|
Post by sellhighdrinklow on Aug 26, 2018 19:08:20 GMT -5
I’ve heard so many conflicting opinions on how much the plant is worth.. did Mike mention that it was worth that much? I think at some point Mike stated the $200 million figure, but that is what it cost to build and certainly not the value if it is sold. Pharma and medical plants are generally constructed as "empty boxes" with utility connections and provisions for clean room air handling. The majority of the investment takes place inside the shell building where production rooms are built-out and equipped to support a specific manufacturing process. The value of the plant itself is just the value of the land and the shell building, about $20-30 million based on comparable facilities in Danbury. Used pharmaceutical manufacturing equipment has a resale value that is generally about 10 cents on the dollar not because the equipment is in bad shape, but because an FDA approved production process is tied to specific manufacturers and models of equipment. If a piece of production equipment is not the identical model used in the validation for approval, the production line has to be revalidated and that can cost more than simply buying the right equipment to begin with. I have toured three production plants that cost north of $100 million (in one case $250 million) that have never produced a single dose of product. Each is state of the art with brand new equipment, but in each case the drug was acquired in a merger and the new owner wanted to manufacture the drug somewhere else. Nice as they were, none of the plants were designed in such a way that they could be economically reconfigured to support the production process I had in mind. These plants still sit empty with weeds growing through the asphalt in the parking lot. So who would pay $200 million for Danbury? A company that wanted to manufacture Afrezza and a company that wants to be located in Danbury. The plant has great value for supporting the Afrezza business, but far less value for any other drug product. On a sale-leaseback arrangement, any lender is going to take a conservative view of the value since they will value it at the real estate value in a liquidation scenario. If Mannkind moves out, there would be a significant cost to remove the Afrezza production rooms to return the plant to its "shell" configuration which is why a value closer to $20 million is the likely scenario. A strategic buyer that wanted to be in the business of producing and selling Afrezza would pay more, but then they would be looking at buying out Mannkind in total and not just the building. That is a different calculation entirely. You sure work very, very hard here to give negative feedback to this company with a 172 million MC which has 2.5 billion (?) invested . You sir (or Ms.) Matt are why I keep buying MNKD stock Thank you for your continuous negative pontificating!!
|
|
|
Post by bones1026 on Aug 26, 2018 19:45:49 GMT -5
I think at some point Mike stated the $200 million figure, but that is what it cost to build and certainly not the value if it is sold. Pharma and medical plants are generally constructed as "empty boxes" with utility connections and provisions for clean room air handling. The majority of the investment takes place inside the shell building where production rooms are built-out and equipped to support a specific manufacturing process. The value of the plant itself is just the value of the land and the shell building, about $20-30 million based on comparable facilities in Danbury. Used pharmaceutical manufacturing equipment has a resale value that is generally about 10 cents on the dollar not because the equipment is in bad shape, but because an FDA approved production process is tied to specific manufacturers and models of equipment. If a piece of production equipment is not the identical model used in the validation for approval, the production line has to be revalidated and that can cost more than simply buying the right equipment to begin with. I have toured three production plants that cost north of $100 million (in one case $250 million) that have never produced a single dose of product. Each is state of the art with brand new equipment, but in each case the drug was acquired in a merger and the new owner wanted to manufacture the drug somewhere else. Nice as they were, none of the plants were designed in such a way that they could be economically reconfigured to support the production process I had in mind. These plants still sit empty with weeds growing through the asphalt in the parking lot. So who would pay $200 million for Danbury? A company that wanted to manufacture Afrezza and a company that wants to be located in Danbury. The plant has great value for supporting the Afrezza business, but far less value for any other drug product. On a sale-leaseback arrangement, any lender is going to take a conservative view of the value since they will value it at the real estate value in a liquidation scenario. If Mannkind moves out, there would be a significant cost to remove the Afrezza production rooms to return the plant to its "shell" configuration which is why a value closer to $20 million is the likely scenario. A strategic buyer that wanted to be in the business of producing and selling Afrezza would pay more, but then they would be looking at buying out Mannkind in total and not just the building. That is a different calculation entirely. You sure work very, very hard here to give negative feedback to this company with a 172 million MC which has 2.5 billion (?) invested . You sir (or Ms.) Matt are why I keep buying MNKD stock Thank you for your continuous negative pontificating!! Exactly...on a Sunday afternoon nonetheless
|
|
|
Post by uvula on Aug 26, 2018 19:53:00 GMT -5
I'm not sure why matt spends so much time here either. But in this case he was merely answering a question from someone else. His answer sounds reasonable and logical. Yes it sounds negative but it does accurately reflect the current situation. Unfortunately.
