Interest rates are rising. Bond yields are up. I can get 5.5% triple tax-free on a good New York muni bond with an assured income stream.Taxes are rising. This 5.5% yield will be worth nearly 10% pre-tax in the new few years.
As interest rates rise, gold and silver begin to look less attractive. They have fallen recently.
As interest rates rise, some of the stronger banks will do better. David Tepper mentioned this morning on BubbleVision he likes Banco Santander (STD).
It has a dividend yield of 6.69% and a P/E ratio of under 10. I do business with their local subsidiary, Sovereign Bank. It’s a capable bank.
What I hate biotech stocks. On the one hand you have investors throwing zillions at the world’s most serious medical problems. On the other hand you have the FDA. Irrational, kooky, scared, holding a sword over the heads of the investors and the sick people trying to get well. There are serious arguments for closing the FDA alftogetrher and leaving the decision as to which drugs to prescribe to doctors. What a novel idea.
Anyway, Mannkind got screwed (again) by the FDA and its shares which had been edging up in anticipation a favorable FDA decision plummeted:
Here’s the full sad story:
NEW YORK (Dow Jones)–MannKind Corp.’s (MNKD) regulatory setback for its inhaled insulin treatment Afrezza has led to a massive drop in the biotechnology company’s stock and an increased likelihood management will need to raise cash in the next year.
This latest challenge also has raised questions about the strategy MannKind undertook last year after the U.S. Food and Drug Administration had requested more information on the treatment.
MannKind said Wednesday the FDA didn’t approve Afrezza and has requested two additional full trials. The company declined to provide a new timeline for potential approval, but many analysts think the request for further information could add another 18 months to 24 months to the process.
Shares of MannKind recently fell 36% to $5.81, after earlier dropping as much as 45%.
Because of the delay, MannKind likely will need more cash to meet the FDA’s latest request. MannKind officials said Wednesday that before the FDA’s latest request, it had projected enough cash to get it through the third quarter of this year.
The company, which had about $98 million in cash through Sept. 30, said it will give more details on its cash position when it reports its fourth-quarter results, expected on Feb. 1. But MannKind noted that it has already budgeted for two late-stage trials it has begun on Afrezza, which the company hopes can be adapted to meet the FDA’s requirements.
Chief Financial Officer Matthew Pfeffer told Dow Jones Newswires Thursday that the company is evaluating its options, which include tapping the capital markets or getting more help from the company’s chairman and chief executive, Alfred Mann, who has already contributed well over half of the approximately $1.5 billion invested in the drug. Pfeffer said the company is also considering resuming partnership discussions for Afrezza.
MannKind will need a minimum of $150 million in additional cash to get through 2012, Monness Crespi Hardt & Co. analyst Avik Roy estimated. He thinks the company will probably be able to raise capital, but it will have to make any deal very attractive to investors, such as by offering stock at a sharp discount.
The FDA’s concerns focus on the different inhalers MannKind has used to deliver Afrezza. When the company first filed for FDA approval in 2009, Afrezza was delivered by an inhaler called MedTone.
In the intervening years, MannKind developed an inhaler it felt was superior to MedTone. After the FDA didn’t approve Afrezza in March, MannKind met with the agency last June to discuss a path to approval using the next-generation inhaler.
Following that meeting, MannKind refiled for approval, including in its application a short study comparing the two inhalers. However, in its most recent complete response letter, the FDA asked for two full trials on Afrezza using the latest inhaler.
The setback has fueled questions about whether MannKind misread what the agency was looking for or if the FDA changed its mind since meeting with the company in June.
On a conference call Wednesday, MannKind said it can only guess what happened.
“I think that is a very difficult question to answer, whether this is a misreading or whether there actually has been a change in view,” Chief Scientific Officer Peter Richardson said. “It’s something that we really can only speculate on.”
He added the company believed that the guidance it had received previously from the FDA had indicated that the approach the company took could be appropriate.
It’s difficult to believe there would have been miscommunication on such a critical issue, making it more likely that the FDA “moved the goal posts on MannKind,” Rodman & Renshaw analyst Simos Simeonidis said in a note Thursday.
While it’s unclear what happened in MannKind’s conversations with the FDA, Simeonidis was confident the company isn’t ready to give up.
“Given that CEO Al Mann has invested close to $1 billion of his own money into this venture, we don’t expect him to throw in the towel anytime soon,” Simeonidis said.
Please back up. My main laptop — the one I use every day — blew up yesterday. I had backup hard drives. But the machine blew them up. I’ve never seen a hardware problem which destroys hard drives. By the time I figured out the problem and switched to another machine, five hours had vanished. I was lucky. I had multiple backups. But it was exhausting and frustrating. The moral of this story: You need backups of your working files and you need at least three backups of your working hard drive — including all your installed software.
Please don’t tell this couldn’t have happened with a Mac. It could have. Macs have hardware problems also. The big advantage of PCs is that you can easily remove hard drive, slipping in a good one in place of a bad one.
Reverse Logic — 1
“Susan, please close the window. It’s cold outside.”
“OK, But if I close the window will it get warm outside?”
Reverse Logic — 2
“Ya know, when I was 25 and got a hard-on, I couldn’t bend it with both hands.
By the time I was 50, I could bend it about 10 degrees if tried real hard.
By the time I was 60 I could bend it 20 degrees, no problem.
I’m gonna be 80 next week, and I can bend it in half with just one hand.”
“So, what’s your point?”
“Well, I’m just wondering how much stronger I’m gonna get!”
Reverse Logic — 3
Bono is at a U2 concert and asks the crowd for some quiet. Slowly, to rapt silence from the audience, he begins clapping his hands and says into the microphone: “Every time I clap my hands a child in Africa dies.”
A voice from the front of the audience pipes up: “Well, stop clapping.”
Harry Newton looks with awe … This is Shanghai, 1980.
This is Shanghai, 2010
There are 166 cities in China with over a million people. There are cities you’ve never heard of with 8 million.
Harry, the FDA, when run well, is protecting our lives.
That's the theory. I''m no longer convinced. The FDA's delaying has cost thousands and thousands of needless lives.
Harry – to get 5% on NY munis (good minus?) you have to go out 20 or 30 years. If you believe rates are rising why lock into those rates now. If you wait a few months you will be able to get 5% on shorter paper or get better rates on the same long dated bonds. Higher yields mean principal goes down. Why do I want 30 year paper that I know is going down in the face of rising rates (not to mention turmoil in municapl busgets and possible defaults)?
If there's one thing I've learned about muni bonds — it's that you can't generalize. Some muni bonds are dangerous. Others are ultra-safe. What interest rate you earn depends on your searching and bargaining ability. As to length…. that depends on your time frame. You typically buy muni bonds for the yield, not for trading. Can you predict interest rates ten years out? Will they be higher or lower than now?
Harry – I am specifically refering to the muni bonds you described as yielding 5.5% triple tax free on “good” muni bonds. Regardless of your bargaining prowess these must be long dated bonds – 25 or 30 years out. As far as predicting rates are concerned I am only repeating what you keep sayoing – “rates are going up”! So if rates are going up (in your words) that means bond prices are going down. Why would anybody want to lock into a rate today when they will get better rates tomorrow especially if they have to lock the bonds up for 30 years? If you are in the investment advise dispensing businees (or newslettr/blog) than you need to be a bit more transparent.
The old Shanghai (circa 1980) looks more like a place I would like to visit than the new Shanghai (2010).
You go to China to do business. When I visited there a few years ago, I found there really wasn't much touristy to see. There are 166 cities in China with over one million people.
agreed