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Post by georgethenight2 on Nov 5, 2020 23:05:25 GMT -5
Some questions I would like to ask, if anyone can answer it would very much appreciated.
- The sale of the factory, are we going to be able to recoup our are initial cost to build it?
- As the factory will eventually produce meds for not only MNKD but also UTHR, does UTHR's input become necessary?
- If a sale if finalized are we privy the details?
- As the building and facility is currently under utilized, will another pharma company become a tenant? Also, will it be easy to ramp of production if necessary?
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Post by sayhey24 on Nov 6, 2020 9:01:06 GMT -5
Fat chance they would recoup the costs - this PR says $163M but real costs are probably $200M+ investors.mannkindcorp.com/news-releases/news-release-details/mannkind-wins-two-facility-year-2010-category-awardsI think you would see a sale of MNKD before the lease buy/back. You will probably see further dilution prior to either but who knows. MNKD has been written off for years yet its clear nothing works as well as afrezza for post prandial control. Without CGM technology MNKD would have already been history. As CGM use gets larger and larger it gets harder and harder to ignore afrezza results. |
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Post by olderteampt on Nov 6, 2020 9:42:59 GMT -5
What if MNKD sells the plant to UTHR and leases back to MNKD?
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Post by agedhippie on Nov 6, 2020 9:45:33 GMT -5
Some questions I would like to ask, if anyone can answer it would very much appreciated. - The sale of the factory, are we going to be able to recoup our are initial cost to build it? - As the factory will eventually produce meds for not only MNKD but also UTHR, does UTHR's input become necessary? - If a sale if finalized are we privy the details? - As the building and facility is currently under utilized, will another pharma company become a tenant? Also, will it be easy to ramp of production if necessary? - The sale of the factory, are we going to be able to recoup our are initial cost to build it? No. The property is on the books for $25M. - As the factory will eventually produce meds for not only MNKD but also UTHR, does UTHR's input become necessary? Not strictly. The risk would be that UTHR decide to build out their own manufacturing because of uncertainty about supply, but royalties would be unaltered. - If a sale if finalized are we privy the details? Yes. It will be in the 10Q as a minimum, but probably an 8K as well. - As the building and facility is currently under utilized, will another pharma company become a tenant? Also, will it be easy to ramp of production if necessary? Not really. The problem is that the pharma would have to spend a ton of money building out what would effectively be a sub-let. That works well for office space, but not for manufacturing plant. |
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Post by dg1111 on Nov 6, 2020 11:25:14 GMT -5
A couple questions on this. What debt does MNKD currently have that uses the Danbury facility as collateral? Presumably that would need to be paid off if the building is sold. If there is not a lot of debt attached and there is equity in the facility, why wouldn’t we simply take a loan against it rather than sell the facility? To me, this seems like a short sighted move.
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Post by mannmade on Nov 6, 2020 11:57:53 GMT -5
Selling Danbury seems a bit short sighted to me. How much does Mannkind need to bridge to break
even/profitabliity? (Eg: Trep T Royalties)
As I mentioned earlier, why not just try and get a loan from Uthr that is convertable and collateralized against Trep T royalties, as it seems they are now partners for a long time.
It seems to me that if they sell Danbury to a third party and then lease back it may make it tougher for Uthr to go all in as now another entitiy is involved in those discussions.
Honestly, as an investor since 2008, I would take one more dilution over the sale of Danbury unless of course you think Danbury will sell for $100m or more. My guess is, it sells for around $50m and for that price I think I would rather see the last dilution if required.
