Friday Trivia: In Which We Look In, Once Again, On That Hapless Small Cap Call Center/Consulting Company

May 12, 2017 - 2 Responses

At least a few of the longer term readers will recall that at least twice before, we’ve offered quick peeks into this company — since in now nearly 18 years as a public company, it has never posted a single penny of GAAP EPS from continuing operations. That, I think, is unprecedented in the annals of public companies, since at least 1980. [If any reader knows of a US-based public company with 20 years of such unending losses, please alert me to it, in comments.] To be clear, I’ve never been short or long in this company, nor will I ever be.

No. . . I write on this fine, sunny Friday morning — about that company, anew — mostly to scratch my head, and wonder. . . why the board hasn’t been sued by at least a few of the institutional stockholders (such holders are about 40 per cent of all outstandings), for breach of fiduciary duties. Chief among these, the duty to attempt to earn GAAP net profits from operations, for the long suffering shareholders — some still in place, from the fall of the year 2000 (then trading above $175 a share), to this very day.

A few weeks ago, I predicted this company would lose ($0.20) per share, in Q1 2017 — while the “professional analysts” were predicting losses of ($0.15) to ($0.17). [In candor, I was just guessing about a “worst possible case” scenario, for Q1 2017.] Results came out Tuesday night — and the company lost nineteen cents a share. Mattersight’s stock was at $3.40, on the NASDAQ, two weeks ago — this morning it opens at $2.72. Ouch.

Here is what “Bob” — a great “amateur” analyst had to say about the balance of 2017, related to that company. He has a long track record of being spot-on, on the numbers — and far more realistic and accurate than the Wall Street paid analysts. Five years of posts at the other property back that up:

. . . .“Just looked at the conference call transcript.

Q2 will evidence the low point of their seasonality and just as they’ve missed on every objective, this likely means a fairly disastrous quarter, which, as they have a difficult time throttling expenses, means a big cash burn. Since it’s now known that they adjusted the contract terms for a customer, look for other customers to ask for a similar deal, further eroding the top line.

In Q1, they lost $5M on $11M in revenues, burning in the neighborhood of $4M in cash (all the financing translations take more time to sort out than is worth the effort — ballpark is close enough).

In Q2, they’ll likely generate $10.2M in revenues and lose $5.8M, burning $4.8M in cash. This revenue projection (which could be a best case) — leads to a $0.22 per share GAAP loss….

Always use GAAP numbers in evaluating a company like MATR. EBITDA is for suckers as that depreciation represents true cost of real cash money spent in the past and is only relevant for one-time events that distort the quarter to quarter comparison. Non-cash compensation is a real economic loss to existing shareholders.

Going forward:

– Q3: $10.6M in rev, loss of $5.5M, 19.8 cents per share loss

– Q4: $11M in rev, loss of $5.4M, 19.3 cents per share loss

By September, they’re going to need to find yet more cash to keep the party going”. . . .

The rest of the story is here. Who knows where it will open on the NASDAQ this morning? It is traded under “MATR”.

Now you know — do heartily-enjoy your Mother’s Day weekend, one and all. Do call home, to mum. Or, if yours is no longer with us, call anyone’s mom. No doubt she will appreciate it. I’m out — for a walk-about, grinning ear to ear. . . .

नमस्ते

Brooklyn’s Federal Trial Level Case Update: On Trump Muslim Ban 2.0…

May 11, 2017 - Leave a Response

As many recall, 45’s Muslim Ban 2.0 is also the subject of various trial level federal injunction proceedingsseparate from the two cases on appeal on each coast. The more significant near term event — as to this wholly-unconstitutional mess — is the argument in the Ninth Circuit on this coming Monday. We will cover it, in just the same way we covered the one in the Fourth, this past Monday.

But overnight, in Brooklyn — at the trial level — settlement discussions reached an impasse, and the able Judge Amon has referred the case to a binding mediation. Here is that scheduling order, in full:

. . . .SCHEDULING ORDER: The Court shall hold a pre-mediation telephone conference on May 19, 2017 at 12:00 p.m. Defendants’ counsel is requested to arrange and initiate the conference call at that time. After contacting plaintiffs’ counsel, defendants’ counsel shall call the Court at 718-XXX-XXXX.

The Court shall hold a settlement conference on May 26, 2017 at 11:00 a.m. in Courtroom 11A South of the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The parties shall exchange specific settlement demands and offers before the settlement conference. The parties shall fax ex-parte confidential settlement statements setting forth the legal and factual basis for their settlement positions and their most recent best faith demands and offers to the Court at 718-XXX-XXXX by 5:00 p.m. on May 22, 2017.

