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Post by lakers on Nov 12, 2015 2:39:04 GMT -5
This press release was not to placate nervous investors but to assure the survival of Mannkind from a financing point of view. I have been a long time investor (over 8 years) but have gradually sold out all my shares over the last year or so. One misstep after the other. If what you are saying above is the thinking at Mannkind it scares me and explains to me the deeply flawed thinking that seems to afflict Mannkind management. The days leading up to a big refinancing (and crucially based on share price around that time) are very material and a strong denial or clarification would have been urgently needed. No wonder short find it so easy to punch around a company that plays by the rules it wants or thinks it should play by and not by the rules it has to play by. And if you answer the high road is a better strategy I would answer back: how has that worked out for us from a financing point of view? Always dilute at the absolute worst time and under dire conditions and at the mercy of crooks. Why didn't management dilute when we were at a 52 week high (like most well run biotech do)? Because it wouldn't have been popular? Guess who isn't very popular right now and for good reason... This is why I have no respect for management, especially Matt. In the summer of 2014, when the SP was $8-$10 Mannkind could have and should have sold the same 50,000,000 shares and raised $400m-$500m. Mannkind would have then had plenty of cash to pay off all of the debt, finance its TS R&D, and provide sufficient cash flow to finance at least 3 years of cash flow. They also would have been in a much stronger possession to be able to negotiate a better deal with Sanofi or some other BP candidate. But what did our management do? They SOLD THEIR OWN SHARES, leaving us as the bag holders. Trend Your critique is legit, well taken. In hindsight, mgmt and BoD were brimming with excitement and overconfidence. Mgmt needs to plan and prepare for the worst, the rainy days, not the best. |
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Post by mbseeking on Nov 12, 2015 2:45:15 GMT -5
So yes, I've made a thesis , and I'm doubling down. I believe that exit clause you cite is satisfactory to my case.
What justifies failure of commercial reasonable efforts?
1. Poor coverage of Afrezza at SNY Meet Management meeting (10 months after launch) is now on the record. (Past)
2. If the large clinical studies is not fully spun up in time (Think Hakan mentions March on MNKD call) would be a second data point. (6 mths)
3. Don't believe the exact nature of the milestones have ever been released. But have been articulated by Matt as swinging to the SNY perform in teh later stages and I'm sure include qty / $ and timing attributes. (6 mnths or so)
As these things stack up over the next six months, and if SNY misses them do you not think MNKD can make a case that Commercial Reasonable Efforts were not undertaken? Sure there is some leeway here , but the point I've been making is that MNKD now has the means to walk too. And that is what might change the calculus at SNY. And leeway is where lawyers earn their keep.
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Post by cjc04 on Nov 12, 2015 2:49:43 GMT -5
Either party will have rights to terminate. This is what milestones are for in contracts. I remember distinctly Matt saying they achieved the early ones related to production - so SNY could not just walk away. Well that's swung the other way time for SNY to perform.. Sure I dont have access to the precise wording of the contract , but missed milestones mean decisions can be made without further recourse. I suggest you take a look at Exhibit 10.1 to the 3rd quarter 2014 10-q, specifically Article 12. Your assertions are incorrect. Mannkind can terminate only if a ruling is obtained that Sanofi has failed to use Commercially Reasonable Efforts. There are no termination rights related to missed milestones. Trend AND, the remaining milestones are mainly for sales and reg approvals... Ironically both are SNY's responsibility, so they're in control doing anything worth paying a milestone before they're guilty of not paying it. |
