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MYX - Mayne Pharma Group

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Ah see. I thought the big jump from previous years revenues were due to that new acquisition. So there's another major acquisition after the last financial year, hence the new share issued?

Thanks.
 
luutzu said:
Ah see. I thought the big jump from previous years revenues were due to that new acquisition. So there's another major acquisition after the last financial year, hence the new share issued?

Thanks.
Click to expand...


Yes the Teva generic acquisition is the biggest one and about the size of Mayne. Teva is a forced seller so the price is decent and it EPS Accretive from day one

Uncle Bruce took the full entitlement and bought more shares during the recent panic, at the time he said this is once in a lifetime opportunity and he knows his stuff, he been in business for a long time and don't make many false moves nor talk bull****.

He also give me high confident that he walks the talk about once in a lifetime opportunity as he bought more shares after the right issue not that he need any more, he is one of the largest shareholder.

When my uncle play game like that I love to go big with them
 
Not as on the ball as you ROE, bought in at the open.
 
I don't invest in many stocks, those I do I take large position and on the ball with the business.

Corbett just bought more on Friday that should tell you the health of the business going forward notwithstanding the current volatility which is to be expected given the recent history.
 

He didn't spend chump change either...he bought something like 199k worth. So a fairly decent investment. Time will tell.
 
JTLP said:
He didn't spend chump change either...he bought something like 199k worth. So a fairly decent investment. Time will tell.
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He already owns 90m odd shares - $199k seems like spare change in comparison.

But it is still a strong display of confidence
 
Klogg said:
He already owns 90m odd shares - $199k seems like spare change in comparison.

But it is still a strong display of confidence
Click to expand...

Ahh yes! But still, if you weren't really confident you'd throw $20k and be done with it.

Heavy selling in to the close.
 
Got in today at $1.25, its just too good a business to let go at that sort of price. Love it when the market panics.
 
JTLP said:
Ahh yes! But still, if you weren't really confident you'd throw $20k and be done with it.

Heavy selling in to the close.
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Maybe he doesnt have the cash lying around as he just stump up millions not long ago for right issue
Graham Turner only throw in 300K or so during the FLT great panic around 4-5 bucks
 
galumay said:
Got in today at $1.25, its just too good a business to let go at that sort of price. Love it when the market panics.
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If they are on target around 11.4 EPS FY18 year, an absolute bargain a couple weeks till first half is done and we find out in Feb how well thing go with the Teva generic acquisition.

and the nature of this business I dont see they can fall too far from that projection, it not commodity business where thing just fall off the cliff. It be steady as you go
 

Just out of curiousity, where does that EPS figure come from?
 
A question for anyone who understands this one:

What does the acquisition of the portfolio give them exactly. Is it a license to distribute or manufacture the generic versions of various drugs? (Pharma is all new to me)

I ask because the presentation on the Teva acquisition (see link below) mentions using contract manufacturers (CMOs) to manufacture the product - in which case, Mayne are just the middlemen with a license?
http://www.asx.com.au/asxpdf/20160628/pdf/4385f8xclm0lmb.pdf

I get the impression I should have read Hempton's Valeant posts in more detail...
 

It acquire 42 generic drug portfolio from Teva force to sell due to competition concern as part of teva takes over for Allergan. Looking at the increase revenue I say they own the drug and can manufacture, sale and distribute

This artcile high light how good management are at playing this game and they are veteran
http://www.afr.com/business/health/pharmaceuticals/how-mayne-pharmas-eagle-landed-20160630-gpvctb

I cant fault this business except the over hanging of DoJ and even then it tiny part of their business now and it focus on the period where Mayne sale of that drug were like 15-20m in revenue.

I am not sure what all the panic is about, I search far and wide and I cant find anything it is so crazy, I bought more today.

fast forward a year or two it revenue projected to be 500m and up to a Billion
 

There's no license required to manufacture a generic, as it's off patent. What I'm thinking they have bought is the FDA approval which even for a generic can run into the millions of dollars, especially proving and the supply chain and manufacturing know how and of course the established distribution network.
 

Thanks for the response. I believe you're correct:
http://www.fda.gov/Drugs/ResourcesF...afely/UnderstandingGenericDrugs/ucm506040.htm
http://www.fda.gov/Drugs/NewsEvents/ucm508150.htm

The links go through the approval process. Without the purchase, they would have had to file with the FDA to get approval... it all seems rather onerous.

