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Post by cjm18 on Nov 5, 2020 6:44:52 GMT -5
The CC was good and MNKD rec'd a couple of congratulations. My biggest "READ BETWEEN THE LINES"......DILUTION is COMING Last Week of December. Mike mentioned they haven't raised money in 2 years (if you don't include the ATM last qtr). I believe they are going to fund the start of the Pediatrics Trial until the stock price is higher and bring in an equity partner. Let's see........ OBTW - I'm not back Wouldn’t read much into it. Mc has said “ there has been no capital raise for a while”many times. He’s selling stability aka promoting the stock. It’s his job. |
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Post by prcgorman2 on Nov 5, 2020 7:58:58 GMT -5
Our /mnkd’s business model is predicated on that factory.. that must be one hell of a lease ... there’s not more to the picture! Somehow the lease goes bad , it’s lights out .🤔 take the equipment and start over somewhere else ! Sell and lease back is a way to extract capital out of an asset other than it’s use as collateral. Not sure what the depreciation schedule is on the plant but the closer it gets to being depreciated the less value it has as a liability to offset taxes. And, there is no property tax on a lease. It does sort of feel like selling the crown jewels, but it has always felt to me like Danbury could only be the beginning and not the long-term for manufacture and sale of Afrezza and other TS-based products at scale. There was a target baseline that Danbury was designed to support but blockbuster status (is that still possible?) was going to require additional capacity. So selling and lease back makes some sense financially as a way to reduce impact of dilution and a bridge strategy, but a bridge to what? |
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Post by matt on Nov 5, 2020 8:33:31 GMT -5
This was suggested and discussed on this board about two years ago as one option to improve the cash situation without requiring traditional fund raising dilution. Some suggested the valuation of the plant would be too low to make this worthwhile. Others disagreed. I see this as a bridge potential between now and when revenue increases allowing the company to possibly buy back the lease and plant at the pre-determined price. Interesting that it's now being considered. Right, and I believe matt (could be some one else) who read the docs said the plant was held as collateral by the lender at that time (forgot the name), and hence it was not possible to do so. May be things have changed? After a long time, I skipped their CC (may be 2nd/3rd time?). I still have a bunch of shares, but gotten off with the crazy addiction! Hopefully they will get us *some* return by 2022/23? The plant used to be security for Deerfield, but now it is security for Midcap so the same rule applies. Just like a home mortgage, you cannot sell your house to a third party and pocket the money if you still owe $100K to the bank on a mortgage. Midcap might be pushing them to do a sale / leaseback to reduce their exposure to bankruptcy, but if there are net proceeds from a sale that cash will go to reducing debt (i.e. Midcap will get the money, not MNKD). Everything of value that MNKD owns is similarly encumbered by the security agreement so any strategy that relies on asset sales to generate operating cash is a non-starter. The plant building and associated land may have some value, but processing equipment inside the plant has hardly any value due to the way drug production is regulated and the cost of relocating and revalidating equipment. prcgorman2 noted that there is no property tax on a leaseback which, in principal, is true but in reality is false. Virtually all commercial property leases are quoted as "triple net", which means that the tenant pays the stated rate per square foot, but the landlord also recovers a pro-rata share of his operating expenses, maintenance costs, and property taxes. So you might see rent quoted as $30 gross per square foot, $27 net which means that the estimated share of the reimbursable expenses are $3 per square foot. However, the tenant has to pay the actual expenses so if the building needs a new roof or the property taxes increase then the lease will exceed the $3 expense stop and the tenant might be on the hook for $4 instead of the expected $3. So yes, the property tax is assessed on the landlord rather than the tenant, but the economic effect of the tax will still be borne by the tenant in the gross rent calculation. It is somewhat of a concern that this 10-Q has increased the level of disclosures associated with a default on the Midcap facility. The 10-Q that posted to EDGAR was a "red line" version that highlights in red differences between the filed copy and a previous version (that was likely posted in error, I have never seen any company post a red line version of a quarterly filing). There are several places where it is stated that missing the covenants at year end is probable unless the Midcap agreement can be successfully renegotiated, and the entire Midcap balance (around $40 million) has been reclassed as a current liability from long-term debt due to the risk of default. Most well financed companies maintain a ratio of current assets to current liabilities of 2:1 (i.e. there are two dollars of liquid assets available to pay each dollar of liabilities that are coming due in the next year). MNKD's current ratio was 0.63:1 at September 30, and with the company's burn rate that number will be 0.5:1 later this month. |
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Post by mango on Nov 5, 2020 8:37:35 GMT -5
I’ve been looking into sale lease back and it appears that tons of companies do this and is quite common and a good way to have free cash flow. Actually sounds like a good idea. I didn’t know what it was at first, but now I’m not concerned at all. Good idea.