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Post by mbseeking on Nov 12, 2015 2:51:56 GMT -5
I suggest you take a look at Exhibit 10.1 to the 3rd quarter 2014 10-q, specifically Article 12. Your assertions are incorrect. Mannkind can terminate only if a ruling is obtained that Sanofi has failed to use Commercially Reasonable Efforts. There are no termination rights related to missed milestones. Trend AND, the remaining milestones are mainly for sales and reg approvals... Ironically both are SNY's responsibility, so they're in control doing anything worth paying a milestone before they're guilty of not paying it. Sorry, but this is precisely my point. Surely if SNY dont achieve them,or they are late, dont you think MNKD now has a case to show SNY did not attempt Commercially Reasonable Efforts? |
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Post by mbseeking on Nov 12, 2015 3:04:23 GMT -5
So yes, I've made a thesis , and I'm doubling down. I believe that exit clause you cite is satisfactory to my case. What justifies failure of commercial reasonable efforts? 1. Poor coverage of Afrezza at SNY Meet Management meeting (10 months after launch) is now on the record. (Past) 2. If the large clinical studies is not fully spun up in time (Think Hakan mentions March on MNKD call) would be a second data point. (6 mths) 3. Don't believe the exact nature of the milestones have ever been released. But have been articulated by Matt as swinging to the SNY perform in teh later stages and I'm sure include qty / $ and timing attributes. (6 mnths or so) As these things stack up over the next six months, and if SNY misses them do you not think MNKD can make a case that Commercial Reasonable Efforts were not undertaken? Sure there is some leeway here , but the point I've been making is that MNKD now has the means to walk too. And that is what might change the calculus at SNY. And leeway is where lawyers earn their keep. Let me add item #4 4. If insurance coverage hasn't budged by March. |
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Post by trenddiver on Nov 12, 2015 3:09:42 GMT -5
AND, the remaining milestones are mainly for sales and reg approvals... Ironically both are SNY's responsibility, so they're in control doing anything worth paying a milestone before they're guilty of not paying it. Sorry, but this is precisely my point. Surely if SNY dont achieve them,or they are late, dont you think MNKD now has a case to show SNY did not attempt Commercially Reasonable Efforts? Having a case to show and proving the case is a long, arduous and expensive battle. At this point in time, it would be difficult to show such a case (let alone prove such a case) because all decisions regarding this venture are jointly approved by Sanofi and Mannkind. This is all covered in the Collaberation Agreement which I encourage you to peruse (Exhibit 10.1 to the 3rd q 2014 10-q.) Trend |
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Post by jpg on Nov 12, 2015 3:13:39 GMT -5
From where I look at it Sanofi holds al, the cards and gets to deal and arbitrate...
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Post by trenddiver on Nov 12, 2015 3:45:42 GMT -5
From where I look at it Sanofi holds al, the cards and gets to deal and arbitrate... As it relates to termination rights, you are 100% correct-Sanofi is in the drivers seat. After Jan.1, 2016, Sanofi can terminate with 90 days notice if they determine Afrezza is not commercially marketable or they can terminate for any reason with 180 days notice. Mannkind's termination rights will definitely involve expensive litigation and will be hard to prove. Trend |
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Post by Deleted on Nov 12, 2015 3:58:18 GMT -5
MBS: You're correct on all 4 counts! And, if MNKD wants out, they will get out, it's really that simple. However, I still believe there is ample trust from both partners, to continue their joint efforts unhindered.
Sanofi knows what they have with Afrezza, they know how to market diabetes drugs, and Sanofi is global! I'm content to wait, remain patient, and give Sanofi the running room it needs to bring Afrezza to full potential in the diabetic community. Aloha.
