Tuck...I'm afraid I going to have to get off the fence-straddling on NKTR. Lack of information today by the Vice-Chairman about a launch, now having Miller Johnson to confirm the drug was launched in Germany in May(so we now have 4 months of revenue to report) and in my opinion it isn't going to be good. I decided to go back to the last two Q reports of this year and after FDA approval and what I found doesn't offer any comfort to owning this stock. Look at these numbers on inventory levels for Exubera, as reported by NKTR. Especially look at the work-in-progess....it appears that building inventory has slowed to a creep...indicating that there is no demand in Germany and thus we are getting one excuse after another as to the delay of launch here in the US. One would think that NKTR would be growing inventory:
Note 3 - Inventories
Inventories are stated at the lower of cost or market and are computed using standard cost, which approximates actual cost on a first-in, first-out basis. Inventories are reflected net of reserves of $4.1 million and $3.1 million as of March 31, 2006 and December 31, 2005, respectively. Reserves are determined using specific identification plus an estimated reserve against finished goods for potential defective or excess inventory based on historical experience. The following is a breakdown of net inventory (in thousands):
March 31,
2006 December 31,
2005
Raw material $ 8,436 $ 8,050
Work-in-process 19,659 2,740
Finished goods 5,085 7,837
Total inventories $ 33,180 $18,627
Work in process primarily represents first time commercial build of Exubera ® inhaler device inventory that is in process at contract manufacturers as of March 31, 2006.
Inventories at end of June, 2006:
Note 3 - Inventories
Inventories are stated at the lower of cost or market and are computed on a first-in, first-out basis. Inventories are reflected net of reserves of $2.5 million and $3.1 million as of June 30, 2006 and December 31, 2005, respectively. Reserves are determined using specific identification plus an estimated reserve against finished goods for potential defective or excess inventory based on historical experience. The following is a breakdown of net inventory (in thousands):
June 30,
2006 December 31,
2005
Raw materials $ 9,482 $ 8,050
Work-in-process 5,106 2,740
Finished goods 1,659 7,837
Total inventories $ 16,247 $18,627
Work in process has dropped from $19M to $5M....????? And raw material only growing by $1M???????????????? And finished goods drops from $5M to $1.6M?????????
And total inventory from Dec. 05 to June, 06..has only dropped by $2M...??? This doesn't IMO add up to a product flying off the pharmacist shelves!! |
