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Post by prcgorman2 on Dec 20, 2019 12:31:37 GMT -5
If it is new, I think it helps firm up expectations associated with confidence in MNKD’s abilities to develop the pipeline that extracts additional value from Technosphere, and that MidCap does indeed want in on the action as investors, not predators (although it’s always good to be able to be both). The amended wording certainly is new. It does not strike me as a vote of confidence in MNKD's ability to develop the pipeline, but rather a hedge by the lender in case of MNKD's inability to achieve the good outcomes implied by the UTHR deal. Since decisions that can be taken unilaterally by UTHR affect the ability of MNKD to stay funded under this agreement, it is a new element of risk. How much risk is in the eye of the beholder. As for dilution, the warrants expiring do create risk of a dilutive event. The warrants were priced at $1.60 so that risk is priced in, but with the stock trading below that level any sale of the underlying share will have a different price and one that is most likely a significant haircut from yesterday's closing price of $1.38. Since future warrants cannot be offered on any new deal due to lack of authorized shares, the only way to entice a new buyer is with a deep discount, and percentage discounts starting around 20-25% would be typical (i,e, a discounted price of $1.04-$1.10). The problem that causes is not so much the loss of funding at $1.60, but when a company sells shares at a discount all of the outstanding shares get discounted to the same price. MNKD is literally in a situation where selling the last 22 million available shares at a discount would destroy more market value than the cash it would bring in. That is an entirely untenable position. Huh? |
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Post by matt on Dec 20, 2019 12:57:04 GMT -5
The problem that causes is not so much the loss of funding at $1.60, but when a company sells shares at a discount all of the outstanding shares get discounted to the same price. MNKD is literally in a situation where selling the last 22 million available shares at a discount would destroy more market value than the cash it would bring in. That is an entirely untenable position. Huh? Generally when a company sells shares at a discount, existing shareholders suffer. It is hard to argue that when the company just sold shares for 80 cents on the dollar that the already outstanding shares are somehow worth 100 cents. Look at practically any PIPE transaction in the last ten years and you will find that in nearly all cases the closing market price the following day is approximately equal to the discount offered (or lower if warrants are also included). Think of it this way; you just bought a new car and paid $30K for it. The next day, the dealer drops the price to $25K. Do you think your car is still worth $30K or does the market price decline to $25K? The problem with having only 22 million shares available is that at any discount larger than 9% (i.e. selling shares for less than 91% of current market value) reduces the market value of the 206 million outstanding shares by more than the cash raised (net of a typical 7% investment banker's placement fee). That makes the last 22 million shares essentially unsaleable at current market prices. |
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Post by cjm18 on Dec 20, 2019 13:12:26 GMT -5
So dilution is bad. Who knew? Who is arguing otherwise?
If dilution comes before the next drug gets a partner then the ceo needs to go. That coming from a pro MC investor.
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Post by boca1girl on Dec 20, 2019 14:38:57 GMT -5
If it is new, I think it helps firm up expectations associated with confidence in MNKD’s abilities to develop the pipeline that extracts additional value from Technosphere, and that MidCap does indeed want in on the action as investors, not predators (although it’s always good to be able to be both). The amended wording certainly is new. It does not strike me as a vote of confidence in MNKD's ability to develop the pipeline, but rather a hedge by the lender in case of MNKD's inability to achieve the good outcomes implied by the UTHR deal. Since decisions that can be taken unilaterally by UTHR affect the ability of MNKD to stay funded under this agreement, it is a new element of risk. How much risk is in the eye of the beholder. As for dilution, the warrants expiring do create risk of a dilutive event. The warrants were priced at $1.60 so that risk is priced in, but with the stock trading below that level any sale of the underlying share will have a different price and one that is most likely a significant haircut from yesterday's closing price of $1.38. Since future warrants cannot be offered on any new deal due to lack of authorized shares, the only way to entice a new buyer is with a deep discount, and percentage discounts starting around 20-25% would be typical (i,e, a discounted price of $1.04-$1.10). The problem that causes is not so much the loss of funding at $1.60, but when a company sells shares at a discount all of the outstanding shares get discounted to the same price. MNKD is literally in a situation where selling the last 22 million available shares at a discount would destroy more market value than the cash it would bring in. That is an entirely untenable position. Matt, I hear what you are saying but you assume that management will want to sell those 22 million shares immediately after the warrants expire. MNKD has cash on hand so I don’t think there is a high probability that they will sell those shares until later in 2020. And when they do, our hope is that the stock price will be higher than $1.60. MC said he hopes the warrants expire at the last conference so he must think the price will be greater than $1.60 before they have to be sold. |
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Post by awesomo on Dec 20, 2019 14:52:50 GMT -5
Matt, I hear what you are saying but you assume that management will want to sell those 22 million shares immediately after the warrants expire. MNKD has cash on hand so I don’t think there is a high probability that they will sell those shares until later in 2020. And when they do, our hope is that the stock price will be higher than $1.60. MC said he hopes the warrants expire at the last conference so he must think the price will be greater than $1.60 before they have to be sold. Hope has gotten us a whole lot of nothing. And Castagna seemed pretty damn confident that when the warrants were initially granted that we would easily clear the exercise price by expiration date and would help our cash situation. Of course, like everything else he seems to say, he walks back on his word and now all of sudden he "hopes the warrants expire" when it became clear that he had no catalysts to get to the exercise price. |
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Post by mannmade on Dec 20, 2019 14:55:17 GMT -5