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Post by kc on Nov 12, 2015 7:29:24 GMT -5
I feel I've been misreading Hakan. The inflection point was this conference call. Cultures are different. The US is one that ascribes a lot to what a person says, and how they say it. A lot cultures value that much less, and look more at the unspoken. Consequently I miscued on Hakan. I believe he entered into a good faith agreement with the Chris Viehbacher - Sanofi. That company (then) and his belief in Afrezza led him to believe the product would sail off the shelves. How can an honest CEO dilute capital then , when that is what he believes? Meantime the greedy , evil hedge funds kept shorting MNKD out of the capital market. Time passed. Brandicourt replaced Viehbacher and the rules changed over night. Such things are never said they have to be figured out. Hakan may have got an inkling earlier in his meetings , but SNY only just confirmed their lethargy at their recent public meetings. You cant blame Hakan for this. And you cant expect a young , innovative drug company straining its every resource to bring a most amazing thing to market to have backup plan after backup plan in place. Brandicourt SNY were not sandbagging, they were stonewalling. They knew MNKDs financing were both legitimately declining and under hedge fund short attack. What can David do with this Goliath ? Oh yeah, its biblical. He finds a slingshot. Al calls in a favour in Israel. No shame in that. ( but look at how much the Israelis are bitching, regulators threatening etc ..this is no Jewish lovefest) Two birds with one stone. Non shortable fresh capital, and now MNKD can survive. Why is that important? The performance pendulum on the MNKD / SNY relationship has been swinging toward SNY. Milestone payments are now sales and development (trial) related (SNY) , rather than production (MNKD). The biggest, and most expensive has yet to be cranked up - by SNY. This is the world as we understood it at the time of SNY Meet the Manager meeting. SNY declared.. "haha, we got you and are doing nothing , spending no more money , you're gunna die and will take your IP" Well quite simply Hakan and Matt not only just turned the tables they spun them. SNY has to accelerate immensely to get back to a reasonable spot , or legitimately , MNKD can go to someone else. Seriously , if SNY dont so something do you not think by 2Q16 SNY is dumped (within terms of contract) and TEVA signed up , or something equally gutsy? I absolutely believe this is the negotiating position and dont fear it at all. In fact, bring it on. Mannkind just told SNY to Sh_t or get off the pot. I can even imagine Hakan saying that to Brandicourt , all the time perfectly composed. So no we dont get a lot of perfect American English oratory from Hakan. We dont get raised voices or even anger. We just get steely resolve at the conference table. I'm so impressed.. I wish I could buy a lot more of this stock. This is why Al is keeping Hakan and Matt. Interesting view. I think your right about trying t wake up the relationship by entering the Israeli market and drawing attention to new investors and potential buyers of the company who will challenge Sanofi and their lethargic marketing. |
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Post by chicagpete on Nov 12, 2015 8:21:20 GMT -5
I feel I've been misreading Hakan. The inflection point was this conference call. Cultures are different. The US is one that ascribes a lot to what a person says, and how they say it. A lot cultures value that much less, and look more at the unspoken. Consequently I miscued on Hakan. I believe he entered into a good faith agreement with the Chris Viehbacher - Sanofi. That company (then) and his belief in Afrezza led him to believe the product would sail off the shelves. How can an honest CEO dilute capital then , when that is what he believes? Meantime the greedy , evil hedge funds kept shorting MNKD out of the capital market. Time passed. Brandicourt replaced Viehbacher and the rules changed over night. Such things are never said they have to be figured out. Hakan may have got an inkling earlier in his meetings , but SNY only just confirmed their lethargy at their recent public meetings. You cant blame Hakan for this. And you cant expect a young , innovative drug company straining its every resource to bring a most amazing thing to market to have backup plan after backup plan in place. Brandicourt SNY were not sandbagging, they were stonewalling. They knew MNKDs financing were both legitimately declining and under hedge fund short attack. What can David do with this Goliath ? Oh yeah, its biblical. He finds a slingshot. Al calls in a favour in Israel. No shame in that. ( but look at how much the Israelis are bitching, regulators threatening etc ..this is no Jewish lovefest) Two birds with one stone. Non shortable fresh capital, and now MNKD can survive. Why is that important? The performance pendulum on the MNKD / SNY relationship has been swinging toward SNY. Milestone payments are now sales and development (trial) related (SNY) , rather than production (MNKD). The biggest, and most expensive has yet to be cranked up - by SNY. This is the world as we understood it at the time of SNY Meet the Manager meeting. SNY declared.. "haha, we got you and are doing nothing , spending no more money , you're gunna die and will take your IP" Well quite simply Hakan and Matt not only just turned the tables they spun them. SNY has to accelerate immensely to get back to a reasonable spot , or legitimately , MNKD can go to someone else. Seriously , if SNY dont so something do you not think by 2Q16 SNY is dumped (within terms of contract) and TEVA signed up , or something equally gutsy? I absolutely believe this is the negotiating position and dont fear it at all. In fact, bring it on. Mannkind just told SNY to Sh_t or get off the pot. I can even imagine Hakan saying that to Brandicourt , all the time perfectly composed. So no we dont get a lot of perfect American English oratory from Hakan. We dont get raised voices or even anger. We just get steely resolve at the conference table. I'm so impressed.. I wish I could buy a lot more of this stock. This is why Al is keeping Hakan and Matt. Interesting view. I think your right about trying t wake up the relationship by entering the Israeli market and drawing attention to new investors and potential buyers of the company who will challenge Sanofi and their lethargic marketing. I may have missed it in a previous thread - but isn't the fact that $50,000,000 shares not being offered to SNY a true tell that there is some serious issues between MNKD/SNY? Does anyone have an explanation? I can't believe SNY wouldn't want this stake at a $2+ share price. I don't believe MNKD is or has been pleased with performance and now as it has been stated above "it's time to sh-t or get off the pot". I am Hopeful things are changing - woke up to a text from some friends - an uptake in some scripts received from a SNY rep we know last week and now this week/yesterday........... my understanding of the definition of HOPE - "Expectation of a positive outcome" |
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Post by mnholdem on Nov 12, 2015 8:33:54 GMT -5
CP, that's 50 million shares, rather than $50M.
