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Post by joeypotsandpans on Aug 9, 2019 10:11:18 GMT -5
One of the pluses IMO of this new credit facility (for those that question Mike's motivation) is the accountability that comes with it. Not unlike those that hire private coaches to increase their productivity and achieve higher goals. That is just a bonus added to the debt financing, and no I don't wear rose colored glasses  Adding: I don't see the covenants as insurmountable and unrealistic metrics to meet. |
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Post by hellodolly on Aug 9, 2019 10:46:27 GMT -5
One of the pluses IMO of this new credit facility (for those that question Mike's motivation) is the accountability that comes with it. Not unlike those that hire private coaches to increase their productivity and achieve higher goals. That is just a bonus added to the debt financing, and no I don't wear rose colored glasses Adding: I don't see the covenants as insurmountable and unrealistic metrics to meet. Which circles back to your post about those questioning Mike's motivation. It's there, black and white and obviously, Mike doesn't think it's insurmountable or unrealistic, either.  |
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Post by ktim on Aug 9, 2019 11:40:29 GMT -5
I believe the TTM number at the end of this last quarter is $21.258M. So we'd need to do roughly $1.24M more in Q3 this year than last. Fortunately that is $5.6M, so unless revenue drops from this quarter's $6.06M, which seems highly unlikely, we will meet that covenant. I'm unable to comprehend the details but Spencer Osborne seems to think they will fall short: "Interestingly, prior to my latest revision downward in my projections, I had US net revenue at $27 million in 2019. That happens to be where the 12-month trailing covenant sets for December 31. Today, I have US sales in 2019 closer to $25 million." Is his assessment fair? I was just addressing the 19Q3 target. Can't say meeting all of them looks like slam dunk to me. My own little spreadsheet is showing $25.9M (not even counting Brazil) for this calendar year, though I'd consider it somewhat conservative. But always questions of how to model. Did DTC TV have some impact in first part of year that need to be backed out of trajectory projection? Will new billboard campaign compensate? How does one model the seasonality of Q4 increase? Will Brazil revenue be booked on shipment or will be treated as was done initially in US? I haven't seen SO's take yet, but I suspect it isn't wildly distorted. All of this is a probabilities game. With changing situations it is difficult to actually try to calculate probabilities, but each person's "model" is implicitly including decisions related to probability. Is it very conservative as might be estimating a revenue number that is 95% likely to be met or is it much more speculative yielding a number that is merely 50/50 outcome. Notwithstanding Joey's rose colored assessment that debt covenants are great, in general one wants very high probability of meeting them. It would not be my assessment that our probability is almost assured... but I'd say doable. But as stated, that assessment lacks analytic rigor, which I think isn't possible. Obviously Mike has info none of the rest of us have (including SO), such as how Brazil revenue will be recognized initially. Hopefully Mike negotiated something that he feels is reasonable. Though that begs the question, did he believe the yearly guidance he gave and missed by a mile was reasonable, or was that purely an exercise in smoke blowing. I'd say the price action of stock gives some indication that overall people at least have cautious feeling about this. Current price doesn't seem to be reflective of a total faith that Mike will be right and no further financing moves required to get us to profitability. |
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Post by ryster505 on Aug 9, 2019 11:45:52 GMT -5
At the end of the day....Mike C and MNKD know more than we do I believe we will be just fine. |
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Post by mnholdem on Aug 11, 2019 6:09:25 GMT -5
