Partnership/Greenhill & Co.

[dy2ski]

I Hope I'm not cluttering the new board and I realize *potential partners, etc.* has been discussed ad nauseam for years but I was thinking that *Partnership...*, especially since the Greenhill revelation, was worthy of a thread and discussion. 

Amongst the euphoria of the Trial Announcements and CC, my initial reaction to the hiring of Greenhill was *Hmmmm, has interest become so low among BP's that Management now needs to actively solicit it?!* Obviously, since that moment, I can now see many reasons for hiring a firm of this type at this juncture. 
Terms of any partnership are seemingly infinite and the timing, who knows? 
I would really like to see something (even if there are contingencies relating to approval, etc. etc.), at the very least, announced before or right around the NDA filing to add validity to our submission to the FDA. 
I still have some respect for the FDA and certainly feel the Data is more than enough for approval, but I can't help but think having a BP along with us would command much more attention and hopefully respect. 

[liane]

Hi dy2ski,

Welcome to the board!

My thoughts - I do think having a strong partner going into the PDUFA can only help. I have no doubt that MNKD has worked closely with the FDA to design the studies in a way that will be conducive to gaining approval. They met their endpoints on the top-line. Certainly a partnership can be structured in a way that it is contingent on FDA approval.

The Greenhill news is good - it means business.

I think what we saw in the market last week was a concerted effort to put a negative spin on all the news that came out - Deerfield, Greenhill, and the study results themselves. They were prepared to pounce - and they did. I'm not sure there's any more ammo out there. Sure they can dredge up old stuff (like Exubera) again - but it doesn't have the weight of spreading FUD on new info.

[opc]

I've given this a lot of thought and wanted to read/consider others' opinions before posting. I think bringing in the third party firm is an attempt to avoid two previous problems.

1. Al is difficult. Not having him in direct negotiations makes a ton of sense. Along these same lines I think Al's ego is hurt that Afrezza isn't selling itself and

2. They need help selling this. Note how no other firm was brought in for years while mgmt repeatedly built up expectations for a near term partnership.

People have often posed what would happen to mnkd if Al died. I always said partnership would happen much quicker. Let's hope removing Al and bringing in professional deal makers pays off.

[Chris]

Aug 18, 2013 19:10:49 GMT -5 opc said:

I've given this a lot of thought and wanted to read/consider others' opinions before posting. I think bringing in the third party firm is an attempt to avoid two previous problems.

1. Al is difficult. Not having him in direct negotiations makes a ton of sense. Along these same lines I think Al's ego is hurt that Afrezza isn't selling itself and

2. They need help selling this. Note how no other firm was brought in for years while mgmt repeatedly built up expectations for a near term partnership.

People have often posed what would happen to mnkd if Al died. I always said partnership would happen much quicker. Let's hope removing Al and bringing in professional deal makers pays off.

Al Mann once stated, "“I’m at a point in my life where all I want to do are things that have a real benefit for mankind. (2001)."

news.usc.edu/#!/article/5178/Al-Mann-Humbled-Honored-and-in-a-Hurry/

1.

I agree with all your points on this one OPC, Al Mann drives a hard bargain and I believe it comes from one of his early life lessons in a venture dealing with the US military and the anti-missile technology he helped America develop...

"Even though I had to acquire equipment, design and fabricate control systems to measure thin film thicknesses to fractions of a millionth of an inch --- inside a vacuum chamber --- I told them I could complete the project in four months for eleven thousand, two hundred dollars. Of course that was in 1956, and dollars were more precious then. I should've known something was wrong when I received a contract within an hour! One thing led to another and my company became very substantial. But the fun thing was that about 15 years later, I again became involved with that contracting officer. Now he was working as a vice president for a pharmaceutical company. I had the opportunity to have dinner with him. He began to laugh as he recalled the early Army work. He told me that the Army had given him direct orders to sign me up at whatever the cost, and to ask for more if he needed it. He had pre-approval in his pocket for five hundred thousand dollars, and I came in with the 11 thousand dollar quotation!"

www.audiologyonline.com/interviews/interview-with-alfred-mann-founder-1745

Without a doubt Al Mann is emotionally invested in Mannkind, but he's not foolish. He's business-minded and truly understands the value and potential of Afrezza; much like Steve Jobs was a visionary -- so is Al Mann. Therefore IMO, Al Mann does not mind waiting on Afrezza's value to fully unravel, which makes many investors anxious and question his and MGMT's decision making capabilities and ability to execute especially given MNKD's current financial situation, setbacks and uncertainty.


2.

MNKD MGMT may have hired Greenhill in order to formalize and expedite any potential partnership that was possibly put on hiatus contingent upon Phase III results, which addressed bioequivalency and label issues.

Greenhill may have been hired to also attract new and more partnership or acquisition offers, which would have been unlikely seen if MNKD did it themselves.

Hiring Greenhill adds vast knowledge and additional resources such as established relationships and connections that can be leveraged to help MNKD attract a valuable offer.

They may have also hired Greenhill as it lifts some burden off of MNKD MGMT, which can further focus on upcoming events and issues such as the NDA submission, commercialization, hiring and development and the corporate financial overhang that looms.

MNKD MGMT realizes how unsuccessful they were during partnership negotiations the previous go-around and thus needed to try a different technique (as the saying goes, if your bathroom plumbing is broken hire a plumber.)

