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Post by Thundersnow on Jan 3, 2024 21:52:12 GMT -5
It's obvious Mike is worried about the stock price. He knows the convertible debt deal is the albatross. That's the only reason that I can see for him to give up 1% of revenues. If he stayed on the path to March '26 he would have had enough money to payoff the debt. It's also obvious he doesn't not want to use shares to payoff the debt.
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Post by Thundersnow on Jan 3, 2024 21:57:01 GMT -5
Did anyone catch Mike saying the Afrezza and VGO Scripts have stopped being released through Bloomberg?? It took him a while to stop it. I guess we are flying blind now.
Martine stopped it a while ago.
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Post by uvula on Jan 3, 2024 22:08:32 GMT -5
Did anyone catch Mike saying the Afrezza and VGO Scripts have stopped being released through Bloomberg?? It took him a while to stop it. I guess we are flying blind now. Martine stopped it a while ago. Kippy mentioned not being able to get the data from bloomberg. No one suggested that mnkd was behind this. Can you confirm this or are you just making this up? |
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Post by cretin11 on Jan 3, 2024 22:31:09 GMT -5
Are you saying Wall Street is smart and can be trusted? Debt is always last resort. I agree with Aged and I just listened to today's call. I was hoping Mike was going to say we are planning to use the money to launch a new product with a $100B market. Instead I heard we a playing four corners and protecting what we have. Wall St wants hear we are growing this business and growing it fast. Otherwise they are better putting their money in the S&P 500. Its no wonder we had a sell off. I was glad to hear the $150M is in the bank. Now I need to hear what our next molecule is we are putting on TS. Good post, nice four corners reference! |
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Post by Thundersnow on Jan 4, 2024 2:12:28 GMT -5
Did anyone catch Mike saying the Afrezza and VGO Scripts have stopped being released through Bloomberg?? It took him a while to stop it. I guess we are flying blind now. Martine stopped it a while ago. Kippy mentioned not being able to get the data from bloomberg. No one suggested that mnkd was behind this. Can you confirm this or are you just making this up? I am connecting the dots. First Tyvaso/DPI scripts were stopped shortly after the launch of DPI. Next Afrezza & VGO scripts stopped suddenly. You can make your own determination. Mike mentioned today that Bloomberg is not releasing script data but that MNKD had a very strong year end in sales. |
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Post by sandstorm on Jan 4, 2024 4:35:14 GMT -5
Thank to prcgorman2 for your thoughts.
My understanding is the process is actually more convoluted - please correct me if you think I am wrong on this one.
As it is written (see in blue), MNKD can indeed early repay starting March 6th 24, but only provided the share price is above $6.77 (being 130% of $5.21) for 20 out of any thirty rolling days. This prospect seems not very likely at present. If MNKD wants to go this route, they would presumably wait with the cash in the bank collecting 5% (whilst paying 2.5% interest to bond holders, hence free money for MNKD) and hoping the share price will increase substantially. They could not control this however.
The alternatively scenario (see in green) is the bond holders initiating the conversion, This can happen only from Dec 1st 2025, i.e. almost two years from now. Here I am quite confused from the text who has option to what: "... holders will have the right to convert all or any portion of their notes at their election. Upon conversion, MannKind will pay or deliver, as the case may be, cash, shares of MannKind’s common stock or a combination of cash and shares of MannKind’s common stock, at its election.". My reading is the holders have the option to initiate this conversion process but when they elect to do so, it is then MNKD who controls what gets delivered to the debt holders -- stock (at equivalent of $5.21 per share), cash (is it the pricipal+ interest only, i.e. equivalent $4.01/share + interest OR is it the equivalent of $5.21/share + interest?) or the combination of two. Any clarity on this one much appreciated!
It seems to me therefore, the most likely outcome is neither bondholders nor MNKD will be able to do anything for almost two years unless the share price appeciates >82% from the current level north of $6.77. The question therefore is -- why was there the urgency to sell 10% of their T-DPI revenue stream now?
My opinion is the main purpose was to send a message to the markets of the third party valuation of the T-DPI revenue stream.
Can someone please explain the exact mechanism how the convertible notes conversion mechanism works? I am not much smarter from reading the below. In particular, who decides if the bond gets repaid in cash or via MNKD equity? Is it the bind holders or MNKD? Thank you! 03/02/21 PDF Version WESTLAKE VILLAGE, Calif., March 02, 2021 (GLOBE NEWSWIRE) -- MannKind Corporation (Nasdaq: MNKD) today announced the pricing of $200.0 million aggregate principal amount of 2.50% Convertible Senior Notes due 2026 (the "notes") in a private placement (the "offering") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). MannKind also granted the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $30.0 million aggregate principal amount of notes. The sale of the notes is expected to close on March 4, 2021, subject to customary closing conditions. The notes will be general unsecured obligations of MannKind and will accrue interest at a rate of 2.50% per annum, payable semiannually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021. The notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased.
