Deerfield Deal Sheet

[harshal1981]

So here is the DF deal sheet. 

$120 million - Paid so far in three tranches 1) $40 million at the deal signing in July 2013, 2) $40 million upon trial results release 3) $40 upon payment of 2013 Senior notes. 
$40 million debt converted to common stock @ about $5 of round figure. Round figure shares they got from this conversion is 8 Million. 

As per the amendment, they can convert another $60 million at minimum of $5 that will potentially get them another 12 million shares. 

For the calculation let's assume they do get it at minimum price tag of $5 and convert full $60 million in to 12 million shares. 

SO NOW 

Total secured notes principle outstanding  is 120-40-50 = $20 million  

And total shares with Deerfield is 8+12 = 20 Million Shares. 


UPON APPROVAL

DF will provide $40 million as a fourth tranche of original 2019 notes agreement. + They will give MNKD another $90 million (150% of the amount converted in to stocks after the amendment = 1.5*60 = $90million)

SO NOW

Total secured principle out standing is $20 million + $90 million = $110 million. 

Question is... How will they use their 20 million shares to de-risk their investment ? 

[babaoriley]

First, harshal, thanks for doing that. Just to clean that up, I think you have a typo ("120-40-50 = $20 million" should be 120-40-60 = $20 million). Next, please double check - aren't you missing $40 million of loan principal? Upon approval, DF provides another $40 million representing the fourth tranche, plus, as you point out, agrees to make available up to another $90 million in additional loan proceeds, so shouldn't total principal outstanding be $20 million + $40 million + $90 million = $150 million? If you agree, perhaps you can edit and Liane can pin this at the top of the board as it's an excellent tool for remembering what's going on (or could go on) in this transaction.

My thought is that the 20 million shares will be sold over the remainder of the month.

No one can be that certain, this is not the Olympic 100 meters where timers and photo finish cameras afford you certainty as to a winner; drug approval is more like Olympic figure skating, and the judges are the FDA!!!

[liane]

Mar 5, 2014 0:59:08 GMT -5 babaoriley said:

No one can be that certain, this is not the Olympic 100 meters where timers and photo finish cameras afford you certainty as to a winner; drug approval is more like Olympic figure skating, and the judges are the FDA!!!

Hope it's not the Russian judges!