US Investor

Cfa, registered investment advisor, value
US Investor
CFA, registered investment advisor, value
Contributor since: 2013
Company: Oxford Chase Advisors LLC
If closing price was $4, X = 55/(4*.85) = 16 shares.
If you own 100 shares, you'll get 100 rights. You can contribute 55cent per right to get X number of shares. X = $55/offering price.
I did some background check. Can you explain this statement "Top-line data from the trial is expected by December this year, and if we get some promising results, we could quickly see some upside potential in Retrophin. "?
They are only recruiting patients for this trial and it'll take another 6-10 months to see results. There has been so much delay in Ph2 alone.
Good article. The other upsides are
1) Cash from sale of priority voucher can be used to acquire drugs/companies
2) Any publication of PKAN results from Europe trial
3) Sales guidance increase from sales of Cholbam, Thiola, etc
I'm so glad that these Shorts (including Blue ridge buffettologists) are trading in virtual accounts.
Sanofi reported earnings last week.
Occasional reader of this forum. I had sold out in the last bounce (~ 0.9). 2 years back, after CRL I sold and lost some. I've no position now.
I think that their chances of hitting the Product Sales Milestone #1 are remote. They might hit the others, I think longs will bail out long before that. There is no floor and no limit to downside. If VWAP is 1 cent, Sanofi can buy it all at 1 cent.
Looking at the chart it is ~1955. 1932 is when it bottomed out. Typo in the article.
This is one of those instances where value in comments section is 1000 times that of the article.
Let me add to what others have added:
1) What Retrophin is trying to do is to create a M&A vehicle (platform) to acquire and market Orphan and/or Ultra orphan drugs. This platform is more valuable than sum total of individual products. Look at what VRX is doing.
2) Combining revenue producing drugs with R&D pipeline reduces risk. Even if you fail on all your pipeline, the former will sustain the market cap. It also reduces need for capital raise and dilution.
3) A big premium needs to be added for management's experience and methodical approach. They are trying to replicate BMRN success and will surely succeed. They are showing a lot of discipline by not overpaying.
4) The most foolish analysis of all: NPV=price paid (as asset is marked to market)..
A shrewd management creates value thereby producing IRR>0. RTRX mgmt creates value by raising prices, improving distribution to patients (earlier pt's had hard time getting the drug), working with pt's insurance co's, providing co-pay assistance, working on new indications... By author's logic, Buffett added no value by buying Geico, VRX added no value when they acquired Bausch and Lomb, ...
Yes, he had tweeted that he used that $ to fund Turing pharma. He claims to have made 25 times on his investment. We can confirm it when we see Turing IPO.
Not trolling. I was worried about your well being. Your articles have tremendous value to people who have already done their DD.
I'm looking forward to reading your articles. Good luck and Godspeed.
Are you still short? Hope you also exited your oil longs HK, BHI, RIG, UAN, SDRL, EXXI, TLM, MILL, BBEP, CHK, CLF, MSB, SWN, OGZPY?
Georgie
I'm glad SA didn't publish this article to maintain a higher standard. I hate to criticize a fellow long. I'm doing it for your own good.
1) Your title is chosen poorly.
2) For MNKD, Company performance now is all about sales. Sales have been lackluster and so is stock. This is the cause and effect. There is no disconnect here.
3) Shorts have envisioned the scenario better, about impact of soft launch, dilution etc. So they have played their cards better.
4) You talk about supply and demand , but forget to mention about convertibles. This is coming due and we may see dilution. So both key words "dilution/stock issuance" and "convertibles" are missing in your article.
5) Do you have proof that MNKD short sellers have lost money in aggregate?
So many words, yet you add so little to the discussion.
First Congratulations to Chris. Chris deserves the kudos for his dedication, drive and intellect. I see some posters getting jealous , they should rather be inspired.
I like the SA idea and this is free market at its finest.
Thanks for the comments pointing to cases where bear market happened without Fed involvement. my refutation
1) These happened 60 years ago when Fed wasn't proactive, in control of economy, or didn't have the policy tools
2) Current economy (last 3 decades) is Fed driven, Fed controlled. Fed has a tight leash on economy.
3) Financial sector acts in unison with Fed. Actions of market participants have been tuned to act in accordance with Fed. Low interest rates encourage PE firms to load up debt and acquire co's (kind of interest rate arb). This boosts market valuations. Risk taking is encouraged. If an asset produces 8%, it is profitable if you can borrow at 3%. Simple as that.
Low interest rate boosts economy (consumers - less interest expense, home owners - refinancing, corp - less debt expense, refinance debt, easy junk bond issuance, ..). Everyone benefits. Even the bond holders, lower rates boosts bond prices. the folks having savings/checking are screwed, but who cares.
In short, Fed got a stranglehold of US economy's balls. 50-60 years ago, Fed didn't know where the balls were, or didn't know how to squeeze it.
This is my theory.