Before December 1, 2025, holders will have the right to convert their notes only upon the occurrence of certain events. From and after December 1, 2025, until the close of business on the business day immediately preceding the maturity date, holders will have the right to convert all or any portion of their notes at their election. Upon conversion, MannKind will pay or deliver, as the case may be, cash, shares of MannKind’s common stock or a combination of cash and shares of MannKind’s common stock, at its election. The initial conversion rate is 191.8281 shares of common stock per $1,000 principal amount of notes, which represents an initial conversion price of approximately $5.21 per share of common stock. The initial conversion price represents a premium of approximately 30% over the last reported sale of $4.01 per share of MannKind’s common stock on March 1, 2021. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. MannKind may not redeem the notes prior to March 6, 2024. MannKind may redeem for cash all or any portion of the notes (subject to certain limitations), at its option, on or after March 6, 2024 and prior to the 3 6th scheduled trading day immediately preceding the maturity date, if the last reported sale price of MannKind’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which MannKind provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.If a “fundamental change” (as defined in the indenture for the notes) occurs, then, subject to limited exceptions, holders may require MannKind to repurchase their notes for cash. The repurchase price would be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. I think the key is what I highlighted. Based on the timing of the Sagard cash raise, MannKind apparently intends to eliminate the bond debt (with cash) sooner rather than later. They may have said that explicitly on the conference call, but I've not listened to it yet. |
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limo
Researcher
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Post by limo on Jan 4, 2024 4:42:08 GMT -5
Kippy mentioned not being able to get the data from bloomberg. No one suggested that mnkd was behind this. Can you confirm this or are you just making this up? I am connecting the dots. First Tyvaso/DPI scripts were stopped shortly after the launch of DPI. Next Afrezza & VGO scripts stopped suddenly. You can make your own determination. Mike mentioned today that Bloomberg is not releasing script data but that MNKD had a very strong year end in sales. No Symphony has a data issue, there's no script data for any drugs at this time. noting to do with Mannkind |
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Post by prcgorman2 on Jan 4, 2024 6:57:13 GMT -5
sandstorm - Good points and while I read the part in blue before my reply, I didn’t fully comprehend the conditions put on the March 6th, 2024 date and so glossed over them. That was a mistake. The Sagard $150M is in the bank now drawing interest and MannKind (Castagna and Binder) said it will be covering the interest costs on the $230M convertible bonds with some interest income left over After sleeping on it and thinking some more after your post, I think the purpose (but not urgency) of selling the 1% of the 10% of Tyvaso DPI royalties was to answer a question they’ve been having to field from potential investors in the investor conferences with one of those (JPMorgan) coming up next week. The question is, what is your plan to manage your debt? It’s been obvious MNKD was not going to be able to pay all 3 debt holder obligations from operating income and that MNKD must raise cash to retire those obligations. The question wasn’t whether that was going to be required, it was how, and when. Both of those questions are now answered. MNKD has proven their ability to work to a budget and they’re able to execute on all of their operational goals with a little leftover for retiring the $40M MidCap loan (with $33M still outstanding), the Mann Group debt ($8M) and even report, potentially, a minor amount of profit. It’s really up to MNKD at this point whether they report profit or pour the additional savings of the renogiated Amphastar insulin deal and increased interest income into paying debt down sooner, or slowly letting cash accumulate (and report a profit). The financial situation is now completely resolved from what it was in 2017 when MNKD was operating with less than one quarter’s worth of cash and carrying a “toxic” debt load. Now is the best MNKD has looked financially since the Sanofi deal. This is the new baseline. The main catalysts for growth are the IPF indication for Tyvaso DPI, pediatric and pump switch Afrezza insulin studies (and Cipla???), Clofazamine, and Nintedanib. Afrezza is one tough nut to crack and I doubt anything MNKD says about improved revenue from Afrezza will resonate with any investors. Basically, MNKD is going to have to show everyone they’ve conquered prescriber and insurer reluctance with increased prescriptions and published (Tier 1?) formulary coverage. Until that happens, Afrezza is only treading water. On the upside, Afrezza should be provably SAFER and superior to RAA insulin. Successfully executing clinical studies like the Pediatric trial are the key, but I don’t think we should assume proving safety and superiority begins and ends with the Cipla, Pediatric, and pump switch investigations. I assume MNKD is using a success-based business plan with the insulin business unit which is pay for itself (achieved?) and pay for whatever it takes to reduce prescriber and insurer reluctance. It starts with current trials, and if those “move the needle”, then execute more including, perhaps, CGMs and GLPs. So to summarize, the cash raise was to frame the corporate finances as solid and put focus on the catalysts which are Tyvaso DPI expanded indication, Clofazamine, Afrezza, and Nintedanib.