The amended wording certainly is new. It does not strike me as a vote of confidence in MNKD's ability to develop the pipeline, but rather a hedge by the lender in case of MNKD's inability to achieve the good outcomes implied by the UTHR deal. Since decisions that can be taken unilaterally by UTHR affect the ability of MNKD to stay funded under this agreement, it is a new element of risk. How much risk is in the eye of the beholder. As for dilution, the warrants expiring do create risk of a dilutive event. The warrants were priced at $1.60 so that risk is priced in, but with the stock trading below that level any sale of the underlying share will have a different price and one that is most likely a significant haircut from yesterday's closing price of $1.38. Since future warrants cannot be offered on any new deal due to lack of authorized shares, the only way to entice a new buyer is with a deep discount, and percentage discounts starting around 20-25% would be typical (i,e, a discounted price of $1.04-$1.10). The problem that causes is not so much the loss of funding at $1.60, but when a company sells shares at a discount all of the outstanding shares get discounted to the same price. MNKD is literally in a situation where selling the last 22 million available shares at a discount would destroy more market value than the cash it would bring in. That is an entirely untenable position. Matt, I hear what you are saying but you assume that management will want to sell those 22 million shares immediately after the warrants expire. MNKD has cash on hand so I don’t think there is a high probability that they will sell those shares until later in 2020. And when they do, our hope is that the stock price will be higher than $1.60. MC said he hopes the warrants expire at the last conference so he must think the price will be greater than $1.60 before they have to be sold. Agree, and while I really don't like to specuate, the future sale of the returned shares could come after good news such as a second UTHR molecule approved or an RLS announcement. All speculation as is the talk of future dilution... GLTAL's |
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form 8-k
Dec 20, 2019 16:36:28 GMT -5
via mobile
Post by sportsrancho on Dec 20, 2019 16:36:28 GMT -5
Matt, I hear what you are saying but you assume that management will want to sell those 22 million shares immediately after the warrants expire. MNKD has cash on hand so I don’t think there is a high probability that they will sell those shares until later in 2020. And when they do, our hope is that the stock price will be higher than $1.60. MC said he hopes the warrants expire at the last conference so he must think the price will be greater than $1.60 before they have to be sold. Agree, and while I really don't like to specuate, the future sale of the returned shares could come after good news such as a second UTHR molecule approved or an RLS announcement. All speculation as is the talk of future dilution... GLTAL's It better, because if it doesn’t you can see why we would be in deep Doo Doo! |
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Post by matt on Dec 20, 2019 17:09:05 GMT -5
Matt, I hear what you are saying but you assume that management will want to sell those 22 million shares immediately after the warrants expire. MNKD has cash on hand so I don’t think there is a high probability that they will sell those shares until later in 2020. And when they do, our hope is that the stock price will be higher than $1.60. MC said he hopes the warrants expire at the last conference so he must think the price will be greater than $1.60 before they have to be sold. I would agree that there is no urgency to sell the remaining shares although the new covenants will make it difficult to draw tranche 3 as originally expected so it might come to pass earlier than you may think. The issue is not the low stock price, although that certainly doesn't help, but the limited number of shares available to issue. The limited number of share, combined with the discount required to sell them, and netting out the placement fees, means that the negative impact on the market value of the 206 million shares outstanding is greater than the value of the cash raised for any discount greater than 9%, and the discounts without warrants usually start around 20%. That is going to be true if the market price of the stock before the transaction is $1.00 or $100.00; regardless of the share price it will be very inefficient to sell such a small number of shares and may preclude those shares from ever being issued until more shares are made available. The math is relatively simple, but the point I am making is that the theoretical proceeds from those shares may not be available to fund operations in 2020 unless management is willing to make the shareholders swallow a larger than average dilutive event. That makes the new covenants required to draw tranche 3 all the more important. |
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Post by mannmade on Dec 20, 2019 17:24:33 GMT -5
They could be sold thru the ATM?
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Post by MnkdWASmyRtrmntPlan on Dec 20, 2019 18:19:04 GMT -5
So dilution is bad. Who knew? Who is arguing otherwise? If dilution comes before the next drug gets a partner then the ceo needs to go. That coming from a pro MC investor. Dilution will come again. But, MC will wait until AFTER the Board election at the next annual mtg. And, there will probably be an announcement just after that meeting that more shares are being made available for offering. Our CEO needs to go NOW! Before he dilutes again! We will need to vote to shake up the board at the next meeting. That is our best hope. |
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form 8-k
Dec 20, 2019 18:52:38 GMT -5
via mobile
Post by georgethenight2 on Dec 20, 2019 18:52:38 GMT -5
So dilution is bad. Who knew? Who is arguing otherwise? If dilution comes before the next drug gets a partner then the ceo needs to go. That coming from a pro MC investor. Dilution will come again. But, MC will wait until AFTER the Board election at the next annual mtg. And, there will probably be an announcement just after that meeting that more shares are being made available for offering. Our CEO needs to go NOW! Before he dilutes again! We will need to vote to shake up the board at the next meeting. That is our best hope. Hate to say it, but dilution is on the horizon. I desperately want to be wrong! |
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Post by awesomo on Dec 20, 2019 18:55:28 GMT -5
So who wants to bet that management gets raises again?
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Post by apidistra on Dec 20, 2019 19:17:09 GMT -5
Here we go with OFF WITH THEIR HEADS again!
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Post by sportsrancho on Dec 20, 2019 19:20:49 GMT -5
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Post by mnholdem on Dec 20, 2019 21:03:11 GMT -5
I expect that shareholder authorization of $60-$100 million worth of additional common stock will be on the Proxy for next year’s annual shareholders meeting.
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