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Post by radgray68 on Nov 6, 2020 12:05:14 GMT -5
I'd prefer to do a cash raise and keep the Danbury facility as an asset. The way I see it, 10% dilution at $2.30 is a lot of money. Probably get our bills paid for the next 18 months. A lot will happen in that time. Stock price would probably dip more than 10% for a time (big whoop, we've taken worse pain), but if it's enough money to get us to profitability, as a long-term investor, I take the short-term hit. I'd also buy the dip BIG TIME. JMHO
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Post by matt on Nov 6, 2020 12:53:14 GMT -5
As I mentioned earlier, why not just try and get a loan from Uthr that is convertable and collateralized against Trep T royalties, as it seems they are now partners for a long time. It would be useful if everyone would read the security agreement between Midcap and MNKD. It defines "collateral" as all assets of the corporation that it may hold as of the date of the agreement and any asset the company may acquire in the future, and that includes proceeds of any license agreement. You can read the details in the Security Agreement and Schedule A thereto. To be clear, the company cannot sell any asset to any party without the proceeds of that sale going straight to Midcap, and since Midcap's lien covers all assets there is nothing available to offer as collateral to another party like UTHR. If UTHR wants to make a loan to MNKD that is convertible, they can certainly do that, but that loan cannot be collateralized by future royalties because Midcap already has a lien on that income stream. The only lienholder than can jump in front of Midcap is one designated by law (like the IRS lien that automatically accrues on employee payroll tax withholdings). The company is scraping the bottom of the barrel at this point. Current liabilities (defined by accountants as liabilities that must be paid within the next 12 months) exceeded the total assets of the company by $11 million as of September 30. Meanwhile, the net cash burn from operations for third quarter exceeded $9 million per month so by now the difference between current liabilities and total assets has grown to $20 million (net of any stock issuances on the ATM). UTHR will pay royalties some day, but today is not that day and neither is tomorrow. Sale of shares is the only feasible way to bridge the chasm between now and when those royalty streams kick in since the company has run out of easy options, and we don't know what additional handcuffs Midcap will apply for missing the sales covenants (which company has already admitted they will miss). It would be nice to have a simple fix, but absent share dilution there really isn't anything the company can do in the short term. Long term is a different story. |
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Post by mytakeonit on Nov 6, 2020 14:05:09 GMT -5
UTHR and MNKD are partners. I don't see a problem with it and neither does Martine. To wait a year or two for royalties is not a big deal ... it is all a part of normal business dealings. Sit back and drink some wine. Don't worry about it.
But, that's mytakeonit
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Post by cretin11 on Nov 6, 2020 14:36:09 GMT -5
Thank you Matt for that well written summary of the situation.
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Post by casualinvestor on Nov 6, 2020 15:11:05 GMT -5
Something being overlooked is that Mike C knows all of this better than we do, despite what the bashers say. So for him to talk about a Danbury sale and lease-back in a quarterly meeting and to an investor email afterwards means he's going to address any issue with it being collateral to the MidCap loan. The MidCap milestones are a minor disaster for various reasons, that is a reality.
The obvious solution is that MNKD is going to pay off the MidCap loan, penalties and all, with proceeds from the sale of the Danbury plant. The single largest beneficiary of Danbury being unencumbered, other than MNKD, is UTHR. UTHR is also one entity that can guarantee the Danbury plant is going to generate enough revenue to pay the rent.
UTHR has some risk in play with the Danbury plant being collateral. Yes, they could build their own production facility and get it FDA certified for millions of dollars. Why would they do that when one of their partners already has such a plant built, certified and producing? More likely they would buy the plant. If they want to stay out of the real-estate game, then they could encourage one of their current/friendly real-estate partners to do the buying.
Matt's Q4 money calculations don't include the next UTHR $12.5M milestone. Prudent, because it's not cash received yet. But it's expected in Q4
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Post by porkini on Nov 6, 2020 16:30:39 GMT -5
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Post by goyocafe on Nov 6, 2020 17:20:01 GMT -5
Because not one strategy MC has implemented has brought sales of Afrezza up sufficiently to ward off having to make other more dramatic choices on how to keep the company going. |
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Post by matt on Nov 6, 2020 17:40:09 GMT -5
The obvious solution is that MNKD is going to pay off the MidCap loan, penalties and all, with proceeds from the sale of the Danbury plant. The single largest beneficiary of Danbury being unencumbered, other than MNKD, is UTHR. UTHR is also one entity that can guarantee the Danbury plant is going to generate enough revenue to pay the rent. Matt's Q4 money calculations don't include the next UTHR $12.5M milestone. Prudent, because it's not cash received yet. But it's expected in Q4 That is about the only plausible solution. Midcap has to be paid, which means $40 million plus accrued interest from September, plus 8% in exit fees and penalties, but at the same time if that happens it contradicts the latest 10-Q filing which said: "The Company intends to amend the Midcap Credit Facility to address this probable covenant violation; however, such amendment, if completed, would occur after the date of this report." It would not make much sense to amend the Midcap covenants unless the company can get rid of the albatross around its neck completely. That would be the smart thing to do and I would hate to see the Midcap debt paid down but have the covenants remain, even if softened. You are correct that I did not include the $12.5 million in milestones, but I also did not include the cash burn that will happen in Nov and Dec (about $18MM) which is significantly more than the milestone payment. The question is whether UTHR loves MNKD as much as MNKD loves UTHR. United wanted, and got, a license to the technology, so while MNKD is the logical manufacturer they are not the only one that can make this product. Regardless, sale of the plant is not going to fix this cash problem. I still think a significant equity raise is prudent, albeit painful for longs. |
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Post by lennymnkd on Nov 6, 2020 17:52:41 GMT -5
Mnkd is the logical manufacturer, but are not the only ones who can make this product ! Matt what do you mean by that ? And who else and how else would it be made ? I see your comment on United license... and produce ... but that would seem to be a major move in an of itself
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