The parties are advised that they must contact each other before making any request for an adjournment to the Court. A request for an adjournment must be received in writing at least forty-eight (48) hours before the scheduled conference. Ordered by Magistrate Judge Lois Bloom on 5/10/2017. . . .

And so, once again Mr. Trump wastes significant taxpayer resources on goals that are simply beyond his grasp, as a matter of law — even if we were to decide that his goal is wise — he is not empowered by the Constitution to pursue it in the way he has. And it happens that the measure bears no rational relationship — to his asserted goal, if we take his order(s) at face value. Truly a mess.

Just as his endlessly shifting stories on the dismissal of FBI Director (and former US Attorney, under Bush 43) James Comey have become. A mess — but there “treason” — as defined in the Constitution, and impeachable “high crimes and misdemeanors” may well lie. Now you know. Off now, on a sunny, fine and crisp Thursday afternoon!

नमस्ते

Two Bits Of Good News For Kenilworth… (Short Supply) Wee Hours Edition

May 11, 2017 - Leave a Response

We first mentioned this idea last year — that these Merck approvals will always be about 25 per cent of the addressable patient base, in lung cancers. That was when Merck first got this indication approval as a mono-therapy.

And as of market close last night, Kenilworth now has it — in combination with chemo. That’s good news — but may not be as important as some analysts believe — as it covers about the same subset (i.e., about one-quarter of all such patients) that Merck has been battling BMS and Roche over, for most of the prior twelve months. But it is good news, to be sure. [Something we’ve found in very short supply of late, truth told.]

Separately, Merck disclosed in the SEC Form 10-Q (pages 18 and 19) filed this week that it has, as of this month, settled the Cabilly patent spats (see my prior backgrounder, here, and graphic — at right), related to pembrolizumab — for an immaterial sum. That too is good news.

On the main topic, though — here’s the lung cancer FiercePharma chemo-combo FDA approval story, and a bit:

. . . .The FDA late Wednesday green-lighted Merck’s checkpoint inhibitor Keytruda in tandem with Eli Lilly’s Alimta as a regimen for previously untreated patients with non-squamous non-small cell lung cancer.

Keytruda’s solo approval in previously untreated patients covers only those with PD-L1 expression levels above 50%, and that group makes up just 25% to 30% of the addressable population. . . .

Merck’s approval also marks “the first true endorsement of the general ‘chemo combo’ approach,” which Roche is also pursuing with its contender Tecentriq. What is “not yet clear” is how Bristol-Myers and AstraZeneca’s efforts to pair their PD-1/PD-L1 meds with CTLA4 treatments—such as BMS’ own Yervoy—will stack up. . . .

We didn’t bite on the “next seven days” making or breaking Merck’s year stories out of Wall Street, last week — for just this reason.

And so. . . for reasons well-understood, over much of these past four and a half years — it just seems that sleep will not find me once again, this evening/morning. . . so I wait for the luminous and clear. . . arrival of a new dawn.

For as I well-know, this too, shall pass. . . all things, good and bad, sweetly sublime, and profoundly cruel, too. . . do end.

नमस्ते

O/T Lighter Fare: Paleo-Biology — Meet The “Destroyer Of Shins” — 75 Million BCE!

May 10, 2017 - Leave a Response

Given that we are now learning that Mr. Comey (in writing, last week) asked Rod J. Rosenstein, the man who wrote the memo firing him last night — for additional resources to broaden the Russia contacts investigation — and all that means for Mr. Hamilton’s notions of ordered liberty, and freedom from tyrants. . . .

I decided. . . we could use some lighter fare! So, do meet the first dino named after the morphed Rick Moranis and Sigourney Weaver characters, in the original “Ghostbusters“. Hilarious!

Do go read it all:

. . . .This “Zuul” weighed in around 5,500 pounds, which is about the size of a white rhinoceros, said study leader Victoria Arbour, a paleontologist at the Royal Ontario Museum in Toronto. . . .

Like their relatively close cousins the stegosaurs, ankylosaurs may have used their weaponized tails to fend off predators such as tyrannosaurs: The species name crurivastator means “destroyer of shins.”

It’s also possible that the dinosaurs used their tails to compete with other males, though it’s hard to test that theory in an extinct species. . . .

Now you know, and do twist onward with unwasted grace — and endless radiance — you know who you are. . . .