The P/E analysis is somewhat dubious. There is Shiller CAPE that shows some usefulness. What is defined as E has changed a lot over years.
Jesse Livermore has done wonderful work fixing this
http://bit.ly/1wgGQZh
Great comment and I concur to an extent. I cannot predict what is going to happen short term, but I think we'll see highs before tightening occurs
Great, do you have any proof of your assertion? Why don't you write an article that shows market participants voluntarily exit out when valuations are too high? I would love to read that
you are not living up to your moniker. Take a look at last several cycles. For first several rate hikes market continues to ramp higher. Only in later hikes, it goes into braking mode.
I'm long with a small position. So many things have to work right for investors to make money. You need to apply a higher discounting rate to compensate for risk.
I'm getting 26% interest rate through Fidelity's stock yield program. This is one reason why I'm long. I like Al Mann's vision.
You are misreading the table. $15 (discounted at 20%) for 60%/5 years is in today's dollars. In future value, it is $37. All numbers in 2nd table are today's dollars. I compare today's NPV with current stock price.
I'm giving a model to all bulls and bears to use this table to suit their greed and fear. Achieving 60% market share in 5 years is a momentous task. I'm not taking a stance on what Afrezza is worth!!!!!
If I gave round price target of $40 in 5 years, everyone would have gone home happy.
You are preaching to the choir. Read my old articles that look so prescient now.
1) http://bit.ly/1C9RbTE
2) http://bit.ly/1C9RbTH
3) http://bit.ly/1C9RbTE
4) http://bit.ly/1C9RaPw
If you are a T2 and are already on RAA, your numbers are already included in current $6BB market. If you are on T2/basal and not on RAA, then you'll fall under the potential growth rate that is assumed.
If you are T2 with OAD only, then starting on Afrezza is a paradigm shift ( I know spiro had done it. He is an outlier to me). If I see lots of T2 starting with OAD/AFrezza before basal, then I'll change some of my assumptions and arrive at higher NPV.
What I've dismissed is this T2's starting with Afrezza first or with OAD/Afrezza before basal. We've interviewed nurses/docs and at the moment they are not too receptive. Show some trials, hard facts, then they'll change.
Coolwatch
If you have read some articles on my blog afresa.blogspot.com, you would know that I've read every single pubmed and other publication articles on Afrezza. I view Afrezza as a game changer and Technosphere as a potential platform. For biotechs I use 20%, for co's like Berkshire I'll use a reduced %.
The Op losses are sunk cost. Given Sanofi's involvement, I think further massive dilutions are unlikely.
johnchow
I have not analyzed PBYI. They don't have any approved drugs. I don't know when they start producing revenue. I would not even attempt to analyze this firm. I've followed MNKD for several years, interviewed CEO, endos, pcp's, trial patients, current patients etc. I've some idea what MNKD is worth.
Thanks for all your enthusiastic feedback.
Please read my comment at the end.
First let me give some pointers to hoi polloi on NPV and discount rate.
When I invest, I expect to make 20% return, this is arbitrary. I like to do better than the market and have done it for the most part. I don't aim for 10% and get 8%.
Now if I have a project that gives me a payoff of $6000 in 8 years, and I've to pay $1000 now, is it a good deal? If you dont apply time value of money, risk etc, you take the deal as it is a 6 bagger.
I like to make 20% return at the least and would discount the $6000 to current price. That gives me $1395. To the financial naive person, it'll appear as if I'm saying that my $1000 becomes $1395 in 8 years. They get agitated and mad. The way I use $1395 is, that the NPV is more than $1000. So it is a good deal. It is a good deal until NPV = $1000, in this case I end up getting 20%. Anything above $1000 NPV, I make more than 20%. In this example above, I make 25% return.
Many have asked why I didn't give the Future value. What is the point in that? I can't compare if I'm making 20% or more return by comparing a FV to current price. If I got a FV of $3059, then it doesn't tell me that my return is only 15% (which is below my expected 20%). The discount rate is my expected return.
Those who seek alpha and have some knowledge of finance will intuitively understand what I'm trying to do. I've six figures investment in MNKD, which is more than what most posters have invested.
In the green cell given, the $6.x NPV is more than current price. So in my world, I'll try to get 20%+ and some upside options for free. Kapish?
OOG
Thanks for your feedback.
I don't do this kind of valuation.
1) Reimbursements in non-US is much lower. Even in US, not all insurance co's are covering it.
2) Even the best product in the world takes time to penetrate. If it has competition, then forget about it
3) Your scenario may as well happen, and I hope it happens and we all can get rich.
Bob,
If you are an old timer, you'll know that old name is Afresa. They later changed it to Afrezza.
Since I had many following it with old name, it will add confusion to change it.
I created one afrezza.blogspot.com to redirect it. I use the old URL by habit.
I no longer post here as drug is approved.
Download my model and feel free to change my assumptions
http://bit.ly/1GdfiGX
To understand discounting and Time value of money, feel free to read this
http://bit.ly/1BIZXrL