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Post by morfu on Nov 5, 2020 8:51:06 GMT -5
I’ve been looking into sale lease back and it appears that tons of companies do this and is quite common and a good way to have free cash flow. Actually sounds like a good idea. I didn’t know what it was at first, but now I’m not concerned at all. Good idea. Like a house owner.. Typically it is almost always a cheaper/better idea to keep your house in the long run.
But some do "reversion" their home giving up a big part of it´s value.. typically to burn all their money before they die. Good idea for the very short term.
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Post by barnstormer on Nov 5, 2020 9:29:06 GMT -5
Selling the plant shows that Afrezza revenue (oh yow the companies only real product) has no chance of reaching break even anytime soon. Most of the long term hope for ever seeing a recoup of share price now hinges on UTHR. If MC was any kind of CEO he would have been able to optimize the plant by finding other partners who needed manufacturing capacity. Look at all of the CV vaccine makers looking for capacity. As mentioned here before, MidCap has had to bless the transaction and it appears they would rather have MNKD sell it and pay back the loan than for them to foreclose and have to conduct a fire sale/auction. Any way you try to sugar coat this, it doesn't smell good.
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Post by mannmade on Nov 5, 2020 10:22:59 GMT -5
If the Uthr partnership is so solid why not just do a deal to get a convertable note from them for $50m I am sure we would all be happy with that kind of dilution as it would be negated just on the news that Uthr might buy in. Afterall, it appears from what Mike siad that they are in at least early stage discussions on other molecules. The note could be payable aganst futre trep t royalties.
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Post by wyattdog on Nov 5, 2020 10:35:29 GMT -5
Mike said "On a bridge over to the pipeline on Technosphere, we just completed formulation work on two new opportunities, which we’ll talk about in early Q1." any thoughts
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Post by sayhey24 on Nov 5, 2020 10:37:00 GMT -5
Selling the plant shows that Afrezza revenue (oh yow the companies only real product) has no chance of reaching break even anytime soon. Most of the long term hope for ever seeing a recoup of share price now hinges on UTHR. If MC was any kind of CEO he would have been able to optimize the plant by finding other partners who needed manufacturing capacity. Look at all of the CV vaccine makers looking for capacity. As mentioned here before, MidCap has had to bless the transaction and it appears they would rather have MNKD sell it and pay back the loan than for them to foreclose and have to conduct a fire sale/auction. Any way you try to sugar coat this, it doesn't smell good. The reality is Al Mann's vision of afrezza becoming the largest selling drug of all time has clearly not materialized. At the same time it is the greatest advance in diabetes care since Banting and Best. I thought the good news from yesterday's call was Mike's statement "And we recently got notification that CMS is going to remove the injectable restrictions for Afrezza, when you come to get CGM. Right now CGM was in Medicare, was only dedicated if you’re on injectable insulin". |
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Post by mannmade on Nov 5, 2020 11:56:45 GMT -5
Actually I also like the compatability of Bluhale with Dexcom. At least they must be talking...
