- 1. Mannkind (MNKD) Aloke Desai
2. Proposal Long position ($20,000) in Mannkind (MNKD) 3. Thesis
MNKD undervalued because of previous FDA denial and failure of
competitors Capture rise of price because of anticipation of FDA
announcement in Q1 2014 M&A possibilities by large
pharmaceutical companies 4. History Founded in 1991 by Alfred Mann,
didnt take present form until 2003 Pharmaceutical company
producing: AFREZZA- inhalable insulin MKC1106-MT- immunotherapy
drug for advanced stage melanoma MKC1106-PP- immunotherapy drug for
prostate cancer FDA rejected Afrezza on January 19, 2011 asking for
two more clinical trials 5. Afrezza A low-cost inhalable insulin
powder aimed at treating type 2 diabetes In late stage clinical
trials, possibly over Drug was originally scheduled to be approved
Dec 29th, 2010 FDA announcement was delayed and ultimately denied
on Jan 19th, 2011 6. Competitors Pfizer (PFE) tried to release a
form of inhalable insulin in 2007 with Exubera Took it off the
market before its release in Oct. 2007 because of many problems:
Risk of lung problems Size of a can of tennis balls (cumbersome to
use) Dosage cant easily be adjusted Long time to take into effect
(49 minutes) 7.
1/17/1311/17/129/17/127/17/125/17/123/17/121/17/1211/17/119/17/117/17/115/17/113/17/111/17/1111/17/109/17/107/17/105/17/10103/17/101/17/1011/17/099/17/097/17/095/17/093/17/091/17/0911/17/089/17/087/17/085/17/083/17/085
Year Trend1210.48 9.648 7.166 5.05420 8. Valuation Measures
Valuation MeasuresMarket Cap582.25MEnterprise Value (Feb 25, 2013)
737.63M Trailing P/EN/AForward P/EN/APEG Ratio0.03 9. Financials
Revenue vs Net IncomeRevenue vs Cash Flow Operations
100,000100,00000 -5080,000-5080,000 -100-10060,00060,000 -150
40,000 -200 20,0000-250-300Revenue Cash Flow40,000-150 -200
-25020,000 -300 0-350RevenueNet Income 10. Income Statement Dec
2012 RevenueDec 2011Dec 2010Dec 2009Dec
20080.040.050.090.000.02Cost of Goods Sold0.000.000.000.000.00Gross
Profit0.040.050.090.000.0245.4740.6340.3153.4555.34(146.96)(140.54)(152.50)(209.78)(305.77)(1.19)1.54(0.73)0.05(0.06)(21.62)(21.81)(17.34)(10.38)2.79(169.77)(160.80)(170.56)(220.10)(303.04)(0.41)0.000.000.000.00Net
Income After Taxes(169.37)(160.80)(170.56)(220.10)(303.04)Total
Operations(169.37)(160.80)(170.56)(220.10)(303.04)(169.37)(160.80)(170.56)(220.10)(303.04)SG&A
Expense Operating Income Nonoperating Income Nonoperating Expenses
Income Before Taxes Income TaxesTotal Net Income 11. Effect of FDA
in 2011 12$10.05 1086$6.05420
12/1/1012/8/1012/15/1012/22/1012/29/101/5/111/12/111/19/111/26/11
12. The Mann Alfred Mann, founder, supports the company through
subsidiary, The Mann Group Recently purchased 40M worth of shares
Has stated that he cannot continue to fund company if Afrezza is
not approved Buy (P) / Sell Filed Date (S)InsiderRelationshipShare
AmtUnit PriceTotal ProceedsP12.21.2012Mann, Alfre dCEO4M$2.59$10
MP1.27.2011Mann, AlfredCEO700K$7.15$5,005,000P1.13.2011Mann,
AlfredCEO700K$8.73$5,111,000 13. M&A Implications With Pfizer
and GSK losing patents this year, MNKD could be a possible target
for either of them to acquire Pfizer estimates that inhalable
insulin could be a $2B market 14. Risks FDA could deny Afrezza
again If so, its possible stock could tank If FDA were to approve
it, Afrezza could hit $10+ based on 2010 results 15. Ways to Hedge
Risk FDA announcement expected in Q1 2014 Sell principal and 10% of
earnings on Jan 2, 2014 and keep rest to move based on decision 16.
Questions