From Credit and Security Agreement between MannKind Corporation, MannKind LLC and Apollo Investment (lender) and Midcap Financial (lender & Agent): 6.15(d) Borrower shall own, or be licensed to use or otherwise have the right to use, all Material Intangible Assets subject to Permitted Licenses. So, essentially MannKind has put up all IP, patents, trademarks etc. as security for a $75 million (minus interest & fees) loan. MannKind is also required obtain permission from the Borrower before being allowed to assign rights to MI assets to any future partner. So, for any who thought that freeing up assets held by Deerfield who give leverage back to MannKind for partnership negotiations...guess again. Now unless my 6th grade education is failing me and I'm no lawyer - BUT - WHO IS THE BORROWER?? Isn't MNKD the BORROWER??? I don't think Binder would have stated all restrictions were lifted when Deerfield was paid off. Also I can't imagine MNKD agreeing to the same terms as Deerfield when MNKD is a MUCH STRONGER Company than in 2013 and they borrowed LESS MONEY. NICE TRY!!! Okay, so I emailed the question to Investors Relations at MannKind. This was the reply: “Yes, Mr. _____, MannKind's obligations under the MidCap Credit Facility are secured by a security interest on substantially all of our assets, including intellectual property. Thank you. --------------------------------------- Rose Alinaya Investor Relations & Treasury MannKind Corporation 30930 Russell Ranch Road, Suite 300 Westlake Village, CA 91362 Office: 818-661-5055 Fax: 818-661-5099 ralinaya@mannkindcorp.com www.afrezza.com |
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Post by mnholdem on Aug 11, 2019 6:19:01 GMT -5
So there you have it. MannKind’s assets & IP are apparently only worth only $75M to Apollo/Midland. Sad to think about it as the erosion of shareholder value continues.
I sincerely hope CEO Castagna succeeds with his newly-funded business plan. I was hoping for financing in excess of $300M to be used to launch multiple trials for pipeline candidates. A $40M initial cash infusion will likely be insufficient without future partnerships to pick up drug development costs.
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Post by Thundersnow on Aug 11, 2019 7:50:56 GMT -5
So there you have it. MannKind’s assets & IP are apparently only worth only $75M to Apollo/Midland. Sad to think about it as the erosion of shareholder value continues. I sincerely hope CEO Castagna succeeds with his newly-funded business plan. I was hoping for financing in excess of $300M to be used to launch multiple trials for pipeline candidates. A $40M initial cash infusion will likely be insufficient without future partnerships to pick up drug development costs. Are you serious?? You're joking right?? $300M??? Mike is a smart CEO. That's like you buying a 30,000 Sq Ft Home and it's just you and your husband. (LOL) Makes no sense. You never over extend yourself if you don't have too. Plus MNKD could not borrow that much. They are not creditworthy for $300M. |
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Post by matt on Aug 11, 2019 8:33:26 GMT -5
So there you have it. MannKind’s assets & IP are apparently only worth only $75M to Apollo/Midland. Sad to think about it as the erosion of shareholder value continues. I sincerely hope CEO Castagna succeeds with his newly-funded business plan. I was hoping for financing in excess of $300M to be used to launch multiple trials for pipeline candidates. A $40M initial cash infusion will likely be insufficient without future partnerships to pick up drug development costs. I am not sure you can look at it this way. Lenders always want more security if they can get it and for them to take less than 100% of the assets would be out of character. If you take out a $100,000 mortgage against a $1 million house, the bank will have first lien on the entire house and not just the kitchen and living room. Likewise, the Danbury plant is good for just one thing - making pharmaceuticals delivered by TS. Pharma plants are big empty boxes with rooms constructed inside that are specialized to a particular production process, and the equipment inside those rooms is also specialized. The "empty box" has no more value than any other empty building in the Danbury market; it only has value as a pharmaceutical plant. If the lender forecloses on the physical collateral, that does them no good if they can't exploit the intellectual property that enables the production of drugs. As I have said many times, there is no value inherent in any patent. The value of a patent arises from its ability to enable production of a product that competitors cannot copy, and if the product is not a success then the patent has little value. The fact that the lender bundles the physical assets and IP together to form the collateral for the loan is perfectly reasonable. Your other point, that the company needs $300 million or so to develop the pipeline, is spot on. R&D isn't cheap and developing new delivery forms for already generic drugs is not going to get the job done. It is time to get serious about the pipeline, and that funding should probably come from equity and not the debt market. The company is way overleveraged relative to the debt they can service from their operations. |
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Post by sportsrancho on Aug 11, 2019 8:38:11 GMT -5