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Post by sayhey24 on Nov 5, 2020 14:16:36 GMT -5
Actually I also like the compatability of Bluhale with Dexcom. At least they must be talking... Mike said Dexcom API. They may not be working directly with Dexcom but rather a telemedicine service. IMO it would make sense for someone like a WeightWatchers to provide such a service. For years we have talked on this site about connected care and telemedicine. It took Covid to make it mainstream. We have also talked about afrezza and CGMs being like peanut butter and jelly. Hopefully Mike has a deal up his sleeve to make afrezza mainstream and get that damn SOC fixed. |
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Post by goyocafe on Nov 5, 2020 14:27:10 GMT -5
Actually I also like the compatability of Bluhale with Dexcom. At least they must be talking... Mike said Dexcom API. They may not be working directly with Dexcom but rather a telemedicine service. IMO it would make sense for someone like a WeightWatchers to provide such a service. For years we have talked on this site about connected care and telemedicine. It took Covid to make it mainstream. We have also talked about afrezza and CGMs being like peanut butter and jelly. Hopefully Mike has a deal up his sleeve to make afrezza mainstream and get that damn SOC fixed. Hasn’t it been stated for years that the ADA will base their decisions on data via the label. I wasn’t aware they were trying this, but rather working around the ADA, insurance limitations, etc. |
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Post by sayhey24 on Nov 5, 2020 15:46:25 GMT -5
Mike said Dexcom API. They may not be working directly with Dexcom but rather a telemedicine service. IMO it would make sense for someone like a WeightWatchers to provide such a service. For years we have talked on this site about connected care and telemedicine. It took Covid to make it mainstream. We have also talked about afrezza and CGMs being like peanut butter and jelly. Hopefully Mike has a deal up his sleeve to make afrezza mainstream and get that damn SOC fixed. Hasn’t it been stated for years that the ADA will base their decisions on data via the label. I wasn’t aware they were trying this, but rather working around the ADA, insurance limitations, etc. Nope. The ADA is not the FDA. The ADA has a track record of doing whats in their best interest which means $$$ from BP. Nothing is stopping them today from making afrezza Step 1 for T2 diabetics. There are a zillion studies showing insulin when used early in a T2 has huge benefits. What we also know is the current T2 SoC is a treat to fail protocol. The ADA expects Step 1 to fail then Step 2 then 3 and 4 but along the way BP sells lots of crap including the SGLT2s and DDP4s. This is huge money and funding for the ADA Providing afrezza as step 1 would in most cases stop the insanity and in the long run reduce medical costs but it would kill this multi $$$B industry. It will happen sooner or later. At some point afrezza will fulfill Al's dream. What's not clear is whether MNKD can hang on that long. Until CGMs are ubiquitous and everyone can actually see their post prandial BP, who knows what is happening. They still think AC1 is the gold standard. |
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Post by nylefty on Nov 5, 2020 16:20:28 GMT -5
From StockTwits  |
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Post by goyocafe on Nov 5, 2020 16:31:30 GMT -5
Hasn’t it been stated for years that the ADA will base their decisions on data via the label. I wasn’t aware they were trying this, but rather working around the ADA, insurance limitations, etc. Nope. The ADA is not the FDA. The ADA has a track record of doing whats in their best interest which means $$$ from BP. Nothing is stopping them today from making afrezza Step 1 for T2 diabetics. There are a zillion studies showing insulin when used early in a T2 has huge benefits. What we also know is the current T2 SoC is a treat to fail protocol. The ADA expects Step 1 to fail then Step 2 then 3 and 4 but along the way BP sells lots of crap including the SGLT2s and DDP4s. This is huge money and funding for the ADA Providing afrezza as step 1 would in most cases stop the insanity and in the long run reduce medical costs but it would kill this multi $$$B industry. It will happen sooner or later. At some point afrezza will fulfill Al's dream. What's not clear is whether MNKD can hang on that long. Until CGMs are ubiquitous and everyone can actually see their post prandial BP, who knows what is happening. They still think AC1 is the gold standard. I stated jokingly some years ago that MNKD will have to organize a new group called the Afrezza Diabetes Association (ADA) since I had concluded then that the current ADA is never going to abandon its source(s) of revenue. However, if Mannkind were to come back to the ADA with an improved label (superiority), they would be hard pressed to ignore it. Until then, they can dismiss it or burry the claims deep in the SOC, as they currently do. |
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