नमस्ते

And, A NON-Trivial Update: Merck’s Federal Propecia®/ Proscar® MDL…

May 9, 2017 - Leave a Response

Earlier today, we mentioned a small scheduling order that only affected a single bellwether case.

Later in the day today, in Brooklyn, the very able Judge Brian Cogan signed an order that affects all federal plaintiffs.

That said, I puzzled on this a bit this afternoon — as I need to be very careful here, not to provide any substantive legal advice to any individual plaintiff.

But if you are in the federal MDL, you are likely to be contacted by your lawyer (likely during the coming summer), to discuss the general and specific theories of causation being advanced by the expert witnesses. Do pay close attention. Do ask questions. That is as much as I feel comfortable saying.

I will link to the court’s order (a short 2 page PDF flie), so you will be aware of the relevant deadline dates.

[And now, apropos of nothing. . . really — but to be clear regarding the masthead change, tonight — I do think there isn’t too much to worry about on the Comey firing front — for those of us who still believe in justice under the law. It is a near certainty that even Republicans will seek an independent prosecutor now, for the Trump Russia investigation. It will be the appropriate response, in a functioning system of ordered liberty. So I am. . . sanguine.]

And with that, I will fall silent. . . .

नमस्ते

A Trivial Amendment — To Schedules In Merck’s Federal Propecia®/Proscar® MDL — In Brooklyn, Today…

May 9, 2017 - Leave a Response

I note it primarily to keep a complete record. [Last update here, on the state cases — and the last prior update, here — on the federal New York (Brooklyn) MDL.]

I still believe the federal finasteride MDL will go to trial, on bellwether cases, before the New Jersey State consolidated cases (called an MCL). Here is the order, as just entered this morning:

. . . .1. The following amendment to Practice and Procedure Order No. 15 (Amended) relates only to the Expert Reports and Expert Discovery for Cases in the First Bellwether Tranche.

2. On or before June 15, 2017, Plaintiff in the Z [redacted] case will disclose in writing the identities of his experts and will serve the reports and other materials required by Fed. R. Civ. P. 26, including case-specific reports.

3. On or before July 13, 2017, Merck will disclose in writing the identities of their experts for Z [redacted] and will serve the reports and other materials required by Fed. R. Civ. P. 26, including case specific reports.

4. On or before July 25, 2017, Plaintiff in the Z [redacted] case will disclose rebuttal expert reports, if any.

5. All other dates in Amended Practice and Procedure Order No. 15, entered on February 15, 2017, remain in effect. . . .

Now you know — onward, for a bit of a chilly walk — shopping for Mother’s Day. . . . smile.

नमस्ते

56 Years On… Newton N. Minnow — And “The Vast Wasteland…” Speech

May 9, 2017 - Leave a Response

As I listened to the Fourth Circuit oral arguments yesterday, via an IP connection, I found myself wondering whether the now 91 year old Mr. Minnow might see the content rich media delivered by internet as at least one additional reclamation project — in his five and a half decade push to alleviate the “wasteland“.

Fittingly, Mr. Minnow was awarded a Presidential Medal of Freedom in 2016 (by President Obama) for his life-long work, advocating for television “in the public interest“.

Here is the bit, from exactly 56 years ago this morning — during his first major speech as chairman of the FCC, under then-President John F. Kennedy — an electrifying speech that won him a leading role in the history of media in the late 20th Century:

. . . .When television is good, nothing — not the theater, not the magazines or newspapers — nothing is better. . . .

But when television is bad, nothing is worse. I invite each of you to sit down in front of your television set when your station goes on the air and stay there for a day without a book, without a magazine, without a newspaper, without a profit and loss sheet or a rating book to distract you. Keep your eyes glued to that set until the station signs off. . . .

I can assure you that what you will observe is a vast wasteland. . . .

I do think he would say, if one is willing to scout about a bit — the internet will offer much of the higher-functioning content he so craved in 1961. Of course, there is a lot of garbage out there, too — and of course, cable has given television both its share of sublimely shining moments, and all-time new lows.

So — onward, in silence, into the start of year 57, plus about seven hours — in reclaiming the wasteland (that duty falls to all of us, near and far), on this chilly gray morning here. Smiling just the same, though. . . .

नमस्ते

An Unusual Sunday Filing, In The Fourth Circuit…

May 8, 2017 - One Response

Update: argument underway. 45’s lawyer (Mr. Wall) being hammered — right out of the box. He’s doing an admirable job, with what are terrible facts.

