Griffin Securities - August 11, 2015

[sla55]

griffin.bluematrix.com/sellside/EmailDocViewer?encrypt=3ee91398-ade8-4de5-94b4-72cb146f73d7&mime=pdf&co=griffin&id=[e-mail]&source=mail

[kc]

Nice to read and see. I am ok with his 12 month target of $11.50

MannKind’s convertible debt issue is being handled adeptly.
The Company had a $100 million obligation due this month
on convertible notes. Negotiations with the noteholders greatly
reduced the cash obligation by refinancing $27.7 million via 3-
year, redeemable convertible notes (5.75%, convertible at $6.80
per share) and issuing $56.9 million in stock (based on the
weighted average selling price from July 29 through August 11.)
The remaining $15.4 million will be paid from cash. As of June
30th, MannKind had $107 million of cash, access to $31 million
via the MannKind Group line of credit, and $147 million remaining
on the Sanofi loan facility.
The June-quarter financials came in much as expected.
Operating expenses fell markedly with R&D costs dropping by
80%, to $7.7 million, and G&A expenses falling 67%, to $10.6
million. The lower expenditures stem from the FDA approval of
Afrezza in July 2014 and the partnering agreement with Sanofi
a month later. The latest quarter included a new expense, $5.7
million related to product manufacturing. Overall, the Company
booked a loss of $28.9 million, which was roughly half of the loss
of a year ago.
MannKind shares are on our recommended list.
Commercialization of Afrezza is proceeding much as we’d
expected. Spirometry testing of new patients has become
more readily available, and insurance reimbursement should
remove the drug’s price from the decision-making process
by the physician and patient. At that point, we believe
Afrezza’s competitive advantages, notably its ability to mimic the
pancreas at mealtime and dosing convenience, will enable it to
capture significant market share. Such progress should become
apparent by the December quarter and accelerate through 2016.
Accordingly, we are maintaining our BUY recommendation.

[Chris-C]

Somehow, I thought this was first posted by Liane on another thread, and thus may be a duplicate,  or perhaps this recollection is just a symptom of spending too much time on this board. No matter.

I thought the Griffin update was a refreshingly appropriate and straightforward note. I wonder if Keith Markey is spending time on this board? Otherwise, he could just be a competent, honest analyst doing his job without an ulterior motive. (Now,that's a refreshing concept!)

Chris C

[liane]

Keith has written on MNKD for several years. We have most of his analyses in a thread in the Resources section.

[longstocking]

Aug 13, 2015 9:41:05 GMT -5 Chris-C said:

Somehow, I thought this was first posted by Liane on another thread, and thus may be a duplicate,  or perhaps this recollection is just a symptom of spending too much time on this board. No matter.

I thought the Griffin update was a refreshingly appropriate and straightforward note. I wonder if Keith Markey is spending time on this board? Otherwise, he could just be a competent, honest analyst doing his job without an ulterior motive. (Now,that's a refreshing concept!)

Chris C

I agree.  Honest and straightforward, (and realistically sobering).

[mannmade]

So according to Griffin Securities (and based on what we were told on the last CC) Mnkd has roughly 107m in cash, access to roughly 30m from mnkd group credit line and 147m left on Sanofi credit line. Given that we get very little information that is specific about sales goals etc... I like to try and read the tea leafs.

Here is what the leafs above tell me...

Mnkd has recently hired roughly 30 people to work on TS development and has made significant progress in identifying the first tow API's. All good news but these 30 people and the R&D they work on cost money to support the development of the first 2 TS apps with others in the pipeline.

So knowing that they have these expenses with no offsetting revenue for at least 2 to 3 years from the new TS apps and their cash and credit is limited to the above, with 147m of it only usable for Afrezza related losses, one would logically conclude that mnkd would expect Afrezza to be producing significant revenue sooner than later. Otherwise the prudent thing to do would have been to hold off on taking on new costs until you had the ability to ensure the long term survival of the company with revenue from Afrezza which for now is their only source of such revenue.

[jpg]

Aug 13, 2015 22:08:18 GMT -5 mannmade said:

So according to Griffin Securities (and based on what we were told on the last CC) Mnkd has roughly 107m in cash, access to roughly 30m from mnkd group credit line and 147m left on Sanofi credit line. Given that we get very little information that is specific about sales goals etc... I like to try and read the tea leafs.

Here is what the leafs above tell me...

Mnkd has recently hired roughly 30 people to work on TS development and has made significant progress in identifying the first tow API's. All good news but these 30 people and the R&D they work on cost money to support the development of the first 2 TS apps with others in the pipeline.

So knowing that they have these expenses with no offsetting revenue for at least 2 to 3 years from the new TS apps and their cash and credit is limited to the above, with 147m of it only usable for Afrezza related losses, one would logically conclude that mnkd would expect Afrezza to be producing significant revenue sooner than later. Otherwise the prudent thing to do would have been to hold off on taking on new costs until you had the ability to ensure the long term survival of the company with revenue from Afrezza which for now is their only source of such revenue.

Sounds perfectly logical but this is Mannkind (and I am reaching my point of maximum pessimism!)... 

[mnholdem]

My tea leaves tell me that other BP companies want some evidence that TS will succeed in the marketplace. If Afrezza does well, they will beat a path to MannKind's door.