Cheers,
Chris

[opc]

Chris,  just hope you realize while he waits patents depreciate, value is lost, competition responds and dilution undermines partnership splits.  Last point is a big one.  100mil shares w/ a 50% split or 400mil shares and a 70% cut to mnkd.....Which winds up better for shareholders?  On a pure eps basis  (and on the assumption when one purchases stock they are buying a future stream of cash flow), shares would be more valuable by a long shot under the first scnerario.  Waiting is never good.....and I'll never buy the argument that geniuses dont make mistakes. It's a false implication.  Good to see you here.  So much for taking time off. lol

[Chris]

OPC, I agree. This is such a painful and tricky scenario. We're burning around 10 million dollars a month. Fortunately the recent Deerfield tranche of 40 million upon Phase III results gives us an additional four months of operation. The upcoming October warrants expiring at an exercise price of $2.60 should net us some much needed cash too. However the Dec. 15 convertibles are due with a conversion price of $22.47 and LOC is also due on Jan 2014. Our financial situation is tight.

haha, you're right, just cause you're smart -- it doesn't mean you don't make mistakes and everything you touch turns to gold. I hope MGMT can deliver and meet the NDA resubmission by October. FDA will more than likely take the full 6 months to review Afrezza again (sorry for those hopelessly wishing for fast track approval) so April is when our moment of truth happens. So much time for MM's to play with MNKD. You think things will heat up after NDA submission? Our current share price shows who's in control... I feel sorry for those that got slaughtered by high-expectations and sell on the news investors recently. I unfortunately raised my average by purchasing 1500 shares close to $7 before results. Lesson learned but holding strong.

lol! I was going to take some time off the boards because there probably isn't going to be much going on from now till October but I checked Agora and realized everyone was moving out! haha! It would have been so weird to log back on @ Agora a month from now only to realize everyone left. haha

[opc]

I think we see a rise into results with some bumps along the way.

[opc]

Chris, some odd things hapoening w PB or i would have just edited my response. Anyway, one correction. Deerfield isnt loaning them $40mil. The net pmt is closer to $20mil. Think of it like a zero coupon bond sold at a discount to face value. Repayment will amount to $40mil.

[turk74]

First time contributor - apologies for stating the obvious or possibly repeating anything others have already contributed but, Re Greenhill - given the milestone/upside consideration Deerfield receives as the result of a partnership, and also the sale of appreciated stock should Deerfield convert the first tranche, I feel it is safe to assume that Deerfield insisted on the retention of Greenhhill or the like in order to make its multiple tranche commitment. Furthermore, while Greenhill may be receiving some nominal payment for doing the work, they make their 'real' money by earning a fee associated with a transaction, and most of the assignments they complete entail the sale of a business. I am not suggesting this will be the near term outcome of this effort, in fact, there is the possibility of multiple transactions if there is not one global partner, but Greenhill will marshal a process that will bring order and discipline to a comprehensive list of potential partners/bidders and what can be accomplished at this point in time - and could result in opportunities not currently on the table - including partnership or sale of control alternatives. While there is no guarantee of what the outcome will be, in my view Deerfield and Greenhill's participation will guide Mann and Mankind to a reasonably well defined decision point - and should likely address the concerns debated by contributors OPC and Moderator earlier in this thread.

[opc]

If it was a requirement, it would have necessitated disclosure. I don't think mgmt would provide that type of control to outside investors.

[liane]

Agree with OPC. I've been through the 8K a few times. I may have dozed off some, but I didn't see that type of requirement.

[turk74]

Agree with you both regarding legality of any concrete requirement - but my sense is the hand does not fit into the glove without the retention of the broker to conduct the process - albeit with no requirement to consummate a transaction - just the confidence the agent will be comprehensive and professional (and motivated) in developing the alternatives.

[mdcenter61]

Whatever the reason, I applaud the hiring of Greenhill. I agree with OPC that Al is a very tough negotiator, which IMO at this point in the Company's journey can end up being somewhat of a detriment. In fact, I have feared that Dr. Mann is so emotionally tied in with "his baby" (and I can't blame him with the time he has spent, investment of a billion dollars, and his namesake company) that objectivity and reality can be blurred. Greenhill should bring a professional, organized, mediation approach to the process. My guess is that there was certainly strong persuasion by Deerfield regarding the retention of Greenhill, but no concrete requirement. But what the heck do I know sitting in small town Texas!

[mannmade]

As someone who built and sold a couple of small companies, I do not know what the deal with Greenhill is but I can assure you they will get paid handsomely for their participation one way or the other so i see it as a positive. I had a small company that was bought by a very large Fortune ranked company. They descended upon us with hoards of lawyers, accts, and an Investment Banker. Cost us around 110k just to go through due diligence, negotiate and execute contracts. Now multiply this by size of projected deal and number of potential partners. Each serious partner will want DD and mnkd will have to respond. It is very expensive and labor intense process. And thats before they get to the deal making and final negotiations...

[spiro]

With the cost of developing a new drug now estimated to be over $5 billion, I believe the latest results are good enough for MNKD to get a legitimate offer from a major drug company. It's not rocket science. invest say $ 2-3 billion in a partnership with MNKD and within 3 years, that company will have a good idea of success or failure. I would not be surprised if Pfizer is in the mix, remember the $10 billion in insulin they sold MNKD for only $2.5 million.  Or did Pfizer just give it to MNKD because they love Al so much. I would have burned it, before giving it away so cheap. 

www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/