paul
Researcher
Posts: 134
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Post by paul on Aug 7, 2019 21:47:09 GMT -5
• MannKind (NASDAQ:MNKD) Q2 results: • Revenues: $15.0M (+285%); Afrezza sales: $6.1M (+62% yoy and +20% sequentially). • Net loss: ($12.4M); loss/share: ($0.07). • Yesterday, the company inked an agreement with Apollo Investment Corp. and MidCap Financial Trust for a $75M secured loan facility maturing on August 1, 2024. The company drew $40M at closing. It also negotiated exchange agreements with each of its creditors in order to pay off and/or restructure its existing debt obligations. • Shares down 4% after hours. The immediate news is that this is a $40M loan of which $15M must be held in escrow leaving $25M available. The remaining $35M of the loan is dependent on hitting certain targets (and an extra $5M in escrow). Overall certain Afrezza revenue targets must be hit each month to keep the loan open. Mid-Cap have the same lock on the assets that Deerfield did. And warrants. That loan is interesting. It is $75M once all the milestones have been hit. The structure is; - first tranche $40M now - second trance $10M when $30M net Afrezza revenue is hit. This must be achieved before April 2020 so the first quarter is already completed ($6.1M) - third tranche $25M when unspecified TreT revenue targets are hit. This must be achieved before June 2021. - Repayments are monthly starting September 2021 On the plus side the Afrezza revenue targets look fairly safe. For example the August 31 target is $21.5M year to date. I can SO tracking this since they publish the target for each month. Now the not so good: - there are monthly trailing annual Afrezza targets (Minimum Afrezza Net Revenue Schedule) that *must* be hit. - interest rate is a minimum of 8.75% rising if Libor gets above 2% (there is no drop). - $15M in escrow for the initial trance rising to $20M with the subsequent tranches - Warrants issues along side each tranche. For the first tranche there are warrants covering 1.17M shares at $1.12 with a seven year expiry. The strike price and number for the remaining tranche warrants are dependent on the share price, Mid-Cap does better if the price is low. - as with Deerfield Mid-Cap has all assets and IP as security - there is a 6% exit fee based on the maximum borrowed (there is also an early repayment penalty). That's my first cut of the loan agreement. Thanks for the analysis. I hope you do the same for the Bruce and Mann debt. The escrow bums me out. Mannkind is stuck paying interest on money it can't use.
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Post by bones1026 on Aug 7, 2019 21:53:37 GMT -5
Several people are complaining about what aged posted but no one pointed out any factual errors on what aged posted. I’m not concerned with if it’s right or wrong, I want a logical reason why this particular STOCK Message Board, is where he chooses to share his diabetic expertise and why Afrezza is not necessarily the right choice for most....why not on a DIABETIC site...if you are not an investor(or short)..why do you care to share all this “knowledge” here?
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Post by brotherm1 on Aug 7, 2019 22:05:28 GMT -5
He's a very good man IMO. He does or at least has traded the stock and did say he would like it to be $3 before he would view it as an investment. He recently called the bottom at $1.05. He does not use Afrezza because his insurance won"t pay for it and he's doing ok on his current insulin/pump. That's ok with me, Afrezza is not for everyone - at least not yet. He posts things that big investors look at. I knew somehow that what was perceived from the call was not all stars and he was kind enough to point it out despite all the critisism he knew he would get.
I' m personally still skeptical we have enough money to make it to break even though if the share price remains tomorrow around where it is now I hope to buy more tomorrow. I hope someone can show me we do have enough money to make it to break even.
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Post by ryster505 on Aug 7, 2019 22:21:05 GMT -5
Hey Aged one....You forgot to mention part of the positive aspect you seem to have left out regards the renegotiated Amphastar commitment. Kind of plays a big role in why this deal is great for the company right now regardless of the fine print. If MannKind was to continue with junk/toxic financing, they would have stuck with their old pals at DF. Expect many more positives in the coming months along with pipeline advancements, RLS etc just to name a few. This loan is in essence a nice little bridge financing until the good stuff finally starts to roll in. Good luck!
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Post by agedhippie on Aug 7, 2019 22:25:16 GMT -5
Even if aged's facts were right, I think it's still OK to be annoyed with his post.
I think what I got from agedhippie's post was Mannkind may only perform well enough to have borrowed $40M, and the interest will be higher if they do perform poorly.
Meh. OK, and?
Is the other $35M potentially available on good terms a make-or-break proposition? No. So yeah, OK, thanks for the dour analysis of arcane corporate finance information from our resident pump-loving non-Afrezza-using T1. He writes good factual posts that still manage to rain on long suffering longs. I'm not surprised the posts, while good, are not entirely welcome. So be it. I'm confident aged doesn't care and will continue to write them (and I will continue to read them even if they do annoy me too sometimes).
