Is MannKind going Bust?

[robsacher]

Dec 14, 2015 21:08:40 GMT -5 dreamboatcruise said:

Dec 14, 2015 19:14:02 GMT -5 compound26 said:

I just read the latest edition of Nate's Notes (dated 11 December, but published today). So the notes were very updated (have the closing price of $1.53 as of last Friday).

Nate does not seem to be concerned about the financial situations of Mannkind at all. He averaged down continuously and encouraged his subscribers to average down at this moment (if they are interested).  He noted that MNKD's PPS, if without shorts' action, would be around $8-12. So he attributed the current PPS mainly to shorting + tax loss selling. Of course, his discussion is much more detailed than the above. 

Nate has 28 years' experience investing in biotech and he started to recommend Celgene when it was at $0.44 (split adjusted price) and Celgene is currently at $108 per the notes. So his experience does give me comfort. 

If you do not subscribe for his newsletter, maybe you can subscribe for one month for $34 to get access to the last few months' notes to see his thoughts on Mannkind. 

(FYI, I am not affiliated with Nate in any way.  Just a reader of his newsletter.)

How does he explain his non-concern for the financial situation?  Does he have some insight that scripts will jump soon?  TS deal signed? Raising capital somehow without cratering the price further and having significant dilution?

The current trajectory of Afrezza sales certainly doesn't keep MNKD from running out of money.

Averaging down is guaranteed to work as long as 1) the stock doesn't stop trading due to BK or takeover and 2) you have infinite amount of money to double down at ever lower prices.  Does he give some sort of indication of how much he buying at these levels compared to how much he still potentially could invest... and what his average price is?

For what it's worth, Nate and I may share the same opinion in regard to MannKind's financial situation right now which is that it's mostly a tempest in a teapot and that like all the other short arguments that have come and gone over the last few years, this one will pass too. There are a number of ways in which the company can raise capital, lower operating expenses, and move along to the next phase of operational existence. I recall that MNKD traded at $1.84 several months after being turned down by the FDA in December of 2011.  Naysayers believed that the company could never do another expensive clinical study. They were wrong.

I too have been adding to my position and plan on continuing to do so. 

I am looking at a window for MannKind subdivided into three phases: immediate, mid term, and long term. 

We are currently within the immediate phase which will last until Sanofi can get Afrezza placed within a majority of preferred insurance tiers and a majority of endocrinologists begin to prescribe Afrezza for some number of their patients. 

The mid term phase will begin when financial results begin to be posted related to patients who are using Afrezza through preferred tier payment schedules after Afrezza is found in a majority of preferred insurance tiers.

The long term phase will begin when the results of Afrezza being available in a majority of preferred tiers will have been posted for two or more years. By that time, Afrezza could be available in just about all preferred tiers.

In addition, I expect to see Technosphere applications for additional drugs break through along the way. 

[robsacher]

Dec 14, 2015 21:57:41 GMT -5 mnkdfann said:

Dec 14, 2015 21:30:05 GMT -5 nylefty said:

Nate bought another 2000 shares of MNKD  for his model portfolio today, giving him a total of 30,000 shares.  He also bought 50,000 shares for his aggressive portfolio, giving him a total of 400,000.

He says MNKD is still a buy under $6 and a strong buy under $3. Despite the paper losses he's suffered in this stock, his overall model portfolio is still up 3 percent so far this year.

In an interview (from 2003 when he was promoting an investment in MNKD), Nate said "I like to get into stocks where I think the company has great long-term potential, and then, when stocks are acting well, we try to add to those positions. When they're not acting so well, we pull in our horns a little bit ...".

Based on that along with the news that he is still adding to his portfolio, it sounds as though Nate might be violating his own investing rules here. Just an observation.

As many have said, the hardest part of investing is not learning the rules ... it is following them. We'll see how it works out this time.

Nate still believes that the company has long term potential and that may be the basis for his decision to add shares. That probably trumps the shorting going on in the immediate time frame so I see Nate continuing to follow his own advice...

