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Post by prcgorman2 on May 3, 2024 22:00:32 GMT -5
Excellent explanation. Thank you so much. I understand and you bring up an interesting point (at least to me). Is there more value in using treasury stock (1 cent per par is my guess) to eliminate the bond debt, or is there more value in avoding dilution which may very much please investors? I don’t know the answer. I can only say that for myself I would prefer avoidance of further dilution. If the time comes and the shares go out because we're over the conversion price, that leaves MNKD with the money, and if there aren't enough opportunities to put that money to use expanding the pipeline, they could always institute a share buyback program. Though I'd hope they find growth oriented uses for the cash. I cannot really argue. I am in favor of a share buyback program (to a point - after this much time, and based on my guess at the sentiments of the founder and namesake, I and the other MNKD longs deserve an opportunity to enjoy as much “embarrassment of riches” as MNKD has to offer). |
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Post by runner on May 3, 2024 23:20:40 GMT -5
I’m not embarrassed if I get rich from MNKD. My way, way under water 107,163 shares will allow me to give back more and more to needy causes.
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Post by anderson on May 4, 2024 5:06:02 GMT -5
Sorry ktim, you’re going to have to help me out. I don’t know how you arrived at the conclusion that becoming debt-free (a very rare thing in the corporate world) without dilution could imply poor share price performance. We’ve all seen how the share price takes a beating with every dilution, and constant complaining about it, even when it is relatively miniscule and is only used as a form of executive compensation. In any case, dilution bad, debt-free good. What is your logic? It is only going to be without dilution if we are still under the conversion price. But that dilution has basically already been factored in, and will save a lot of cash if we're above the conversion price. I don't think in and of itself it would be horrible to be under the conversion price so that there isn't dilution, other than the fact that it will mean we're still under $5.20 at the end of 2026. I'm hoping and believing that we'll be considerably higher than that, even with the dilution that will be triggered by it. Not entirely true "Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture." I agree that the debt will be converted if it is above the 6.77 price for 19 day otherwise the debt holders will loose out on some cash. Best bet for MNKD would be to buy back the bonds on the open market when they are trading at below face value. US56400PAQ54 if someone wants to look at how the bonds are trading. |
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Post by agedhippie on May 5, 2024 0:01:20 GMT -5
Not entirely true "Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture." I agree that the debt will be converted if it is above the 6.77 price for 19 day otherwise the debt holders will loose out on some cash. Best bet for MNKD would be to buy back the bonds on the open market when they are trading at below face value. US56400PAQ54 if someone wants to look at how the bonds are trading. Bid 110.977, Ask $111.662 |
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Post by prcgorman2 on May 5, 2024 8:07:02 GMT -5
Not entirely true "Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the common stock or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture." I agree that the debt will be converted if it is above the 6.77 price for 19 day otherwise the debt holders will loose out on some cash. Best bet for MNKD would be to buy back the bonds on the open market when they are trading at below face value. US56400PAQ54 if someone wants to look at how the bonds are trading. Bid 110.977, Ask $111.662 I’ve never bought a bond before, but my memory is they typically sell for $1000 per bond. If the conversion price is $6.77 per share, then I assume 1 bond is worth ~150 (147+) shares of MNKD. If the bond holders wanted MNKD shares, they’d be better off getting paid now and buying more than 150 shares for every bond they held. I don’t think the bond holders want to go long MNKD. Regardless, that’s not in the cards because of the conversion terms. What is interesting to me is if those bonds originally cost $1000 each, and now are discounted to ~$112, there would be a huge incentive to buy them back and retire them that way. It would cost a fraction of what it will take at maturity. Couple things to observe there are not all of the bonds may be available for buyback, and buying up the bonds would presumably erode the discount. If the bonds originally sold at $100 each, then they would be selling at a premium with a bid of $110, but that doesn’t seem likely given the interest on the bonds relative to current interest rates. Therefore the bonds should be discounted, although I wouldn’t have guessed almost 90%. Pretty sure I’m missing part of the picture. Interesting stuff to be sure! |
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Post by agedhippie on May 5, 2024 8:53:53 GMT -5