LATER UPDATE @ 2 PM CDT: If I am hearing the competing voices clearly enough — I’ve heard at least seven voices that are VERY skeptical of 45’s claims here — and there are only 13 jurists on the en banc panel. I think Mr. Trump’s chances are evaporating — we may see unity in both Circuits — finding against the Muslim Ban. The rest of my updates will appear in the comment box below, as the plaintiffs lawyers get underway. End updated portion.

Overnight, the plaintiffs in the Muslim Ban 2.0 case (appeal set to be heard this afternoon) replied in an appropriately tart fashion (a four page PDF file) — to the Trump Administration’s earlier suggestion that it may “re-write the executive order” — simply by saying that one date, set certain by the order. . . means. . . a different date.

This is endemic of 45’s arguments on matters constitutional. He seems to think that he can simply make words mean something other than what they mean (a la “alternate facts“). Do go read it all, and I will post something later today, based on how the argument streams out.

And the list of able jurists, hearing argument today, En Banc: Chief Judge Roger L. Gregory; Judge Paul V. Niemeyer; Judge Diana Gribbon Motz; Judge William B. Traxler, Jr.; Judge Robert B. King; Judge Dennis W. Shedd; Judge G. Steven Agee; Judge Barbara Milano Keenan; Judge James A. Wynn, Jr.; Judge Albert Diaz; Judge Henry F. Floyd; Judge Stephanie D. Thacker; and Judge Pamela A. Harris.

Be well.

Be American.

Tell everyone you meet today, that the life sciences industry, in America (along with all other sciences, truth told) would be largely. . . non-existent, without our policies of pluralism.

To quote Lin-Manuel: “. . .Immigrants: they get the job done!”

नमस्ते

A Quite Smallish Merck Related Item — From Last Week…

May 8, 2017 - Leave a Response

It has been about a year or so, since we last mentioned the former high-flying, now struggling Valeant Pharmaceuticals.

Its connections to former Schering -Plough CEO Hassan have been well-documented here — via the now ousted CEO Pearson.

Valeant has lost 95 per cent of its market value, in the prior two years, or so. So it surprised me to read that one of Merck’s higher ranking external communications mavens, Lainie Keller, had jumped ship — to join Valeant at the end of last week:

. . . .In a newly created role, Keller will be responsible for executing external corporate communications and media relations strategies for Valeant. She joined the company from Merck & Co., Inc., where she most recently served as a director of corporate media relations, overseeing corporate, financial, litigation and policy communications. During her 10 years at Merck, she also served as a director of communications for various product portfolios. Prior to that, she worked at various public relations firms for more than 10 years, managing business for health care, corporate and consumer clients.

Communicating accurately and transparently is one of our highest priorities,” said Scott Hirsch, senior vice president, Business Strategy and Communications, Valeant. “Lainie’s experience in developing and leading successful, strategic communications programs on behalf of global pharmaceutical and health care companies will be invaluable as we continue to transform Valeant. . . .”

With Valeant stock at around $13.50/share — from a high of around $345 — I’d say the turnaround. . . hasn’t really started yet. Onward — to hear argument, in the Fourth Circuit. It will be an invigorating day, to be sure.

नमस्ते

Tomorrow At 7:30 AM Chicago Time…

May 7, 2017 - Leave a Response

. . .We will know which of the able Fourth Circuit jurists will hear argument on Mr. Trump’s Muslim Ban 2.0.

Then at 1:30 PM Chicago time, we will listen in to the live feed of that argument. Despite what Fox News might opine, I expect it will not go well for the Trump Administration.

. . . .Courtroom Seating: To accommodate public interest, an audio-video feed of the oral argument will be broadcast to two overflow courtrooms – the Blue Courtroom on the third floor (Room 339) and the Red Courtroom on the fourth floor (Room 412). Seating passes for the overflow courtrooms will be distributed at the Main Street and Bank Street entrances to the Courthouse beginning at 8:30 a.m. on May 8. All courtroom doors will open at 12:30 p.m.

En Banc Panel: The composition of the en banc panel will be posted at the Courthouse and released in a Public Advisory on the web page at 8:30 a.m. on May 8.

Real-Time Audio: Real-time audio of the oral argument will be available through C-Span and other media outlets, as well as on the Court’s web site, beginning at 2:30 p.m. on May 8. The audio file will be available for download approximately an hour after the argument concludes. . . .

Now you know — onward, on a sparklingly cold but clear Sunday evening. . . as sunset paints the steel and glass canyons in hues of ochre and rose. . . . smile. Tomorrow will be recorded as a moderately-important day, when historians tell this narrative, decades from now.

नमस्ते