The License and Collaboration Agreement between Sanofi and MannKind expressly forbids Sanofi from acquiring a 5% or more stake in MannKind Corporation. That is for good reason. You have no doubt been reading many posts that expound on how much control Sanofi has gained over the future of Afrezza.
Can you imagine if they gained control of the entire company via a hostile takeover? I am of the opinion that when it comes to the potential value of MannKind's Technosphere drug delivery technology, Afrezza is only the tip of the iceberg.
Al Mann is no dummy.
NOTE: There is a caveat to the 5% ownership restriction. It's in the form of, "...without the express written consent of MannKind Corporation." In other words, MannKind could allow Sanofi to buy a >5% stake in the company, and possibly develop a collaborative effort similar to the relationship between Sanofi and Regeneron. |
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Post by Deleted on Nov 12, 2015 8:41:53 GMT -5
Legally Mannkind can attempt to terminate the relationships with Sanofi for lack of good faith effort. Realistically, it won't happen. Sanofi can drag the termination process out in a way which Mannkind cannot afford.
Sanofi does not want Afrezza in the hands of another player. Kind of like when you really don't like the girl a lot and then you find out your friend is going on a date with her and then you become jealous.
How can Mannkind get rid of Sanofi? Easy, with a repressed share price, another suitor comes in and throws down a bid for Mannkind. Sanofi can match the bid or not. In the process, the price gets bid up to a point where Sanofi cannot make a multi-billion dollar investment and maintain the lax approach to marketing Afrezza. No company is going to buy out Mannkind you say, OK then maybe TS rights for a specific therapeutic category can be sold. Any Rx products with annual sales above $2B going off patent in the next 2-4 years? They might be interested in a drug delivery system that allows them to keep their sales and margin strong. I have not read in detail the agreement Mannkind has with Sanofi and there is much that has been redacted but as detailed as the agreement is, nothing is air tight and their is likely enough ambiguity that gives Mannkind some room for innovative solutions to the current challenges.
Keep in mind, Al Mann did not get to where he is by being a shrinking violet. He is smart, driven and scrappy. He may not be involved in the day to day, but he can still pick up a phone.
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Post by kball on Nov 12, 2015 9:06:24 GMT -5
Interesting view. I think your right about trying t wake up the relationship by entering the Israeli market and drawing attention to new investors and potential buyers of the company who will challenge Sanofi and their lethargic marketing. Does anyone have an explanation? I can't believe SNY wouldn't want this stake at a $2+ share price. I don't believe MNKD is or has been pleased with performance and now as it has been stated above "it's time to sh-t or get off the pot". I am Hopeful things are changing - woke up to a text from some friends - an uptake in some scripts received from a SNY rep we know last week and now this week/yesterday........... my understanding of the definition of HOPE - "Expectation of a positive outcome" I'll go one more...I have a suspicion that SNY may not have even been aware of Mannkind's Israeli gambit. Which would certainly be interesting. Thoughts from the smart folks? |
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Post by liane on Nov 12, 2015 9:10:05 GMT -5
Sounds like a mystery novel in the making - "The Israeli Gambit".
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