Bid 110.977, Ask $111.662 I’ve never bought a bond before, but my memory is they typically sell for $1000 per bond. If the conversion price is $6.77 per share, then I assume 1 bond is worth ~150 (147+) shares of MNKD. If the bond holders wanted MNKD shares, they’d be better off getting paid now and buying more than 150 shares for every bond they held. I don’t think the bond holders want to go long MNKD. Regardless, that’s not in the cards because of the conversion terms. What is interesting to me is if those bonds originally cost $1000 each, and now are discounted to ~$112, there would be a huge incentive to buy them back and retire them that way. It would cost a fraction of what it will take at maturity. Couple things to observe there are not all of the bonds may be available for buyback, and buying up the bonds would presumably erode the discount. If the bonds originally sold at $100 each, then they would be selling at a premium with a bid of $110, but that doesn’t seem likely given the interest on the bonds relative to current interest rates. Therefore the bonds should be discounted, although I wouldn’t have guessed almost 90%. Pretty sure I’m missing part of the picture. Interesting stuff to be sure! They were priced at $100 each. The premium is because they have a redemption pattern similar to options so they have an intrinsic value. I feel in this case MNKD is in the position of the option writer. |
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Post by prcgorman2 on May 5, 2024 9:31:12 GMT -5
I’ve never bought a bond before, but my memory is they typically sell for $1000 per bond. If the conversion price is $6.77 per share, then I assume 1 bond is worth ~150 (147+) shares of MNKD. If the bond holders wanted MNKD shares, they’d be better off getting paid now and buying more than 150 shares for every bond they held. I don’t think the bond holders want to go long MNKD. Regardless, that’s not in the cards because of the conversion terms. What is interesting to me is if those bonds originally cost $1000 each, and now are discounted to ~$112, there would be a huge incentive to buy them back and retire them that way. It would cost a fraction of what it will take at maturity. Couple things to observe there are not all of the bonds may be available for buyback, and buying up the bonds would presumably erode the discount. If the bonds originally sold at $100 each, then they would be selling at a premium with a bid of $110, but that doesn’t seem likely given the interest on the bonds relative to current interest rates. Therefore the bonds should be discounted, although I wouldn’t have guessed almost 90%. Pretty sure I’m missing part of the picture. Interesting stuff to be sure! They were priced at $100 each. The premium is because they have a redemption pattern similar to options so they have an intrinsic value. I feel in this case MNKD is in the position of the option writer. Thanks agedhippie. Just to be sure I understand, being “in the position of the option writer” implies the option writer has been paid the cost of the option, and the best outcome for the writer is for the option to expire “out of the money”. Do I understand correctly? If I understand correctly, than I suppose the point anderson is making is retiring the convertible bond debt at a premium now (as compared to at maturity) could be worth it if having the debt gone sooner rather than later was more valuable than the savings of retiring at maturity. |
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Post by ktim on May 5, 2024 17:09:16 GMT -5
If we're above the conversion price by end of 2026, there would be essentially no difference between settling the debt with cash vs keeping the cash and then buying stock back on the open market. We aren't now so cash rich as to cancel debt at such a beneficial interest rate. Keeping the cash for now GIVES the company optionality... and even a bit of extra profit from the difference in interest we receive vs what we pay.
I certainly wouldn't be fretting over the fate of this debt. If Tyvaso DPI achieves UTHR goals and MNKD executes as planned on pipeline I think we'll all be very happy come the maturity date of this debt.
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Post by castlerockchris on May 6, 2024 18:08:50 GMT -5
A couple of quick thoughts:
- One benefit of a generous restricted stock program for management is that once they receive a significant enough number of shares, they are very interested in minimizing dilution. Not once did I ever look at my stock options or restricted stock and not calculate their value based on them being worth 100% - i.e. I never, ever calculated a dilution factor into their future value.
- I don't have a problem with using a mix of shares and cash as the shares will really not dilute share holders that much as you are simply moving the debt liability on the balance sheet, or a portion of it (based on the number of shares used) from debt to owners equity. When done this way, yes you own a smaller percentage of the company, but the increase in enterprise value of the company (or market cap), if done right, should mostly offset the dilution. Real dilution occurs when you sell a bunch of shares, spend the cash and then have nothing to show for it in terms of developing a profitable revenue stream or asset that can be leveraged or sold.
- Management has already said they intend to use the proceeds (including interest earned) from the sale of a portion of the T-DPI royalty to pay off/down the dept.
