MNKD and Sagard Healthcare Purchase Agreement $200 Million

[Clement]

See slide 8 of MNKD investor call edge.media-server.com/mmc/p/w5xjwrjw

Accounting Treatment:
- $150M recorded as cash and debt on the balance sheet
- Debt balance is amortized through 2042
- MNKD will book non-cash royalty revenue representing 1% sold
- Non-cash interest expense of ~$20M/year
-----Interest expense and debt balance will change over time depending on estimated future cash flows of the royalty

[prcgorman2]

I should have guessed something like this. Makes sense. It’s an agreement. Cash comes up front and is a liability because the cash to Sagard has to get to them, and that is time bound. I assume the spending of the cash is at MNKD’s discretion, but it may not be, and for sure they indicated it was expected to draw interest income, and be used to pay down the $230M in convertible bonds.