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Post by sandstorm on Jan 4, 2024 7:34:12 GMT -5
prcgorman2 - some excellent points, thank you.
Your guess of MNKD's motivations makes a good sense to me. Also thank you for an excellent summary of key catalysts as well as not so likely ones.
I would be very interested if anyone has some insight also into the bit in green, namely
"... holders will have the right to convert all or any portion of their notes at their election. Upon conversion, MannKind will pay or deliver, as the case may be, cash, shares of MannKind’s common stock or a combination of cash and shares of MannKind’s common stock, at its election.". My reading is the holders have the option to initiate this conversion process but when they elect to do so, it is then MNKD who controls what gets delivered to the debt holders -- stock (at equivalent of $5.21 per share), cash (is it the pricipal+ interest only, i.e. equivalent $4.01/share + interest OR is it the equivalent of $5.21/share + interest?) or the combination of two.
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Post by agedhippie on Jan 4, 2024 7:46:44 GMT -5
prcgorman2 - some excellent points, thank you.
Your guess of MNKD's motivations makes a good sense to me. Also thank you for an excellent summary of key catalysts as well as not so likely ones.
I would be very interested if anyone has some insight also into the bit in green, namely
"... holders will have the right to convert all or any portion of their notes at their election. Upon conversion, MannKind will pay or deliver, as the case may be, cash, shares of MannKind’s common stock or a combination of cash and shares of MannKind’s common stock, at its election.". My reading is the holders have the option to initiate this conversion process but when they elect to do so, it is then MNKD who controls what gets delivered to the debt holders -- stock (at equivalent of $5.21 per share), cash (is it the pricipal+ interest only, i.e. equivalent $4.01/share + interest OR is it the equivalent of $5.21/share + interest?) or the combination of two.
MNKD can either supply the shares, or can give the lender cash to the value of the shares at that moment in time. Almost invariably companies supply shares because it preserves cash. |
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Post by standup on Jan 4, 2024 8:21:23 GMT -5
This little tidbit is important as well regarding the Senior convertible notes:
If the Company elects to redeem less than all of the outstanding Senior convertible notes, at least $75.0 million aggregate principal amount of Senior convertible notes must be outstanding and not subject to redemption as of the relevant redemption notice date. No sinking fund is provided for the Senior convertible notes.
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Post by hellodolly on Jan 4, 2024 8:40:15 GMT -5
My oh my this board got very entertaining today. I too agree with agedhippie , and am a big believer in OPM - Other People's Money, especially if I can get it at less than 3% APR, hence why I still have a 30 year mortgage. As an investor or business person, I know I can double or triple the return. So I am a little concerned when I see companies with no debt. Likewise I get concerned when companies spend or even borrow to buy back stock. It tells me they are out of ideas on how to create additional opportunities with better ROI or ways to create leverage. AAPL is one of the few exceptions. ... Actually AAPL has a ton of debt. I could see 17 bonds right out to 2060 and I might have missed a couple.  Analysts like to see debt for exactly the reason you say - management are confident in the growth prospects of the company. At one point I worked for a wildly profitable multinational company and remember being told to prepare for the underwriters because we were going to take on debt. I asked why since we plainly didn't need the money and the reply was that it helped the share price as it showed confidence in revenue growth. My portfolio is filled with investment grade corporate bonds, some paying near 7% (Occidental Petroleum), as an example. The maturity on that extends out to 2032. Good for me. |
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Post by cppoly on Jan 4, 2024 9:06:31 GMT -5
I hate to state the obvious, but can someone please explain how collecting $150 million barely improved the SP?
I see arguments of best how that money should be spent. But that can't be the core issue suppressing the SP can it....
Regardless, if you simply replace MNKD with any other 4 letter company on the NASDAQ and this company collects $150 million, the SP should increase.
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Post by uvula on Jan 4, 2024 9:23:20 GMT -5
I hate to state the obvious, but can someone please explain how collecting $150 million barely improved the SP? I see arguments of best how that money should be spent. But that can't be the core issue suppressing the SP can it.... Regardless, if you simply replace MNKD with any other 4 letter company on the NASDAQ and this company collects $150 million, the SP should increase. In overly simplistic terms, if I sell my house for $1M, my net worth does not increase. Mnkd collected 150M but gave away future earnings of more than 150M. |
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Post by cretin11 on Jan 4, 2024 9:53:05 GMT -5
I hate to state the obvious, but can someone please explain how collecting $150 million barely improved the SP? In overly simplistic terms, if I sell my house for $1M, my net worth does not increase. Mnkd collected 150M but gave away future earnings of more than 150M. To continue uvula’s good analogy, what uvula does with that $1M will have a bearing on his net worth going forward. Will he make good decisions to maximize that $1M and turn it into more? How much confidence do we have in uvula’s decision making, based on past performance? |
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