- My guess is they are hedging their bet on paying off the debt using cash based on the potential future cashflow projections from current and future products being in the market place by EOY 2026. If T-DPI even comes close to UTHR's projections and we are in the process of having one drug expansion (Afrezza) and a second drug in the early launch stage - MNKD 101. Those three things should be throwing off enough free cash flow that MNKD can fund their pipeline (with possibly a little dept).
- I am a believer that companies should always have debt, especially when it is cheap (defined as <6%). You can always find a way to leverage cash - buybacks, acquisitions, product expansions. Naturally, I prefer the latter.
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Post by MnkdWASmyRtrmntPlan on May 8, 2024 11:49:01 GMT -5
Last quarterly call they said we will be at zero earnings for a few quarters (or, some verbiage like that).
And, I believe Mike said something about no need for dilution.
Yet, the estimate for Q1 is $.03.
I assumed they planned on using cash to pay down debt.
Is $.03 close enough to zero, or are the analysts full of hopium, too?
If they use that $.03 to pay down debt and, consequently, bring the earnings down to $.zero, when the analysts' forecast is $.03, what will that do the the stock price.
Maybe down below $4 again?
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Post by cretin11 on May 8, 2024 12:50:38 GMT -5
My guess is $0.03 is close enough to zero.
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Post by prcgorman2 on May 8, 2024 13:21:55 GMT -5
Last quarterly call they said we will be at zero earnings for a few quarters (or, some verbiage like that). And, I believe Mike said something about no need for dilution. Yet, the estimate for Q1 is $.03. I assumed they planned on using cash to pay down debt. Is $.03 close enough to zero, or are the analysts full of hopium, too? If they use that $.03 to pay down debt and, consequently, bring the earnings down to $.zero, when the analysts' forecast is $.03, what will that do the the stock price. Maybe down below $4 again? Last earnings call Mike and Steven said they would pay off 2 of the 3 debt instruments: MidCap loan, and Mann Group ATM. And they did.
Whether those payoffs drop EPS to $0 or below $0 is a good question. We'll find out later today.
If the stock price goes down below $4 again, I am determined to be smart enough to pick up shares on the dip. I had sold a small amount of shares at $5.10 after the last earnings call and I meant to replace them and pick up some "free" shares into the bargain. The dip last time was $3.97 and I had set my GTC order below that and failed to adjust.
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Post by parrerob on May 8, 2024 13:28:04 GMT -5
My opinion is that important are the revenues...
With 58m$ we can fall in the 3s again....
With 60m$ we will stay above 4....
With 62+ m$ we will go towards 5....
As we know about Tyvaso dpi q1 revenues the rest will be in the hands of Afrezza....
I hope some news about Cipla could help as well... something related to launch in q2 for example. Mike told us to not expect gold from India but a Xm$ preorder in q2 will be welcome.
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Post by mango on May 8, 2024 13:45:29 GMT -5
Thinking about Technosphere Insulin (Afrezza) combined with MannKind’s inhaler.
Afrezza remains the safest insulin on the market. It’s the only prandial that matches physiologic insulin. Not just that, it’s the inhaler that is the other half of this equation that allows for this unique physiologic mimicry. The monomeric Technosphere insulin mimics intra-arterial administration, which is why it’s so damn fast. But, if it weren’t for the unique MannKind inhaler there would a big problem. The MannKind inhaler is expertly engineered to allow for slow, smooth moving particles across the anatomical airways into the deep lung with minimal deposition on the back of the throat and minimal patient effort.
It’s the combination of the inhaler and Technosphere formulation that makes the MannKind DPI products so damn good.
Afrezza comes with NO RISK of localized insulin-derived amyloidosis, lipohypertrophy, weight gain, pain and needle phobia. It has a SIGNIFICANTLY REDUCED RISK of hypo and hyper glycemic associated events. It’s a great product.
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Post by parrerob on May 8, 2024 13:52:54 GMT -5
Coming back to the title of the thread I still believe Afrezza will be our gold mine and will be the main index of our technosfere pipeline... since when MNKD restarted by its own the sales of the drug every year we had gross sales and net rev increasing even with all selling problems related.... every year 15/25% INCREASE except only 2020 covid year....
Now we have a niche drug selling 120m+$ gross with 70m+$ rev not peanuts at all. Sure already sustainable and increasing.
With ADA and studies on going even if q1 will be not stellar (except 2023 q1 has been always lower then q4) I am sure 2024 will be minimum another 20/30% increase..... good luck guys not only for today call but mainly for our near future....
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