|
|
|
Post by traderdennis on Aug 26, 2018 21:39:39 GMT -5
I think at some point Mike stated the $200 million figure, but that is what it cost to build and certainly not the value if it is sold. Pharma and medical plants are generally constructed as "empty boxes" with utility connections and provisions for clean room air handling. The majority of the investment takes place inside the shell building where production rooms are built-out and equipped to support a specific manufacturing process. The value of the plant itself is just the value of the land and the shell building, about $20-30 million based on comparable facilities in Danbury. Used pharmaceutical manufacturing equipment has a resale value that is generally about 10 cents on the dollar not because the equipment is in bad shape, but because an FDA approved production process is tied to specific manufacturers and models of equipment. If a piece of production equipment is not the identical model used in the validation for approval, the production line has to be revalidated and that can cost more than simply buying the right equipment to begin with. I have toured three production plants that cost north of $100 million (in one case $250 million) that have never produced a single dose of product. Each is state of the art with brand new equipment, but in each case the drug was acquired in a merger and the new owner wanted to manufacture the drug somewhere else. Nice as they were, none of the plants were designed in such a way that they could be economically reconfigured to support the production process I had in mind. These plants still sit empty with weeds growing through the asphalt in the parking lot. So who would pay $200 million for Danbury? A company that wanted to manufacture Afrezza and a company that wants to be located in Danbury. The plant has great value for supporting the Afrezza business, but far less value for any other drug product. On a sale-leaseback arrangement, any lender is going to take a conservative view of the value since they will value it at the real estate value in a liquidation scenario. If Mannkind moves out, there would be a significant cost to remove the Afrezza production rooms to return the plant to its "shell" configuration which is why a value closer to $20 million is the likely scenario. A strategic buyer that wanted to be in the business of producing and selling Afrezza would pay more, but then they would be looking at buying out Mannkind in total and not just the building. That is a different calculation entirely. You sure work very, very hard here to give negative feedback to this company with a 172 million MC which has 2.5 billion (?) invested . You sir (or Ms.) Matt are why I keep buying MNKD stock Thank you for your continuous negative pontificating!! The company is likely in the process of selling shares direct to retail. Probably at least 40 millions shares still available and the company c level management thanks you for continued support for their extrvegant salaries.
|
|
|
Post by sportsrancho on Aug 26, 2018 21:41:44 GMT -5
I get where matts coming from for the same reason I never wanted to own a gym, the equipment depreciates in a sense. There’s something missing here though..and I can’t quite put my finger on it because I am not sure why Mike would bring it up as lease back if those were the accurate circumstances.
There is a lot here going on I can put my finger on:-) But soon we will have the answers so it will cease to matter.
GL to all my friends, here’s hoping there aren’t too many days left in the trenches!
|
|
|
Post by mnholdem on Aug 26, 2018 21:53:27 GMT -5
Matt lowballed by estimating land and building value only (interesting that he specifically uses the term “liquidation scenario”)!and stating, in effect, why would a company buy a plant where they cannot manufacture their other drugs. The answer is obvious: the plant would only be used to manufacture Afrezza until other plant(s) could be built globally. One other factor Matt overlooks is the manufacturing licensing fee.
