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Post by castlerockchris on Jan 3, 2024 14:38:28 GMT -5
One more thing about this morning's call. It was not lost on me that MNKD plans to bank the Sagard money, earn 5% or close to $7mm in interest in 2024, which will also help with our bottom line, in effect offset a large portion of MNKD's interest expense. So now we have the money to pay off a vast majority of the debt without issuing a ton of shares while at the same time offsetting interest expense until late 2025. Certainly should eliminate that overhang on the stock. Only time will tell, but my God MNKD has $300mm in the bank. Not bad for a company that didn't have a plug nickel three years ago.
These two announcements have the potential to positively impact our income statement by close to $20mm in 2024 alone.
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Post by BD on Jan 3, 2024 14:39:37 GMT -5
I stand by my statement. If it were clearly undervalued, you don't think people would liquidate something not quite as undervalued so they could pick up some shares? That's what I would do, in fact that's what I do all the time as an investor/trader. So why would Mike state mnkd is undervalued and not buy? Is he blowing sunshine up our butts? Why are you asking me? |
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Post by mymann on Jan 3, 2024 14:47:47 GMT -5
So why would Mike state mnkd is undervalued and not buy? Is he blowing sunshine up our butts? Why are you asking me? Not direct to you, just questioning our management's lack of purchasing severity undervalued sp. |
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Post by peppy on Jan 3, 2024 14:48:09 GMT -5
Looks like the plan. Was MNKD paying 7.5% on the money? The post above yours says 2.5% in the Press Release, doesn't it? Or do I misunderstand something? No, it was me. 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 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 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 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. OR 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 The repurchase price would be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, 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. How much you you think the pay off will be all? . |
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Post by cjc04 on Jan 3, 2024 15:05:59 GMT -5
One more thing about this morning's call. It was not lost on me that MNKD plans to bank the Sagard money, earn 5% or close to $7mm in interest in 2024, which will also help with our bottom line, in effect offset a large portion of MNKD's interest expense. So now we have the money to pay off a vast majority of the debt without issuing a ton of shares while at the same time offsetting interest expense until late 2025. Certainly should eliminate that overhang on the stock. Only time will tell, but my God MNKD has $300mm in the bank. Not bad for a company that didn't have a plug nickel three years ago. These two announcements have the potential to positively impact our income statement by close to $20mm in 2024 alone. Good stuff, The debt is only 2.5%, but full of restrictions and shares to short. So raise enough to pay the debt off, bank it, and make double (5%) while it sits there as a threat to the debt holders maybe? I’m assuming if MNKD paid off the debt, it would immediately trigger a recall of the shares to short that the debt holders have. ?? Does that set off a short squeeze? Does the threat of this possibility get them to cover before March 6th? Would the debt holders rather cover and let the sp run to new highs while they get paid with “cheap” shares at $5.21 ? |
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Post by mango on Jan 3, 2024 15:54:33 GMT -5
Regarding stock options rewards versus buying on the open market, etc.
We need to know some key elements of MannKind’s operation to further evaluate and critique whether stock options are warranted or hurt performance and are a waste.
Mike serves as the CEO and on BoD. That means there is less oversight and scrutiny. What we need to know is what is the absorbed slack and managerial discretion.
A CEO with more absorbed slack means the CEO has the ability to behave opportunistically aka in self interest. If absorbed slack and managerial discretion are high, shareholders should be concerned about opportunism.
Bottom line: if the CEO who also sits on the BoD is calling his company’s stock undervalued he needs to put his money where his mouth is.
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Post by hellodolly on Jan 3, 2024 16:11:51 GMT -5
I'll join in on the chorus line. Once you tell me your stock is undervalued, you need to show me a commitment to your fiscal objectives with some conviction being in a purchase of shares, unless of course your conviction is akin to flipping a coin and you instead take a pass. That is a very reasonable expectation from shareholders. I hope this is getting to our CEO and CFO.
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Post by Thundersnow on Jan 3, 2024 16:13:32 GMT -5
Overall a fine deal MannKind has found themselves able to ink. Someone in the thread, I believe aged, mentioned that the valuation of the royalties was based on the expected *lifetime* of the royalties. Did I interprete that correctly? There is not a royalty timeline from my understanding it's ongoing for as long as Tyvaso DPI is on the market and the agreement between UT and MNKD is never violated or broken. Anyways, it's nice we have succulent capital for important matters and I'm sure the shorts are not pleased with this fine deal. I like Binder. Binder knows what a difference it s to be debt free. If only the world's best insulin had insurance coverage. It has to be superior. Tricky tricky non-inferior. No one looks at glucose levels anymore. One number? Yes Binder knows what it means to be debt free but there is also a risk at being debt free. Right now balance sheet is not favorable which means it's an indirect POISON PILL. With a clean BS that means MNKD could be a TAKE OUT TARGET. MNKD needs to have manageable and serviceable debt until they get large enough and buying the company is not wise. |
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Post by celo on Jan 3, 2024 16:44:39 GMT -5
Looks like the plan. Was MNKD paying 7.5% on the money? The post above yours says 2.5% in the Press Release, doesn't it? Or do I misunderstand something? I really would think these bond holders would want out. 2.5% in the interest rate market we currently have is horrible. Pay the money and let them move on to a sweeter deal. The bond holders are probably making more through a convertible hedge. The stock price has moved sideways for a while and during that period a convertible hedge would work well. Pay the bond off and the hedge/short position is closed. Bond holders can go invest in greener pastures and the share price can move in a fashion that is more respective of its fundamentals. It would be nice if the bond holders dropped their short hedge, allowed the share price to rise above the conversion price, cashed out and left. It will be interesting as March 6th approaches if that happens. We are at a 13% short share of float which is ridiculously high for a stock that has as stable future as MNKD |
