked in one of my prior articles, that I believe The FDA was unduly influenced in originally rejecting this drug, and will eventually approve it.
I truly believe anyone making a long term investing commitment in Mannkind now, will eventually see substantial reward.
Questcor Pharmaceuticals (QCOR) provides prescription drugs for the treatment of auto-immune diseases.
Questcor is a company I have also written about before that I feel has very good long term fundamentals in place.
Q4 2011 Earnings Call February 22 Key highlights:
Net sales for the fourth quarter were $75.5 million, up from $29.3 million in the fourth quarter of 2010 with the increase driven primarily by the increased market acceptance of Acthar for difficult to treat medical conditions. Earnings per share for the quarter were $0.48 diluted, based on 66.6 million diluted shares outstanding. $0.03 of the $0.48 earnings a share was from a one-time tax credit.
Questcore's Acthar (repository corticotropin injection) is an injectable drug for the treatment of acute exacerbations of multiple sclerosis; infantile spasms in infants and children under two years of age; nephrotic syndrome; and Lupus. I speculate Questcore's Acthar sales could benefit from the kind of technology Antares Pharma (AIS) has like VIBEX QS, currently in development and designed to work as a self-injectable for this type of drug. A possible future partnership between these 2 companies would be mutually beneficial to both in my strong opinion.
Questcore has come under some criticism lately for aggressively marketing its Acthar, but I like when bio-pharmas engage in aggressive marketing; shows me they believe in their drugs.
CFO Mike Mulory commented;
Return on equity was 54.5% for the fourth quarter. We did not repurchase any shares in the fourth quarter, but remain committed to returning cash to shareholders. We have returned $78.5 million through share repurchases under this program since the beginning of 2008, representing approximately 32% of our operating cash
flow over that same period.
Mulory's remarks above certainly seem to indicate that Questcore will continue its share buy-back program, which is good news for longs in the stock. This is just one of many reasons I believe Questcore will see a price north of $45 a share by the end of this year.
|*Direct Competitor Comparison |
Sanofi (SNY) & Novartis (NVS)
|Qtrly Rev Growth (yoy):||91.30%||3.70%||14.30%|
|Gross Margin :||94.09%||68.72%||70.26%|
|Operating Margin :||47.39%||21.49%||22.93%|
|Net Income :||54.37M||9.11B||7.53B|
|PEG (5 yr expected):||0.38||2.50||11.25|
As we can see above, Questcore has a lot of room to grow when compared to much its much larger pharma competitors with similar drugs like Acthar on the market. I like the direction Questcore is taking with its business; an aggressive market approach that will likely to continue to pay off for the company and its investors in future quarters to come.
*Data sourced from Yahoo Finance
Disclosure: I am long AIS.
Additional disclosure: This article is intended for informational and entertainment use only and should not be construed as professional investment advice. Always do you own complete due diligence before buying and selling any stock.