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  • Apple: Why A Car?

    I used to drive to and from work late at night listening to the deeply resonant voice of Art Bell on the Coast to Coast AM radio talk show designed to stir imaginings of all things hidden from our view. Talk of Area 51 was a favorite of mine. Bell was all about aliens, ghosts and guests who could bring them to life. In between each segment, he sold equipment that you could use to ease your late night fears that he helped to conjure which included radios that could be powered up with a crank instead of batteries that might be dead.

    Bell, however, was quite sure you wouldn't be needing that Apple computer much longer. He reveled in the notion that the company, then near bankruptcy, was soon to be gone forever. Why he seemed so gleeful will remain a mystery to me. That was 1997 and I had to call in to tell America why Apple would live forever.

    In a nutshell, I simply said that Apple (NASDAQ:AAPL) offered something that no else could, or ever would - support for individual creativity. Apple, I proclaimed, was made by creative people for creative people. Bell scoffed at this notion. And today, I read the Q1 2015 Results Transcript wondering what a man who placed so much emphasis on Apple's demise must be thinking. Perhaps CEO Tim Cook's words struck a memory of my own.

    Our customers are using Apple products to transform education, discover new ideas for business and express their creativity in ways that no one could have imagined when we sold the first iPhone less than eight years ago. It's amazing to watch and it reminds us that people and great ideas are the reasons we make the things we make.

    A car is your life on wheels.

    I remember it wasn't long ago that everyone was wondering if Apple was going to develop a TV. It sounded like a reasonable notion. Families used to gather around a single television after, or even during, dinner. But Steve Jobs likely recognized that our patterns of behavior would change following paths that led us in separate directions within the home, and at times that differed relative to the requirements each of us are subject to away from home.

    There is, however, one place that we do spend time together still, irrespective of our schedules - our automobiles. We pick up and drop off our children from school. We drive to and from work. And this is also the time that we connect most with our media. This is where we move about to meet our daily needs for food and social connectivity. It's also our place of refuge where we can process the crush of impulses, messages and demands placed upon us throughout the day.

    A computer, laptop, tablet or cell phone is an extension of yourself. It's like hands for your mind. A car, on the other hand, is a living being with a name. It's a friend and confidant. It listens to your frustrations with your fellow human beings without ever objecting. It's more expensive to maintain than your cat or dog but worth every penny. I know this because I'm a bus driver and we've been woefully unsuccessful at convincing you to leave them, even for short periods of time.

    A car is also your protector, and your child's protector. It puts up with all of your bad habits and bad language too. And if you could distill what it means to be American into one word, that word would be - automobile. Born in America. Nurtured in America. Made everywhere, but belongs to America.

    Apple is American too.

    The automobile industry is more vulnerable than ever.

    Tesla (NASDAQ:TSLA) has proven this with a new name, brand and technology that have skyrocketed to the forefront of our futuristic consciousness. And even though gas prices have reached the bottom of the barrel lately, Americans went through an unpleasant transition a decade ago that they'll not soon forget. Their cars were sold and sometimes repossessed. Fewer were bought and gas guzzlers were left by the side of the garage, or worse, sold at severe discounts to their blue book values. And from this shared misery, there emerged a changed reality. Car buyers were made different. And so too, were car makers.

    Consequently, there are more fuel efficient models available - diesels, natural gas, hybrids and electrics. But for all of these changes, there remains a feeling of sameness. Manufacturer's spend billions in advertising to convince us that Buicks don't really look like Buicks anymore, but they do. And I spend a lot of time in new car models because I'm a Zipster, but it's still incredibly frustrating trying hook up my Android phone to hear my playlist on the way to see my kids at their mom's place. And no one could tackle that issue more successfully the company that gave us the problem in the first place.

    Apple, however, is thinking far bigger than that.

    The real opportunity is in what the automobile will become. The current talent pool at your major automotive manufacturer, even at elite enterprises like BMW and Lexus, is oriented toward machine components. But tomorrow's car will drive itself, and will know the music you need to hear based upon the mood its able to ascertain you're in. And who better to inculcate those qualities than the company that's been focusing on it for decades?

    Where there's vulnerability, there's opportunity. And right now, American car manufacturers are still in the same reputational conundrum they've been in for decades. Right or wrong, American brands rarely top any list the industry compiles unless, of course, it involves ignominy. And the most important of these lists that you want to be on is that of the largest automakers in the world. And in 2013, four of the top five spots, according to Drive, were occupied by foreign soil corporations with Toyota at #1.