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Post by prcgorman2 on Jan 3, 2024 17:07:22 GMT -5
Listened to the conference call. It was great. Best 11 minutes and 35 seconds of the day so far (and it's been a pretty good day). 100% answered my question regarding what they plan to do with the money. They couldn't have been much clearer other than to also directly answer the questions cjc04 asked and to confirm what castlerockchris observed. The $150M cash from Sagard brings in more interest (~$7.5M) than is paid on the convertible debt (~$5M-ish) which means increased interest income. Added to this is reduced operational expense paid to Amphastar. Reduced expense and increased interest income combined with operational income allows MannKind to accelerate the pay down on the remaining $33M on the MidCap loan. And it puts MannKind in perfect shape to pay off $230M in convertible debt at their discretion after March 6, 2024. 2024! If MNKD chooses to eliminate the convertible debt on March 7th of this year, they will be sitting with about $70M cash in the bank and carrying about $41M debt between MidCap and Mann Group. If MNKD waits (which is what they indicated on the conference call), they can convert the debt at maturity (2026) using whatever combination of cash and equity (shares of MNKD) that MannKind chooses. I think this move was brilliant. It removes the ambiguity with the volatility in sales of Tyvaso DPI (very noticeable between Q2 and Q3) as an important issue of concern while MNKD uses reduced expenses and increased interest income and operational revenues to manage pipeline research, clinical studies, development trials, manufacturing capacity improvements, sales and administration. Binder and Castagna have put MNKD on a beam reach if not a downwind run. "Epic" is beginning to sound less and less satirical. |
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Post by prcgorman2 on Jan 3, 2024 17:15:05 GMT -5
The post above yours says 2.5% in the Press Release, doesn't it? Or do I misunderstand something? I really would think these bond holders would want out. 2.5% in the interest rate market we currently have is horrible. Pay the money and let them move on to a sweeter deal. The bond holders are probably making more through a convertible hedge. The stock price has moved sideways for a while and during that period a convertible hedge would work well. Pay the bond off and the hedge/short position is closed. Bond holders can go invest in greener pastures and the share price can move in a fashion that is more respective of its fundamentals. It would be nice if the bond holders dropped their short hedge, allowed the share price to rise above the conversion price, cashed out and left. It will be interesting as March 6th approaches if that happens. We are at a 13% short share of float which is ridiculously high for a stock that has as stable future as MNKD Agree with everything you said but I think the process of "cashing out" bears some attention. I assume that the bond holders are a significant portion of the short interest, but not all. If we randomly assumed 20M shares of the 37M shares short, the bond holders would have to purchase 20M shares and spend about $80 to $100M of the $230M and then they would be sitting on say $130M cash plus 20M shares (they probably don't want). IF they wanted a long position, and they might, they would hold onto some portion of those shares, but I assume, not all. So some portion of those 20M shares (50%? no idea really) get sold. The covering and selling would inflate the share price and then deflate the share price, and then MNKD would be more likely to be valued based on fundamentals. Lot of guessing and speculating there on my part so anybody with better knowledge please weigh in. |
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Post by agedhippie on Jan 3, 2024 17:16:02 GMT -5
Wall Street is never going to reward you for raising cash and then settling debt unless the interest rate on the debt is horrific. They see it as management saying that they don't know how to grow the business so they are going to pay down debt because they don't have any better ideas. Wall Street does not see debt as a problem as the bond markets will testify.
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Post by prcgorman2 on Jan 3, 2024 17:17:27 GMT -5
I like Binder. Binder knows what a difference it s to be debt free. If only the world's best insulin had insurance coverage. It has to be superior. Tricky tricky non-inferior. No one looks at glucose levels anymore. One number? Yes Binder knows what it means to be debt free but there is also a risk at being debt free. Right now balance sheet is not favorable which means it's an indirect POISON PILL. With a clean BS that means MNKD could be a TAKE OUT TARGET. MNKD needs to have manageable and serviceable debt until they get large enough and buying the company is not wise. And suddenly the large increase in shares approved (but not issued) comes into focus as the boilerplate said to fend off hostile takeover bids. |
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Post by prcgorman2 on Jan 3, 2024 17:24:41 GMT -5
Wall Street is never going to reward you for raising cash and then settling debt unless the interest rate on the debt is horrific. They see it as management saying that they don't know how to grow the business so they are going to pay down debt because they don't have any better ideas. Wall Street does not see debt as a problem as the bond markets will testify. I've always heard this too that debt is expected and in fact preferred in order to capitalize a company because it does things like avoid impacts from volatility in seasonal businesses and because interest on debt is cheaper in the long run than dividends to shareholders. Put simply, debt is a cheaper cost of capital than equity. |
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Post by Chris-C on Jan 3, 2024 17:36:16 GMT -5
There is a lot to like about today's call, IMO. But, it remains to be seen what the street will do, because the stock has been below the radar of most mainstream investors, and held back by short hedging. It also has a lingering credibility issue because of its failed promises regarding Afrezza almost 10 years after launch. I sometimes wonder if it would be useful for MNKD to re-brand the company by changing its name as a way of promoting its second wind as less of an endocrine focused pharma to one that is focused on lung disease. I'd be okay to see MNKD sell the diabetes arm (Afrezza and Vgo) to anoher company if it could get the right price. Perhaps that will be possible after they get approval from the FDA on clofazamine and demonstrate projected royalties on Tyvaso-DPI. The next quarterly report should be revealing.
Happy new year to all.
Chris C
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