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Post by kc on Jul 4, 2015 17:44:42 GMT -5
Maybe Sanofi buys the note and later exchanges for shares.
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Post by mannmade on Jul 4, 2015 20:11:48 GMT -5
And let's not forget about Al Mann who coincidently just sold some real estate he owned for around 100m. If he had too I am fairly certain he would help solve issue at this point. Do you really think Al will use the money from his sold property, revenue he most likely will have to pay tax on, to pay off the note? I don't think so. All I am saying is that at this point being so close to the goal line if they cannot resolve w favorable terms then yes he might provide another loan. At this point why wouldn't he if nothing else were to work. Having said this I doubt it will be necessary.
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Post by mnholdem on Jul 5, 2015 8:25:00 GMT -5
Proceeds from selling much of the property, per agreement, must go to paying the Sanofi debt facility, since the property was written in as collateral for the Sanofi line of credit / loan agreement. It cannot be used to pay off the $100M debt.
My guess is Matt will pay down part of the debt and restructure/extend the remainder. Operating costs (COGS) for Afrezza is reimbursed 100% by Sanofi per the Sanofi/MannKind Supplier Agreement and a percentage of those reimbursements results in positive cash flow since raw materials were prepaid in 2014. One shouldn't underestimate how important the positive cash flow is until sales reach levels that generate a profit, which will happen once Afrezza becomes a Preferred / Tier 2 drug in most formularies. I say "most" formularies because there are some formularies that still have Lantus at Tier 3, believe it or not, on the same page as Humalin/Humalog at Tier 2. Some insurers look only at immediate costs and ignore long-term health savings.
MannKind's cash situation does put them in a position to negotiate favorable refinancing terms.
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Post by chicagpete on Jul 5, 2015 8:47:06 GMT -5
After listening closely to Matt's conf. calls since early May - My bet is that we are on brink of scripts increasing significantly (coupled with some other good news) over next 45 days - and pps will be over $6.80 by convert date.
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Post by spiro on Jul 5, 2015 9:26:41 GMT -5
chicagpete,
Spiro thinks that MNKD may have just broken the World record for consecutive days of being on the "Brink". Spiro will use his interest present from Fidelity to buy more options tomorrow.
Spiro here, on numerous different brinks, he just doesn't know what they are.
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Post by mnholdem on Jul 5, 2015 9:42:48 GMT -5
What many shorts (and longs) have failed to comprehend is that as long as insurers won't cover Afrezza, or cover Afrezza at Tier 3 with restrictions (which is typically what insurers do for the first six months after a new drug launch) sales will not generate much profit margin. This is because of Sanofi's patient program, where Sanofi heavily subsidizes Afrezza for a $0 cost to patient for their 1st prescription and a max of $30 copay until the offer expires. Very little profit, but with Sanofi limiting their subsidy to $150 per prescription, at least they are not selling Afrezza at a loss.
Regardless, Sanofi still must reimburse MannKind for 100% of COGS. Therefore, it makes sense for Sanofi to have focused on physician education and hold off on a major marketing push until Afrezza is ready to be moved to Preferred / Tier 2 status by insurers. You can believe the deals have already been struck between Sanofi and most major insurers. When the six month post-launch new drug Tier 3 status expires the first week of August, I expect MannKind/Sanofi to announce within weeks that Afrezza will now be covered on most formularies.
The subdued DTC marketing is a prelude to this. Once Afrezza becomes a preferred or Tier 2 drug, Sanofi won't need to subsidize payments and I think we will finally witness a significant uptick in prescriptions and TV advertisements should start airing later in the year when sales is generating decent revenue.
Perhaps Sanofi will talk about this at their 2Q15 earnings call in 3-4 weeks. The MNKD 2Q earnings call should be scheduled about a week after Sanofi has theirs. I hope insurance coverage will be one of the topics discussed by management.
To drive home my point, consider that Jeffries investment analyst Mr. Deepak surveyed physicians at the ADA and that more than half said they will not prescribe Afrezza until it's covered by insurers. In my opinion, insurance coverage has been the primary factor behind the controlled launch and limited sales. Once Tier 3 status is in the rear-view mirror, physicians will prescribe Afrezza at unprecedented levels.
I also think that the rumor we've heard that Sanofi reps have been advocating that physicians prescribe only to certain diabetics implies that prescriptions would be encouraged for patients either with good insurance or patients such as Type 1's who have previously demonstrated control. These patients were desired for gathering data for labeling and future marketing.
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Post by dreamboatcruise on Jul 5, 2015 12:25:56 GMT -5
mnholdem, It would be nice if the formulary improvement were as automatic and fast as you seem to suggest, but I think 6-9 months is just when new drugs tend to come up for review... without guarantee that changes are made. I'm sure Sanofi is working this issue hard, but it's simply the new normal that insurers and PBMs are less accommodating with formularies.
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Post by mnholdem on Jul 5, 2015 21:56:00 GMT -5
Apologies if I am making it seem like the insurers will convert quickly. I addressed this in another thread stating it could take months, but that we should be seeing much better insurance coverages (and sales figures) by September, although Sanofi has got to be talking with the payers in advance. I also think we may see Sanofi lower the price of Afrezza if needed, which may be the reason they are charging a premium on Afrezza right now...intentionally starting Afrezza high, knowing insurers will want a better price to get a better rating.
I was stunned a few days ago when I found a formulary that had Lantus at Tier 3 and Levemir at Tier 2. It made me realize that the insurers are willing to give ratings based on drug price alone. I've read that insurers have been trying to provoke a price war between BP over the past two years and that BPs are resisting, even raising prices to exert some back-pressure to protect their profit margins.
It would be easier to command premium pricing if Afrezza were to be proven superior. Unfortunately the FDA hasn't given Afrezza that distinction...yet.
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Post by mbseeking on Jul 19, 2015 22:15:45 GMT -5
Believe July 20 is the beginning of the convertible count down. Part of this deal was that MNKD had the option to initiate repayment of the loan if there were 20 consecutive business days where there price was 150% above convertible effective price of $6.80.. i.e. $10.20. As it seems unlikely the share price will spike to $10.20 Monday 20th , and stay there , the option remains with the bond holder to convert. IF the note holder has shorted the stock equivalent to his note conversion, then presumably he / she is motivated to convert slightly sooner in to avoid further margin payments. A non hedged note holder may hold the stock till the 15th in hope of getting his $6.8 or better. If the stock price is less than 6.80 at Aug 15 then I guess MNKD has to pay back cash or equivalent stock.
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Post by mbseeking on Jul 19, 2015 22:30:07 GMT -5
How could a note holder, who has shorted to hedge his note now maximize his holdings? Cover his short immediately, and this might trigger a small squeeze. Any price rise between now and $6.8 by Aug 15 and he is ahead.. and MNKD pays.. if the price rises above $6.8 before Aug 15 , then he simply converts to stock at the zenith.
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Post by dreamboatcruise on Jul 20, 2015 10:44:13 GMT -5
No small short squeeze today. Down on pretty good volume. Seems different than recent price movement.
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