In Search of the Perfect Investment

Biotech is the number one way to get rich fast. “All” you need is FDA approval for a potential blockbuster drug — one selling more than a billion dollars a year.

There are many potential blockbuster drugs. The fortunes they have made their families are legendary — e.g. the Sackler introduction of Valium to the U.S.

But… all those billions of investment dollars ride on one government agency’s decisions. That agency is the FDA, the Federal Drug Administration. The FDA has four big-time problems:

1. The FDA is scared to make a bad decision. Hence it doesn’t make many. It delays a lot.

2. The FDA has no concept of deadlines — even self-imposed ones. No one says anything if it misses its own deadlines.

3. The FDA is irrational. It changes its rules regularly. You can’t predict its changes.

4. The FDA is judge, jury and executioner, all rolled into one. You cannot argue with it.

Above all, the FDA is not motivated to introduce life-saving drugs and devices. The FDA recently honored the woman — Dr. Frances Kelsey — who refused to allow thalidomide into the U.S. , thus saving us from flipper babies. Yet, the story goes that Dr. Kelsey never approved a single drug during her 20 years at the FDA.

I wrote about Mannkind Corporation in Friday’s column. On Friday I talked at length to the company’s CFO, Matthew Pfeffer. The story remains as remarkable today as it was then:

+ Al Mann has invested around $925 million of his own money in the company. Probably a record in American business history. He made the money himself by being a hugely successful entrepreneur.

+ The company’s product — if approved by the FDA — could easily revolutionize the delivery of treatment of diabetes — both type I and type II.

+ If approved and marketed well, the product could easily be “blockbuster” — selling several billion dollars a year.

+ The company has invested nearly $300 million of its own money in a factory to make its products. That’s in anticipation of FDA approval. That’s very gutsy.

The latest: Mannkind received FDA questions in March, answered them on June 29. According to the FDA’s own rules, it has six months. Hence the new target date for FDA approval is December 29. Allegedly the FDA’s track record on re-submissions is much better. So there’s a chance it will give Mannkind approval on December 29 — or perhaps a few days earlier (so as not to mess up its Christmas vacation). But go back and re-read the four points above. Biotech investing is not investing. It’s gambling. And it’s not for the faint of heart. Do not put money into Mannkind that you cannot afford to lose.

Frankly, I think Mannkind is worth the gamble. I think you have a 50-50 chance of a tenfold increase in your investment within five years.

I updated this chart. Mannkind enjoyed a little “pop” on Friday. Maybe I moved the stock?

Read the articles on the Internet, you’ll quickly get the impression that everyone loves the company’s story and potential. But everyone (and perhaps the company?) is frustrated with the FDA.Here are several pieces you should read:

+ Is Mannkind the next takeover target?

+ Mannkind Pfeffer is upbeat.

+ Better Buy: Amylin or Mannkind?

+ Wikipedia on Mannkind.

Shingles revisited. Merck’s people have been helpful finding Susan and me a couple of doses of the shingles vaccine. Merck makes the stuff in batches — last batch was in June. Next batch is due in December. As I further researched this, I learned.

1. If you had chicken pox when you were young and are now over 60, you’d be insane not to be vaccinated for shingles today, or asap. That’s black and white.

2. Doctors rarely (if ever) call their patients with preventative recommendations. “You should have have this vaccine.” “You should have a colonoscopy.” “Your cholesterol is too high. You should do…”

3. A remarkable number of people think they’re invincible. A reporter I spoke to said she never took drugs because “she never got sick.” And though she had had chicken pox when she was young and her mother had lost an eye to shingles, she didn’t need the vaccine. Another person told me “they didn’t do needles.”In short, people are nuts.

hence, there isn’t much demand for the shingles vaccine. But Susan and I will get it — and you should too.

P.S. I wish they’d motivate doctors to help us stay healthy, instead of fixing us when we got sick.  But, then, maybe I’m the only person who’d listen.

A little early. But I can’t stop laughing.

Chilean miner disaster.

On coming up, one miner was greeted by his wife and his mistress.

Sadly, the mistress was promptly arrested.

Apparently, in Chile, it’s illegal to have sex with a miner.

(Don’t tell me you didn’t see that coming.)

Harry Newton who marvels at how many people can sit on a train or a plane for hours and do absolutely nothing, except stare into space. I was  on a 2 1/2 hour train yesterday. It was depressing seeing so many intelligent people doing nothing for so long. No book. No Kindle. No computer. No newspaper. No curiosity. Yuch.