[dreamboatcruise]

robsacher... I too tend to be in the camp that believes MNKD has enough assets to somehow survive as a going concern and emerge out the other side.

I also remember Dec 2011. Lost most of my MNKD investment at that point because I had used options assuming a positive outcome. Didn't really buy back in until before the successful adcom.

Even presuming MNKD's eventual success, the questions now are how low the stock can go, how much dilution may occur and when we emerge from the valley of near death. Given that we've had no positive movement on insurance coverage and in fact some anecdotal evidence we may have a setback when Jan 1 plans kick in, the immediate term may be some rough sledding and last a long time. MNKD can cut costs, but that will be cutting off some of those TS opportunities. They've already done a lot of cost cutting so there isn't a lot of fat left to trim.

I'm not selling, but I think I'm looking for some more clarity on how the immediate term unfolds before I buy more.

[matt]

Unfortunately, nobody can say anything intelligent about MNKD and its cash position until mid-March with the 10K comes out. We know the cash balance on September 30, we know how much was raised in Tel Aviv, we don't know about the ATM facility except that those agreements have recently been modified (that was the subject of the confidential treatment order), and we don't know how much, if any, the Mann Group has advanced or the status of the SNY credit line. March is a long time to wait, but wait you must.

What you should not do is ignore the fact that at a certain point cash becomes nearly impossible to come by except from vulture investors. When that day arrives companies tend to proceed rapidly into bankruptcy court because they have to. Running a big bankruptcy case takes six to eight months and tens of millions of dollars. The company cannot run the cash down to zero before it pulls the trigger on a filing, and many shareholders are surprised how early the day of reckoning comes. MNKD will not be at that point in the next six months, but unless there is a fresh source of cash summer could get ugly. Again, nobody can really how long the company will have to fix the balance sheet until the 10K is released, but buying some April options to hedge your bets is not a crazy idea.

[robsacher]

Sorry to hear about you getting swallowed up in the December 2011 disappointment. I only discovered the company in March of 2012 so my timing was fortunate as I bought my shares under $2 around that time.

I stay away from options with MannKind. I've never bought or sold one. I gave it a lot of thought and I understand how options can be a worthy hedge. Straddling can make good sense. But, my issue is about "timing". I have always felt that Afrezza would need time to make its market penetration and there was no good way to know how much time would be needed. Therefore, I took note of how MNKD traded and bought shares when they were low and sold those shares when the s/p recovered. It worked well for me. But, I always kept my core position in tact.

Now, the scenario has changed, at least, for the time being. I cannot know the ultimate bottom but I do know that we are trading at relative lows and that makes this time period a very good time to add shares to my position. I am not currently trading. I am acquiring. At some point, I will have to decide to either keep these shares within my core position or take some part or all of these added shares and sell them for a profit. But, I think it best to wait and see where we are at that time.

Of course, I do this because I have no second guessing inside myself in regard to Afrezza's ultimate success. Obviously, Brian Feroldi (Motley Fool/Looking For Diogenes???) and other naysayers and those who are shorting MNKD will disagree.

I respect your view of waiting for clarity. I think it a wise policy. However, keep in mind that there are many possible positive news catalysts that have the potential to move MNKD as much as 50% or more in one day. That's why I am adding slowly, but steadily. I am not fearful of bankruptcy but I am aware that hesitancy could easily miss that big day coming. And, I firmly believe that that day will come...

[mssciguy]

robsacher I tried options with another equity a couple of years ago (have told this story here before), was horrified when the machines fixed the stock price by just a couple of pennies on a Friday. Never, ever again. But I did buy warrants, same mistake so far but we'll see, still time to Feb16 ... they are very very cheap, but price needs to appreciate by multiples to make them pay off.

The insurance coverage expansion may make many patients happy.

[doublebogey]

The ones with the almighty dollar will try to make this stock's technical data and pps seem like it's going BK. This stock is way oversold.