The value of Danbury is not just building and land. Brazil and China could be supplied with Afrezza immediately and expand finish fill lines if needed. Incidentally, the Sanofi agreement included a manufacturing license. Look it up.
|
|
|
Post by matt on Aug 27, 2018 9:42:22 GMT -5
The value of Danbury is not just building and land. I didn't lowball anything. Let me say it again; Danbury has maximum value to a strategic investor that wants to be in the business of manufacturing and selling Afrezza. It would be valued at the market price in Danbury for land and buildings, net of restoration costs, to a non-strategic investor. A strategic investor may be willing to pay the full replacement cost of the facility plus a premium since it already has FDA approval to produce Afrezza as a commercial product. That figure may well approach $200 million, but only for the right kind of investor. However, for the plant to have that kind of value the strategic investor must also have access to all other rights needed to make, use, and sell the product which includes licenses to all manufacturing technology, patents, and trademarks because without those assets the investor cannot produce and sell Afrezza. It is very hard to unbundle the value of those assets as they were created to support a specific business and the assets themselves do not have inherent value on their own. That is why there is very little profit margin in contract drug manufacturing; the contract manufacturer owns the means of production but the economic value accrues to the owner of the intangible assets. Try to sell the plant without the associated intangibles and the price will be reflective of raw real estate value. Sell the plant with the intangibles and $200 million may be possible to the right buyer, but that would turn Mannkind into a drug discovery and research company. Becoming a drug discovery company may not be a bad thing, but it is a different kind of business.
|
|
|
Post by barnstormer on Aug 27, 2018 9:49:14 GMT -5
The value of Danbury is not just building and land. I didn't lowball anything. Let me say it again; Danbury has maximum value to a strategic investor that wants to be in the business of manufacturing and selling Afrezza. It would be valued at the market price in Danbury for land and buildings, net of restoration costs, to a non-strategic investor. A strategic investor may be willing to pay the full replacement cost of the facility plus a premium since it already has FDA approval to produce Afrezza as a commercial product. That figure may well approach $200 million, but only for the right kind of investor. However, for the plant to have that kind of value the strategic investor must also have access to all other rights needed to make, use, and sell the product which includes licenses to all manufacturing technology, patents, and trademarks because without those assets the investor cannot produce and sell Afrezza. It is very hard to unbundle the value of those assets as they were created to support a specific business and the assets themselves do not have inherent value on their own. That is why there is very little profit margin in contract drug manufacturing; the contract manufacturer owns the means of production but the economic value accrues to the owner of the intangible assets. Try to sell the plant without the associated intangibles and the price will be reflective of raw real estate value. Sell the plant with the intangibles and $200 million may be possible to the right buyer, but that would turn Mannkind into a drug discovery and research company. Becoming a drug discovery company may not be a bad thing, but it is a different kind of business. This is all "just beating wind" at this point. Conjecture. I don't think Mike has put up a For Sale sign yet.
|
|
|
Post by tomtabb on Aug 27, 2018 10:07:35 GMT -5
Has he ever proposed the sale/leaseback idea to Deerfield or anyone else?
|
|
|
Post by whygeniusfails on Aug 27, 2018 10:12:43 GMT -5
I didn't lowball anything. Let me say it again; Danbury has maximum value to a strategic investor that wants to be in the business of manufacturing and selling Afrezza. It would be valued at the market price in Danbury for land and buildings, net of restoration costs, to a non-strategic investor. A strategic investor may be willing to pay the full replacement cost of the facility plus a premium since it already has FDA approval to produce Afrezza as a commercial product. That figure may well approach $200 million, but only for the right kind of investor. However, for the plant to have that kind of value the strategic investor must also have access to all other rights needed to make, use, and sell the product which includes licenses to all manufacturing technology, patents, and trademarks because without those assets the investor cannot produce and sell Afrezza. It is very hard to unbundle the value of those assets as they were created to support a specific business and the assets themselves do not have inherent value on their own. That is why there is very little profit margin in contract drug manufacturing; the contract manufacturer owns the means of production but the economic value accrues to the owner of the intangible assets. Try to sell the plant without the associated intangibles and the price will be reflective of raw real estate value. Sell the plant with the intangibles and $200 million may be possible to the right buyer, but that would turn Mannkind into a drug discovery and research company. Becoming a drug discovery company may not be a bad thing, but it is a different kind of business. This is all "just beating wind" at this point. Conjecture. I don't think Mike has put up a For Sale sign yet. New to this forum but not new to mnkd......revently reentered long position. The issue with selling the whole plant with i tangibkes is your basically closing down ur shop. No one will pay $200M for the facility + intangibles unless its out of BK.....and they wont fetch $200M.....the company cant sell the intangibles unless they are throwing in the towel. More Realistically, they could (as part of recap) sell the shell and land for $20-$25M and lease back. Another $50M would prob need to cone in the form of dilution/stock/warrants and debt......i am long but niw chewing my finger nails.