    Now you, as an investor, may disagree with Apple's alleged foray into auto making. You may question the need, wisdom or practicality of doing that. But as an American in 2033, should you be driving the coast highway on a rainy day in spring, you would no doubt turn up the volume in your latest teal blue iteration of your convertible Apple Pii, and beam with uncontainable pride if you heard the news that Apple was now the #1 automaker in the world. It's already of course, the #1 brand in the world which gives it a running start out of the gate.

    Please come see me in my native biotechnology sector, and always be well...

    Michael Webb

    Tags: AAPL, long-ideas
    Feb 19 9:05 AM | Link | Comment!
  • Why Afrezza Is The New Apple Computer

    As many of you are aware, I became associated with MannKind Corporation (MNKD) through the publication of three pre-adcom articles that warned investors of the risks associated with binary events. It was unfortunate that MannKind happened along at the time I chose to tackle the issue of human bias and holding through advisory committee meetings without adjusting one's profile to risk. Unfortunate, because there was nothing about Afrezza that I didn't like as a product and nothing that I didn't admire about Alfred Mann as a person. I take comfort in knowing that there isn't a word I would alter in any of the articles I wrote, and in knowing that a dear friend of mine who heard Alfred Mann speak and met him informally, suggested that he would have loved my fascination with the Tarot and all things mystical.

    No one should presume that the purpose of my article today is to make amends, as there are none to make. I frankly pity those who were offended by me, as remaining so to this day would be an awful burden for them to bear. Rather, I'm here to alert investors to an idea that has taken root in my mind that I can't seem to shake.

    Afrezza Is To Apple Macintosh What Exubera Was To The IBM PC.

    Perhaps it's too late in life for Alfred Mann to be considered the Steve Jobs of diabetes. And perhaps the metaphor itself is difficult for some to condone. But the fact is that some inventions are culturally disruptive in that they change the way we live, work and play. They literally change the way we perceive ourselves to be as human beings and change the way we interact with each other.

    In his final technology products column for the Wall Street Journal - and I never read one of them, Walt Mossberg compiled a list of the 12 most influential devices he had reviewed over the previous 2 decades of his then concluding career. On that list, you'll find 3 Apple icons - the iPod, iPhone and iPad. But the 2 Steves - Wozniak and Jobs got started sooner in life creating disruptive technologies than Mr. Mossberg's career of coverage allowed for.

    Like the diabetes market, the world of personal computing was already established before Apple (AAPL) made the concept popular. Shadow casting monoliths like Xerox and IBM were in full control along with startups like Atari and Commodore.

    In 1981, IBM was poised to dominate the landscape with the IBM PC that imitated most of Apple's disruptive features embodied in the Apple II. But Steve Jobs by this time was maniacally possessed with the idea of making a machine that was easier to operate, less obtrusive and more user friendly. Does that description remind you at all of the qualities Afrezza offers? It should. Because I believe these technologies are remarkably analogous one to another.

    (click to enlarge)

    Macintosh reshaped the way people thought of computing and thought of themselves. You could do things on an Apple that you couldn't do on an IBM like paint your own images and write documents in a way that you could edit them on screen. Of course, we now take these things for granted, but back in the day, these qualities were beyond what the word "innovative" implies. For all the creativity, hard work and good fortune provided, however, it took a partnership to put Apple on top of the world.

    Sanofi Is To Afrezza What Adobe Was To Apple

    Not enough credit was given to Adobe Corporation (ADBE) of Seattle Washington in the development of Apple's iconic image. You see, Adobe created the software that people needed to become their own personal publishers. This made Steve Job's job significantly easier because he could focus on creating the technologies that buttressed the evolution of the individual's personal computing experience. And this is what I believe is happening now with Afrezza.

    Afrezza is the innovating force that will change the way diabetics not only use insulin but become insulin users. No longer will people avoid taking the insulin that could save their lives because they naturally want to avoid the pain of an injection. And no longer will they feel uncomfortable dining with friends by having to escape to some private place to inject a needle when they can simply and easily inhale their medication right at the table. A sick person or addict injects their drug while someone having fun toots on a whistle. The device itself fits in the palm of your hand. You can see a quick video here that demonstrates how it works.

    (click to enlarge)

    Sanofi (SNY) will allow Alfred Mann and MannKind Corporation to return to a focus on innovation just as Adobe once did for Apple. In this clip from the Quarterly Earnings Call that followed the partnership presentation, Alfred Mann's youthful exuberance at 91 years old got the best of him as he blurted out something that was not yet to be publicly made known.

