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Post by kdaddyfresh2000 on Jan 10, 2016 9:35:56 GMT -5
Like everyone, I am aghast at the change of events in just the last week. Various scenarios have been floated about what Mannkind should do, including bankruptcy. (It's hard for me to write that.)
What are the incentives and disincentives declare BK if your goal is to make Mannkind ultimately profitable by selling Afrezza? BK "solves" a lot of problems by clearing the books of debt to allow a "fresh" start.
(Btw, is MNKD's IP collateral, eg, does anyone know, to be used to satisfy debts? This is a crucial piece of information I think...)
My fear is Duane shows up at JPM and says, "We need to reorganize Mannkind to fulfill Al's vision of a world without diabetes. Unfortunately, that means bankruptcy."
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Post by figglebird on Jan 10, 2016 9:46:31 GMT -5
Again, have read through current debt obligations and the money we owe looks easily serviceable. I have seen much MUCH worse off companies pull through at times like "these". What I mean is this is not one of those times. Not yet. Not by a long shot. Also, based on seniority it would appear bankruptcy would allow deerfield and sanofi to control assets before Al.
Unless there were some conspiracy from the inside to simply hand TS over to sny(something I do not believe) I would expect a law suit against sanofi well bf chapt 11.
but not there yet - truly - look for yourself.
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Post by kdaddyfresh2000 on Jan 10, 2016 11:38:39 GMT -5
Again, have read through current debt obligations and the money we owe looks easily serviceable. I have seen much MUCH worse off companies pull through at times like "these". What I mean is this is not one of those times. Not yet. Not by a long shot. Also, based on seniority it would appear bankruptcy would allow deerfield and sanofi to control assets before Al. Unless there were some conspiracy from the inside to simply hand TS over to sny(something I do not believe) I would expect a law suit against sanofi well bf chapt 11. but not there yet - truly - look for yourself. Thank you, Figgie. Very helpful to hear. More input welcome.
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Post by mnkdmorelong on Jan 10, 2016 11:55:03 GMT -5
Like everyone, I am aghast at the change of events in just the last week. Various scenarios have been floated about what Mannkind should do, including bankruptcy. (It's hard for me to write that.) What are the incentives and disincentives declare BK if your goal is to make Mannkind ultimately profitable by selling Afrezza? BK "solves" a lot of problems by clearing the books of debt to allow a "fresh" start. (Btw, is MNKD's IP collateral, eg, does anyone know, to be used to satisfy debts? This is a crucial piece of information I think...) My fear is Duane shows up at JPM and says, "We need to reorganize Mannkind to fulfill Al's vision of a world without diabetes. Unfortunately, that means bankruptcy." Insofar that Al Mann owns 45% of the stock and about 25% of the bonds, there is no advantage to BK. The worse case is if Afrezza is deemed a niche product and is sold to another company.
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Post by matt on Jan 10, 2016 12:06:45 GMT -5
There are a few circumstances where a prepackaged bankruptcy is a good idea, but I don't see any of those here so to answer your question on incentives to go BK I will have to say there are essentially none.
The Afrezza assets secure the Deerfield debt and in a bankruptcy Deerfield could sell those outside of the court case (secured lenders can always more against their collateral and file a deficiency claim if not paid in full). That would leave the TS business, such as it is, to pay off all the other creditors (including SNY since their debt would get accelerated). At this still early stage of development, with no non-Afrezza partnerships, it is not clear how much TS would be worth in a fire sale / auction scenario. No matter how you slice it, BK is not a good result for shareholders.
I will respectfully disagree with figglebird that the debts are serviceable. They are serviceable today as I write this, but once Sanofi pulls the plug on April 4 all the expenses will have to be borne by Mannkind, and if the company wants to keep selling Afrezza that will take some sales, marketing, and other expenses that Sanofi was carrying for their 65% of the partnership. The credit line that absorbed Mannkind's 35% of expenses will also go away so 100% of the expenses, albeit lower than what Sanofi was spending, will hit Mannkind. The company has about $90 million in cash and credit, but $25 million of cash is restricted by the Deerfield agreement so that is only about $65 million that is free to be spent. That $65 million will not last long which is why I disagree with figglebird. If your idea of long-term is six months, then Mannkind is in OK shape but beyond that point there will be a big cash crunch unless something get negotiated, closed, and put into action this summer.
The saving grace is that Deerfield doesn't really want to own Afrezza, and the other creditors don't want to be running a specialty pharma business either. Just like it is not in the shareholder's interest to BK, it is not in the creditor's interest to go the BK route. That reality keeps a lot of otherwise broke companies limping along for some time, and time is what Mannkind needs to work out a solution.
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