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Post by dreamboatcruise on Dec 3, 2014 19:54:14 GMT -5
Oh and one more. Matt is an idiot for even going down the path of hypothesizing the whole "if we aren't profitable and SNY shelves afrezza" It was a response to a direct question of why they are not allowed to book the revenue of the milestones. What do you think he should have said... "that's all accounting stuff that's over my head", "we plead the 5th", "that's for me to know, and you to find out", "don't be so curious", or... |
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Post by babaoriley on Dec 3, 2014 19:57:23 GMT -5
Production may be slowed as it's apparently going to take longer than Sanofi thought to negotiate the kickbacks...  |
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Post by mnholdem on Dec 8, 2014 17:45:51 GMT -5
Nah... we'll just stock the excess inventory in the kickback warehouse... somewhere near Marseilles, I think.
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Post by gamblerjag on Dec 9, 2014 2:48:26 GMT -5
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Post by liane on Dec 9, 2014 5:21:44 GMT -5
The article itself is the usual FUD (not even very good at that). There is one good analytical reply by pauliene:
pauliene
Comments (193) | + Follow | Send Message
there are several thoughts that must be dealt with separately, to understand the sanofi and mannkind deal.
of the 82 million shares sold short, we must know from you how much is tied to warrants, and how much is tied to convertible loans,
we know they have about 408 million shares outstanding with a 500 million total potential.
assuming its about 40 million shares , that means about 42 million shares are true shorts covered by options, and protecting long positions ,as well as parts of a laddering of calls and puts , long or short, selling puts, buying puts.
this has produced about six dollars times 82 million shares equaling 480 million dollars of stock sold into the market place to investors, above and beyond normal equation of equal or matching buys and sell orders, at any given time frame.
the short position is profitable only if the stock collapses, for any reason.
if the stock does collapse then these 82 million shares, and possibly more in the future, will not have to be repaid with stock , or will be covered in dollars at a very low dollar number.
the shorts must, and use the last reporting numbers as an example , have increased, in that two week time frame, an additional 400,000 shares.
that's about ten trading days, so its about 40,000 shares a day being sold into the market of mankind trading.
a 1/4 million dollars every day of selling pressure increases , if done at specific moments of the trading day uncertainty in trading by traders and investors.
in fact , its so intense, that the market makers are hedging every trade by increasing the spread from one, to two , and sometimes three cents with the bid and ask price.
mankind has a 100 million dollar issue outstanding due in august of 2015 that is convertible.
they have stated they are looking at it to see if they can change the terms and interest rate.
they should leave it alone and allow it to mature as the two arguments are:
leave it and if its under water, meaning below the conversion price, it would require the 100 million to be paid to the note holders in cash. thats a negative.
if the stock is higher priced than the conversion price, which I believe will happen, they issue stock and the note becomes zero on the books as a debt.
100 million dollars converted by, about six dollars and change conversion, means the company has about 17 million shares potential liability for the note.
this creates a situation for the shorts to create a stock decline so as to encourage the company to state, " they are changing the date of conversion, changing the interest rate, and changing the conversion price".
all this will benefit the shorts who own and have sold the stock against the note.
this benefits mannkind as they delay the note finalization, so they will say,, they are concerned about the low price of the stock at time of payments as is due in august 2015,.
now stockholders have some thinking as to what is happening to the stock price versus all the good news they know is happening to this stock.
its forced down pricing is required till they can "put to bed" the 100 million dollar note due in 2015 at a lower price to bail out the shorts against the notes.
now to the mankind and sanofi deal .
since mankind has no cash ,and no ability to borrow cash ,against its assets, it turned to sanofi for cash. remember they have a burn rate of about 30 million a quarter on average.
having about 42 million or 70 million, using different numbers they would run out of normal cash dollars with out some means of getting more cash.
the 150 million up front money is available for mankind to spend any way it needs to . use it to pay expenses, use it for more research , other ideas that management can think of.
they also have the ability to borrow 175 million that is guaranteed to the lender by sanofi. mankind needs that money to fund its half of the initial introduction of afrezza. this covers all costs , regardless of how you want to call spending .
once the product is launched, the two companies can spend up to a total of 350 million dollars for inventory, and all other items they determine.
once the launch takes place we have only a few choices in play:
it is a great launch. they have to have inventory, new machinery, an additional plant, plan for over seas acceptance, what ever you want to add. it adds up to a going cost of using the 350 million dollars , over time, for these activities.
the product fails and mankind is responsible for the 175 million dollars they would have expended for the launch as their half.
mankind believes they would like to say, lets say to the investors of our company that the 150 million really should be thought of as a reserve against the worst case .. a failed launch!
this 150 million in cash that they received from sanofi is a cushion so the company could deal with this type of a situation, just in case.
then they said, once we achieve certain milestones that we have in place with sanofi, we can start to put this cash on the books as cash.
so they went to the bean counters and said, how do we create a barrier or determination of prudent accounting on the books.
this accounting is short term if all goes well, as over time, mankind gets about 950 million in cash from sanofi.
so mankind faces a 150 million cash received , and a total of 950 million if all goes well, then a 35 per cent of profits , forever , with this deal going forward.
your concerns are the potential liability if the deal goes "sour".
mankind has a responsibility to state they believe, and they are betting the company on this, that they spent billions of dollars developing a process, got it approved by the government for selling afrezza, and a willing, partner called sanofi, and that they are confident that sanofi an experienced company in the health field, and in the insulin business to be successful with afrezza
so mankind has several acts going on at once for investors to determine.
shorting to lower the price
change conversion of notes
bails out shorts
have 150 million as cash to use as a cushion till after launch as they then qualify for more cash to up to 950 million
now you understand why the stock price is in a muddle at this time.
yes, once launch takes place we will all know, with certainty, its a winner or a loser. that's what we know sometime in the first half of the year, not till then.
the only way this stock can rise in price till then is if they announce other plans or uses for the process that will off set the shorts till they get their note changed conversion prices locked into place.
the good news is that we have reached just about the maximum number of shares that can be shorted that can be covered with out naked shorting.
I do not believe any more money is going to be locked into shorting with out protection and options can not cover the bet.
yes, about two million more shares could be sold short, but, it would be a gamble these powerful players would probably not do as they like covered bets and have a lot of naked short stock all ready in place.
9 Dec, 04:39 AMReply! Report Abuse1
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