    Adnan Butt - RBC Capital Markets

    If I can get a follow-up, Matt, so what are the plans for cash that you received. How should we view R&D going forward? The company will -- I mean, are there plans to do some R&D or pretty much it's going to be an AFREZZA-focused company?

    Matthew Pfeffer - CFO

    No, there's definitely plans to do R&D. I mean, we have a lot of exciting possibilities in front of us for using this technology in other applications. It was mentioned briefly on the call this morning, although it was primarily about the deal. We did not want people to forget that we view this as a platform technology with a lot of exciting applications and you should expect to hear more from us in the future about that. I mean, it's the obvious next question post Sanofi.

    In that regard, I've been asked this a couple of times on the phone, so probably clarify it, because people will say what rights in those other areas do Sanofi have? They do have a right of first negotiation if we were to take a formulation of inhalable GLP-1 forward. But they have not rights to those -- any other products beyond that. So, I can't say we would mind talking to them about them when they get to the point when that's appropriate. But under the current agreement, the only future potential right they have is on the GLP-1.

    Alfred Mann - Chairman and CEO

    They also have rights to our new process.

    Matthew Pfeffer - CFO

    We've not disclosed that yet Alf.

    Alfred Mann - Chairman and CEO

    Sorry. [Laughter throughout the room.]

    What this spontaneous outburst indicates to me is that MannKind is still hard at work developing new technologies that could be revealed at any moment of any day.

    Licensing Out Modified Technosphere Technology Could Result In Regulatory And Sales Milestones As Well As Royalties

    Obviously, the technology behind Afrezza's Dreamboat inhaler can be tweaked and refined to other licensable applications. There will be other biotech startups whose medications might benefit from a delivery method that emphasizes rapid biologic absorption but has also already passed regulatory scrutiny and been utilized commercially.

    I also believe, however, that MannKind will be tasked to develop something to complement Sanofi's secret marketing plans - accessories, especially by crafting kits designed to bundle Afrezza with Sanofi's traditional insulin therapies.

    Two Forms Of Marketing Will Make Sanofi The World's Largest Insulin Provider

    At that same Q2 Earnings Call, Adnan Butt asked the other question on every investor's mind. Would Sanofi make every effort to sell Afrezza? The thought behind this question is fairly straight forward. Why would a partner enthusiastically sell a drug at a 35% discount that would take away 100% of their own drug's profit?

    And of course, Mathew Pfeffer revealed only that this was top-secret information that Sanofi was unwilling to share with competitors through public disclosure. As a result, it becomes the perfect fodder for my speculative mind.

    To topple Novo Nordisk (NVO), Sanofi will need to steal away existing clients from other companies and bring in both treatment naive patients and those who've given up on needle based insulin therapies. To demonstrate how they will do this, I've constructed two conversations that exemplify this two-pronged approach to marketing success.

    Private And Professional Marketing

    Denise is a newly diagnosed diabetic and is talking with her doctor about receiving therapy.

    Doctor: It's time to put you on some form of insulin therapy.

    Denise: But doc, I don't like shots!

    Doctor: That's understandable. We have a new insulin that you inhale through this little whistle before meals.

    Denise: So, I don't need shots?

    Doctor: Well, yes and no. You need fewer of them though. This is called a Dreamboat inhaler that you'll use at mealtime. And before you go to sleep at night we'll prescribe a more traditional, injectable insulin.

    Denise: That doesn't sound so bad.

    Doctor: Well, I could write you two separate prescriptions - one for your inhalable insulin - Afrezza, and another for your bedtime insulin. But Sanofi has this nice little compact kit that you can place in your purse or pocket and it allows you to store and take a days supply of insulin out with you. It's very convenient and easy to use. And it pairs any of their fine insulin products - Toujeo, Lantus or Apidra in one easy to use and convenient package. There' even a larger travel case that keeps everything fresh for days.

    Denise: Ok. Thanks. I'll give it a try.

    Public And Social Marketing

    Denise is now at a restaurant with friends, breaks out her Dreamboat inhaler and toots her dose of mealtime therapy.

    Her Friend: What's that?

    Denise: Oh, it's my insulin. I have to take it before every meal.

    Friend: You're kidding, right? My mom's diabetic, but she gave up on all the shots.