EDIT:
And in a very pretty PDF format:
http://www.fda.gov/downloads/Drugs/...afely/UnderstandingGenericDrugs/UCM510852.pdf
 
ROE said:
I cant fault this business except the over hanging of DoJ and even then it tiny part of their business now and it focus on the period where Mayne sale of that drug were like 15-20m in revenue.
Click to expand...

To be honest, this is what is attracting me to the company. Usually when these accusations start flying around, there's very little tangible evidence (i.e. it's all verbal), but the gross profit margins are more than healthy.

Once price collusion starts happening in an industry, it's very hard to get rid of (there were 6 companies accused...). Sure, the DOJ might end up taking them to court and even end up in a fine, but this is a small problem.

I think Bruce Greenwald gives an example of this in one of his books - relating to the fuel additives sector. Can't remember the details off the top of my head though.
 

A lot of the cost also depends on what you're trying to approve as well. MYX have said that the portfolio is of hard to source APIs and complex supply chains. I guess if you're selling paracetamol or ibuprofen the margins are lower because the barriers are much less restrictive.
 

So after a fair bit of reading around the generics supply chain, it turns out the biggest hurdle is FDA approval. And they go through everything from manufacturing process, quality control, API sourcing and so on. This takes many years on average (depending on the complexity of manufacturing the product), so the longer the FDA approval, the more valuable the right to manufacture.

Funnily enough, this isn't the only thing that provides significant margins in the manufacture of these products. It turns out distribution is also very valuable - likely because of the customer relationships and goodwill required to become one. Look at the Doryx GP margins before they in-housed the distribution. It went from mid 60's to mid 90's...
This means big upside from potentially bringing in distribution for other drugs where possible, (i.e. without interrupting sales) - and it also explains the single client exposure (~23% of revenues from two clients). If you look at the stats for 2015 US generics wholesale, Amerisource Bergen, Cardinal Health and McKesson made up 85% of total distributed drugs (in the generics space).

Also somewhat related to the above, is the fact that Mayne have decided to continue down the Paragraph IV path and attempt to get generics approved for drugs that are still patented (much like Tikosyn [dofetilide] - anti-arrythmic medication). They realise where the value is (FDA approval and 180days of exclusivity) and that they're not shy to have some earnings volatility for greater long-term returns.


Now that my rant above it done - I was wondering if anyone had thoughts on the below. Any responses are greatly appreciated:

1) Estimation of future legal costs: There are many 'one-offs' related to legal costs and I'm trying to put a longer-term value on this expense. In FY16 alone, there were costs related to settlement w/ Forest Labs, DOJ proceedings and in FY15 Tikosyn related legal expenses

2) Changes in earn-outs: Similar to the above. Not as much of a problem as these tail-off after FY17. Further, the US$19m payout from Forest Labs negates all earn-outs (not discounting cash flows for time value).

3) Marketing/Distribution: How does one ballpark this when only some products have marketing/distribution expenses, whilst others are incorporated in Cost of Sales that 3rd parties charge Mayne? Still thinking about this one, but any input is valuable.

4) R&D and related Amort.: Perhaps most important for future prospects - how to deal with future R&D cashflows. Given the steady rise in revenues, a crude % of revenue metric isn't really useful (I'll still try my luck). Further, amortisation varies depending on the asset life (46 projects currently capitalised).


And one final tidbit for anyone interested - the growth rates assumed for value-in-use calculations are very, very interesting. GPD at 42% growth rate for the next three years (I would have thought the acquisition would impact the next 1-2years only) - wow.

EDIT: A good read on Paragraph IV certs:
http://www.ipwatchdog.com/2013/04/0...ly-of-the-hatch-waxman-beast-part-1/id=38384/
 
Pulled from a 2015 broker report, so a bit outdated - but made me chuckle.
"The benefits of MYX controlling its distribution in this market are already showing with the company recently confirming Oxycodone is now the number one generic franchise2 . Methamphetamine was also highlighted as a key driver of growth"
No suprise Oxy's & meth are the top sellers, given America's prescription pill epidemic.
 
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