So there you have it. MannKind’s assets & IP are apparently only worth only $75M to Apollo/Midland. Sad to think about it as the erosion of shareholder value continues. I sincerely hope CEO Castagna succeeds with his newly-funded business plan. I was hoping for financing in excess of $300M to be used to launch multiple trials for pipeline candidates. A $40M initial cash infusion will likely be insufficient without future partnerships to pick up drug development costs. Are you serious?? You're joking right?? $300M??? Mike is a smart CEO. That's like you buying a 30,000 Sq Ft Home and it's just you and your husband. (LOL) Makes no sense. You never over extend yourself if you don't have too. Plus MNKD could not borrow that much. They are not creditworthy for $300M. That makes some sense, but nevertheless you can’t wash over the fact that you were wrong and mnholdem was right, so your “nice try” post was completely invalid.. that’s why, or one of the reasons why mnholdem is so valuable to this board. |
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Post by Thundersnow on Aug 11, 2019 8:50:48 GMT -5
Are you serious?? You're joking right?? $300M??? Mike is a smart CEO. That's like you buying a 30,000 Sq Ft Home and it's just you and your husband. (LOL) Makes no sense. You never over extend yourself if you don't have too. Plus MNKD could not borrow that much. They are not creditworthy for $300M. That makes some sense, but nevertheless you can’t wash over the fact that you were wrong and mnholdem was right, so your “nice try” post was completely invalid.. that’s why, or one of the reasons why mnholdem is so valuable to this board. How was I wrong?? Someone said I was very close at my debt deal prediction. The only issue was that the deal was not unsecured. |
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Post by akemp3000 on Aug 11, 2019 9:10:53 GMT -5
This does not seem that complicated. Mike has restructured financing and is only extending debt via the best available financing opportunity that he believes will get the company to break even and beyond. Mannkind obviously believes sufficient revenues will be forthcoming from increasing Afrezza scripts in the U.S., international sales, existing pipeline milestones, new pipeline milestones (that we would know nothing about) and ultimately pipeline revenues. He obviously had to sell the plan to lenders. If he's right, he's made a good decision IMO. It would be great to have more cash and even better to have a quality BP partner but the board apparently doesn't believe now is the time to negotiate such deals having less leverage than Mannkind expects to achieve in the near future. It shouldn't take long to see how this plays out.
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Post by mnholdem on Aug 11, 2019 9:24:38 GMT -5
True.
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Post by morfu on Aug 11, 2019 9:25:46 GMT -5
This does not seem that complicated. Mike has restructured financing and is only extending debt via the best available financing opportunity that he believes will get the company to break even and beyond. Mannkind obviously believes sufficient revenues will be forthcoming from increasing Afrezza scripts in the U.S., international sales, existing pipeline milestones, new pipeline milestones (that we would know nothing about) and ultimately pipeline revenues. He obviously had to sell the plan to lenders. If he's right, he's made a good decision IMO. It would be great to have more cash and even better to have a quality BP partner but the board apparently doesn't believe now is the time to negotiate such deals having less leverage than Mannkind expects to achieve in the near future. It shouldn't take long to see how this plays out. >> that he believes will get the company to break even and beyond. I will remember all these "Mike is so smart" calls next time he chooses to dilute my property by 20%! I do believe that Mannkind will succeed (on various fronts actually), but I am afraid, that 75mil$ minus escrow might not get us there! At the same time I repeat my criticism at the dilution 9 months ago, this current loan shows that there were other options and there was no urgent use for that money! (The conference call just now shows it is just sitting there)
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Post by mannmade on Aug 11, 2019 10:12:50 GMT -5
I could be wrong but I beleive he said to "cash flow" break even.
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Post by wmdhunt on Aug 11, 2019 10:24:08 GMT -5
“I want to emphasize that Apollo has never done any business with Mr. Epstein at any point in time,” Mr. Black said in his letter, a copy of which was reviewed by The New York Times.
I certainly hope this is a true statement...
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