The interest rate is set at 6.76% +the greater of LIBOR or 2% regardless of hitting targets. If a milestone target doesn't get hit in it's time window then that part of the loan doesn't get made. If the over-arching Afrezza sales target doesn't get hit then the whole loan becomes repayable. I don't see that as a serious risk though because that target is based on net revenue and it is currently being hit. Further it is net revenue so it doesn't even need to be profitable which means adding the net revenue from Brazil will add a further safety margin. This is the revenue schedule (the table is mangled but it is date then target where target is the trail 12 months net revenue; July 31, 2019 $ 21,000,000 August 31, 2019 $ 21,500,000 September 30, 2019 $ 22,500,000 October 31, 2019 $ 24,000,000 November 30, 2019 $ 25,500,000 December 31, 2019 $ 27,000,000 January 31, 2020 $ 28,000,000 February 29, 2020 $ 29,000,000 March 31, 2020 $ 30,000,000 April 30, 2020 $ 31,000,000 May 31, 2020 $ 32,000,000 June 30, 2020 $ 33,000,000 July 31, 2020 $ 34,000,000 August 31, 2020 $ 35,000,000 September 30, 2020 $ 36,000,000 October 31, 2020 $ 37,000,000 November 30, 2020 $ 38,000,000 December 31, 2020 $ 40,000,000 January 31, 2021 $ 41,250,000 February 28, 2021 $ 42,500,000 March 31, 2021 $ 43,750,000 April 30, 2021 $ 45,000,000 May 31, 2021 $ 46,250,000 June 30, 2021 $ 47,500,000 July 31, 2021 $ 48,750,000 August 31, 2021 $ 50,000,000 September 30, 2021 $ 51,250,000 October 31, 2021 $ 52,500,000 November 30, 2021 $ 53,750,000 December 31, 2021 $ 55,000,000 January 31, 2022 $ 55,916,667 February 28, 2022 $ 56,833,333 March 31, 2022 $ 57,750,000 April 30, 2022 $ 58,666,667 May 31, 2022 $ 59,583,333 June 30, 2022 $ 60,500,000 July 31, 2022 $ 61,416,667 August 31, 2022 $ 62,333,333 September 30, 2022 $ 63,250,000 October 31, 2022 $ 64,166,667 November 30, 2022 $ 65,083,333 December 31, 2022 $ 66,000,000 January 31, 2023 $ 67,100,000 February 28, 2023 $ 68,200,000 March 31, 2023 $ 69,300,000 April 30, 2023 $ 70,400,000 May 31, 2023 $ 71,500,000 June 30, 2023 $ 72,600,000 July 31, 2023 $ 73,700,000 August 31, 2023 $ 74,800,000 September 30, 2023 $ 75,900,000 October 31, 2023 $ 77,000,000 November 30, 2023 $ 78,100,000 December 31, 2023 $ 79,200,000 January 31, 2024 $ 80,300,000 February 29, 2024 $ 81,400,000 March 31, 2024 $ 82,500,000 April 30, 2024 $ 83,600,000 May 31, 2024 $ 84,700,000 June 30, 2024 $ 85,800,000 July 31, 2024 $ 86,900,000
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Post by longliner on Aug 7, 2019 22:27:59 GMT -5
Hey Aged one....You forgot to mention part of the positive aspect you seem to have left out regards the renegotiated Amphastar commitment. Kind of plays a big role in why this deal is great for the company right now regardless of the fine print. If MannKind was to continue with junk/toxic financing, they would have stuck with their old pals at DF. Expect many more positives in the coming months along with pipeline advancements, RLS etc just to name a few. This loan is in essence a nice little bridge financing until the good stuff finally starts to roll in. Good luck! Exactly what my alter ego pointed out. (Amphastar renegotiated purchase agreement).
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Post by agedhippie on Aug 7, 2019 22:36:51 GMT -5
Hey Aged one....You forgot to mention part of the positive aspect you seem to have left out regards the renegotiated Amphastar commitment. Kind of plays a big role in why this deal is great for the company right now regardless of the fine print. If MannKind was to continue with junk/toxic financing, they would have stuck with their old pals at DF. Expect many more positives in the coming months along with pipeline advancements, RLS etc just to name a few. This loan is in essence a nice little bridge financing until the good stuff finally starts to roll in. Good luck! I didn't leave it out, I was reviewing the MidCap loan agreement, not the whole CC. I don't see that this loan is any better than the DF loans as it makes the loan stages conditional, and makes the continued existence of the loan conditional on monthly revenue targets, Deerfield didn't make either of those demands in it's loans. Deerfield was seen as bad because there wasn't the cash to make the payments so stock had to be used instead. If for any reason the cash isn't available with MidCap you are going to see exactly the same dynamic play out. Make no mistake this MidCap loan is hedged with more controls and penalties than the Deerfield loans.
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Post by celo on Aug 7, 2019 23:01:36 GMT -5
The negative points aged brings up are pretty minimal but are well organized. If Midcap is going to be paid in shares and plays the same manipulations deerfield did then that's a problem. If MidCap is paid in cash then no problem.
The fact the Mannkind execs are believing profitability is just around the corner without further fund raises is huge. I hope they are right. If current trends hold they probably will be.
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Post by longliner on Aug 7, 2019 23:53:45 GMT -5
Several people are complaining about what aged posted but no one pointed out any factual errors on what aged posted. Why point those out regarding someone who's not invested in the company - but that's MY take on it I doubt he has the time to invest, with 3800 posts, research, etc. it must be all consuming. The poor thing must be tuckered out.
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