|
|
|
Post by whygeniusfails on Aug 27, 2018 10:15:58 GMT -5
This is all "just beating wind" at this point. Conjecture. I don't think Mike has put up a For Sale sign yet. New to this forum but not new to mnkd......revently reentered long position. The issue with selling the whole plant with i tangibkes is your basically closing down ur shop. No one will pay $200M for the facility + intangibles unless its out of BK.....and they wont fetch $200M.....the company cant sell the intangibles unless they are throwing in the towel. More Realistically, they could (as part of recap) sell the shell and land for $20-$25M and lease back. Another $50M would prob need to cone in the form of dilution/stock/warrants and debt......i am long but niw chewing my finger nails. I expect they are back at the tabke with Deerfield. And Deerfield sitting on top of the capital structure i am sure holds the upper hand. Unless they cal recap with TreT partership or other partnership agreement but that seems like a stretch....hopefully wrong.
|
|
|
Post by dh4mizzou on Aug 27, 2018 10:20:46 GMT -5
New to this forum but not new to mnkd......revently reentered long position. The issue with selling the whole plant with i tangibkes is your basically closing down ur shop. No one will pay $200M for the facility + intangibles unless its out of BK.....and they wont fetch $200M.....the company cant sell the intangibles unless they are throwing in the towel. More Realistically, they could (as part of recap) sell the shell and land for $20-$25M and lease back. Another $50M would prob need to cone in the form of dilution/stock/warrants and debt......i am long but niw chewing my finger nails. I expect they are back at the tabke with Deerfield. And Deerfield sitting on top of the capital structure i am sure holds the upper hand. Unless they cal recap with TreT partership or other partnership agreement but that seems like a stretch....hopefully wrong. But hey, you're long.
|
|
|
Post by whygeniusfails on Aug 27, 2018 10:35:55 GMT -5
I expect they are back at the tabke with Deerfield. And Deerfield sitting on top of the capital structure i am sure holds the upper hand. Unless they cal recap with TreT partership or other partnership agreement but that seems like a stretch....hopefully wrong. But hey, you're long. Yes. I am long. I think there will be a breakout period where scripts signicantly increase (i have my reasons for this). But i wouldnt go out on a limb thinking that will happen this year......so I’m counting on the company being able to recap without tearing a new one into existing shareholders. I bought 65% of my position now and will allocate the other 35% after recap.
|
|
|
Post by whygeniusfails on Aug 27, 2018 10:41:20 GMT -5
Yes. I am long. I think there will be a breakout period where scripts signicantly increase (i have my reasons for this). But i wouldnt go out on a limb thinking that will happen this year......so I’m counting on the company being able to recap without tearing a new one into existing shareholders. I bought 65% of my position now and will allocate the other 35% after recap. Sorry for eating up space. Will limit my posting. But if they do not raise more than $40M.....then I will hold off on allocating more funds.
|
|
|
Post by sportsrancho on Aug 27, 2018 11:05:36 GMT -5
Yes. I am long. I think there will be a breakout period where scripts signicantly increase (i have my reasons for this). But i wouldnt go out on a limb thinking that will happen this year......so I’m counting on the company being able to recap without tearing a new one into existing shareholders. I bought 65% of my position now and will allocate the other 35% after recap. Good plan IMO. Thanks for posting.
|
|