    Denise: I totally get that. You should have her go see my doctor. He said for me to think of this as a romance between Toujeo and Afrezza. This [holding out the Dreamboat in the palm of her hand] is Afrezza. Toujeo protects me in the morning and before I go to bed. And Afrezza's with me all day long. Here's his number.

    Friend: Thanks you! And I'll be sure to let my mom know.

    So, from these two conversations we can see that once Sanofi has educated physicians on Afrezza's method of delivery, providing a pre-designed kit that bundles their existing insulin together with it would make the patient's experience more enjoyable. This convenience and ease of use will make Sanofi the worlds largest insulin provider in a very short period of time.

    Some Closing Thoughts

    Comparing Afrezza to Apple may seem a stretch to most of you, but I believe the similarities abound. When Apple entered the personal PC market, there were larger, established companies all around them. But the market was woefully underserved and Apple offered users something personal and profoundly more responsive to their input.

    The same is true in the diabetes market that Afrezza now enters. Established companies and therapies are ubiquitous, but Afrezza offers something deeply personal and extremely liberating. Something that will take insulin treatment and diabetic persons out from behind closed doors and into public places where they can begin to be proudly human again.

    And in no more than a decade's passing, I believe that those who now would rather die or go blind by not injecting their treatments will stand in the pharmacy waiting line to have their prescription filled. What Afrezza will look like at that point in time I'm not exactly sure, but I'm quite certain, Alfred Mann has a pretty good idea already.

    Always be well...

    Disclosure: The author is long MNKD. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute any suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing information, the accuracy of which is as good as the public sources it was derived from. Do not act on anything I have written. Rather, do your own due diligence and consult an investment professional before making any investment decision. Acting on what any one writer, including me has imparted to you is foolish at best. I have no better access to resources or gift of opinion formulation than you do. I sometimes make mistakes. There are a myriad of things, which can happen in lieu of any forward-looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences, which can change its value in dramatic fashion upwards or downwards. These events can be of a wide variety not limited to news-related occurrences, managerial decisions, trial failures, stock manipulations and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence, invest at your own considerable risk attaining the just reward your efforts have wrought.

    Aug 14 10:19 AM | Link | 4 Comments
  • 2013 Retrospective: My Inaugural Year Of Biotech Blogging

    I'm a novice in personal investment. I've always been an amateur at most everything I've done that's brought me pleasure in life. The word amateur is derived from the Italian "amator" meaning "lover", and "amare" meaning "to love." When one gets paid to do something they love it's both gratifying and a curse.

    Gratifying because there's public recognition and a small quarterly check. A curse because it's difficult enough for me to live up to my own expectations let alone yours. It's important however, for you to remember that I'm a blogger and not a financial advisor. I absolutely insist that you make this differentiation because you will be less inclined to express irrational disappointment as a result.

    My articles this past year were a joy to write. Some of the best, didn't make the publishing criteria of the editors or deadlines of relevance. That said, those that did make the grade scored equally well in the eyes of investors as the graphic below clearly indicates.

    (click to enlarge)

    These stocks on a buy and hold basis from the date of publication have returned investors a good bit of money. And it's important to note that none of my articles led investors down a blind alley to significant loss.

    In point of fact, I warned investors against binary disasters facing those holding long positions in Delcath (NASDAQ:DCTH), Aveo (NASDAQ:AVEO), GTX (NASDAQ:GTXI), Cytokinetics (NASDAQ:CYTK) and Amarin (NASDAQ:AMRN) weeks and sometimes days before the stocks plummeted 65 to 70%. There is however, no joy in doing this as investors always question your motives never thinking you might have their best interests at heart.

    I've put together a short video primer covering investment in the biotechnology sector. It deemphasizes catalysts because that's the first thing that every biotech investor acquaints themselves with and latches onto.

    This year begins with my largest personal holding in Cyclacel (NASDAQ:CYCC) and a growing but smaller position in Nektar (NASDAQ:NKTR). I plan to provide more video companions to each article that I author this year. You'll find them on YouTube at ScryingBiotech.

    It's my hope that together, we can expand our knowledge and consequently, our profits by learning from each other along the way.

    I thank you for your investment in my words and for your encouragements and criticisms over the past year. Hopefully, they'll serve to make me better in this year ahead.

    Michael Webb

    Disclosure: I am long CYCC, NKTR, .

    Tags: CYCC, NKTR
    Jan 09 8:48 PM | Link | 3 Comments
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