Post by james on Oct 13, 2015 17:13:08 GMT -5
Compound - I think you can add a couple of million in cash received from SNY as part of Afrezza sales, this would be for the recapture of costs charged to prior periods that MNKD experienced in building out the production facilities.
The strategic decision on when to tap the ATM vs final $30M of Al's loan is an interesting one. As cash falls, the market will anticipate a need for funding and the stock price will be impacted, so waiting until the last to use the ATM is not advisable. The $30M available credit is a buffer in that regard and that argues for using the ATM first. However, if there is reason to believe the stock price is under undue pressure, then delaying use of the ATM is preferred. Drawing on the loan early also means incurring higher interest expense. So, there really isn't a clear cut choice that I see.
Given that we may expect there is at least one milestone ($25M) within reach, there may not be a need for either in the next year. With an EMA filing or approval on the horizon, the existing cash ramp (without ATM or loan draw) may extend for a couple years yet. Of course, that is hard to say given that we don't know clearly where and how much these milestones represent.
Another element to watch is the burn rate of the collaboration loan. At $15M per quarter, this has 2+ years to go. I would estimate that annual gross sales need to reach ~$100M before the collaboration breaks even. That has a lot to do with how much advertising is in place and the cost to produce Afrezza, so my estimate could be significantly off in either direction. Nevertheless, we should really hope that loan does not get run dry and further cash input be required from MNKD to keep the collaboration going because it would be quite costly to come up with. The next factor would be that the loan must be paid back before MNKD begins receiving any profit back. However, at the point the collaboration does reach break even (or look like it is on that path), long term security for MNKD will have been assured and financing worries will be much less of a topic.
The strategic decision on when to tap the ATM vs final $30M of Al's loan is an interesting one. As cash falls, the market will anticipate a need for funding and the stock price will be impacted, so waiting until the last to use the ATM is not advisable. The $30M available credit is a buffer in that regard and that argues for using the ATM first. However, if there is reason to believe the stock price is under undue pressure, then delaying use of the ATM is preferred. Drawing on the loan early also means incurring higher interest expense. So, there really isn't a clear cut choice that I see.
Given that we may expect there is at least one milestone ($25M) within reach, there may not be a need for either in the next year. With an EMA filing or approval on the horizon, the existing cash ramp (without ATM or loan draw) may extend for a couple years yet. Of course, that is hard to say given that we don't know clearly where and how much these milestones represent.
Another element to watch is the burn rate of the collaboration loan. At $15M per quarter, this has 2+ years to go. I would estimate that annual gross sales need to reach ~$100M before the collaboration breaks even. That has a lot to do with how much advertising is in place and the cost to produce Afrezza, so my estimate could be significantly off in either direction. Nevertheless, we should really hope that loan does not get run dry and further cash input be required from MNKD to keep the collaboration going because it would be quite costly to come up with. The next factor would be that the loan must be paid back before MNKD begins receiving any profit back. However, at the point the collaboration does reach break even (or look like it is on that path), long term security for MNKD will have been assured and financing worries will be much less of a topic.
