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Post by kdaddyfresh2000 on Feb 7, 2016 11:07:33 GMT -5
It might, but first you need to explain how we can know that. Has Al said something to that effect? I know it because I know the people that are holding. Just like they did with MimiMed and his other company's. Al has maybe not helped with the debt because he doesn't think he will have to. Because of a deal or sale like kc says. JMHO This is the kind of input I was looking for. Thank you. I think Al is old-school honorable and will do right by his friends. I am not confident in the management but I know the buck, literally and figuratively, stops with Al.
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Post by garrett on Feb 7, 2016 12:28:21 GMT -5
Garrett that is why a Sale of the Company or Afrezza is necessary. You can't just further dilute the shares. Adding 400 million shares would drive the company to bankruptcy. The real answer is take this valuable product in Afrezza and sell it to a Pharma committed. My view is the entire company should be sold to get the maximum potential of the patents that MannKind holds. It take money to move forward and you can't continue to do it on a shoestring. This company was destroyed financially in 2010 when the Martin Shekreli letter was sent the FDA. That is when the company started having serious money issue. That guy hopefully will burn in Hell but until then MannKind needs to survive to insure that Afrezza becomes a game changer for Diabetes. kc - issued shares has nothing to do with the need for a company to file Chapter 11 bankruptcy. The key is to provide Mannkind with enough time to cash flow and thus to achieve and maintain sufficient working capital. I am ok with my shares someday being worth half of their value with dilution then zero without. Also, selling Mannkind now would yield very little, perhaps enough to only pay debt. Company value and thus share price is determined by earnings (and EBITDA) - at this point there are none. In other words, Mannkind and it's product has the potential to make money and once this happen, value will follow.
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Post by stevil on Feb 7, 2016 12:43:55 GMT -5
I'm not super familiar with secondary offerings... How does dilution work? If we're a $400 mil market cap company now, offering 400 mil new shares at $1 would drive the market cap to $800 mil, but there would then be 800 mil shares. So wouldn't the SP stay at $1? (assuming all shares get bought...)
In any case, you're assuming that 400 million shares would be bought. That might be an improbable assumption. Even if the reward is high, 400 million shares is an awful lot and all this company has shown it can do so far is lose money. It hasn't shown that it knows how to be profitable yet. Sure, we see some of the roadblocks, but can they execute to overcome them with $400 mil more? I'm not sure that'd even be enough, although I'd love to see them be able to try...
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Post by mnholdem on Feb 7, 2016 12:50:34 GMT -5
I think that maybe some may be mistakenly thinking that Al Mann's average share cost is much higher than it is and that his investment is down 80%-90% like those who bought in at ADCOM. Regardless, there are other options available for getting cash. For example I know of a drug development company that secured $500 million to finance Phase II trials in exchange for 3%-5% royalty when (if) that drug goes to market. My point is that Dr Mann still has plenty of wealth, but there are many other options available than for Al to pump more cash into the company. care to disclose the company? Sure. Here's one recent example for $150M.
SAN DIEGO, Jan. 26, 2016 /PRNewswire/ -- Halozyme Therapeutics, Inc. (NASDAQ: HALO) today announced that it has closed the previously announced $150 million royalty-backed debt transaction with investment funds managed by Pharmakon Advisors and Athyrium Capital Management. The debt is secured by future royalties of ENHANZE(TM) products, received only from Halozyme's collaborations with Roche and Baxalta.
"With the completion of this non-dilutive financing, we are well funded to initiate our Phase 3 study in pancreatic cancer patients and continue to execute our two pillar strategy in 2016," said Dr. Helen Torley, president and chief executive officer.
www.halozyme.com/investors/news-releases/news-release-details/2016/Halozyme-Announces-Closing-Of-150-Million-Royalty-Backed-Debt-Financing/default.aspx
The Wall Street Journal ran a piece on this kind of financing not too long ago:
Royalty and health-care-focused credit investors say they have just the right prescription for capital hungry drug developers.
Once an obscure, niche market, drug royalty and health-care debt financing has flourished in recent years, thanks to changes in how drugs are developed, the large amount of capital needed to develop them and the evolution of structures available to finance that development.
On average, “it takes $2.5 billion to get a drug approved and to market, if you factor in the cost of all the failed drugs,” Todd Davis, founder and managing director at Stamford,Conn.-based HealthCare Royalty Partners told Private Equity Analyst this month.
As we report in our March health-care issue, in 2013 and 2014 alone, a total of nearly $6 billion was raised for funds dedicated to drug royalties and health-care structured credit.
blogs.wsj.com/privateequity/2015/03/09/drug-royalty-funds-expand-into-credit-clinical-stage-deals/
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Post by garrett on Feb 7, 2016 12:55:14 GMT -5
I'm not super familiar with secondary offerings... But if MNKD offers 400 million new shares at $1 and causes dilution, wouldn't those shares immediately lose half their value? Or is that not how it works? In any case, you're assuming that 400 million shares would be bought. That might be an improbable assumption. Even if the reward is high, 400 million shares is an awful lot and all this company has shown it can do so far is lose money. It hasn't shown that it knows how to be profitable yet. Sure, we see some of the roadblocks, but can they execute to overcome them with $400 mil more? I'm not sure that'd even be enough, although I'd love to see them be able to try... stevil - 400 million shares was an extreme example and yes those shares would lose half of their value but I am ok with $.45 cent per share of value today as long as the dilution helps the company stays around to see their strategy through. As far as shares being sold, Mannkind sold a lot of share even before the FDA approval - a much higher risk then today IMO
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Post by Deleted on Feb 7, 2016 13:06:54 GMT -5
From the 2015 annual report, the debt to 2019 is $80 million. Are bankruptcy prognosticators trying to say in a worse case scenario that Al would not increase the amount from the Mann Group and lose his $billion investment?
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Post by garrett on Feb 7, 2016 13:18:18 GMT -5
I am not sure why bankruptcy is continuing to be mentioned on this board. Mannkind's potential upcoming problem would be one of operating cash first - not creditors attacking their assets who need to be stayed by the court. The issue is with some of the secured debt. The assets that secure the debt are not protected in bankruptcy and the secured party has the right to move against the collateral whether the company is BK or not. This is similar to an individual; it doesn't matter if you are personally bankrupt or not; the bank can still foreclose on your mortgage and take your house. A bankruptcy can stay that for a few weeks, but the bank will almost always win. In MNKD's case, Deerfield has rights to the production facility and enough IP to keep making Afrezza, and they have a security interest in the last $25 million of cash. Deerfield plays hardball and that could be enough to end MNKD as you know it.
As for Al, it is hard to say what will happen. On the one hand he might look at the situation and conclude that he is throwing good money after bad and shut off the taps. That is what a rational businessman would do if he though the situation hopeless. In the alternative, he might decide that letting the company go BK is the best thing and he can then step in and buy up the assets at the BK auction for less money then he would have to inject to save MNKD. The better question to ask is what motivation he has to keep MNKD running as is. He can always give shares to his friends and family if he starts a new company with the assets, so why should he bail out all the retail common? If he does that then he is a REALLY nice guy.
matt - you are assuming that Mannking's assets are sufficient in value to support all the secured debt balances (that's quick sale value). If not, then that portion become unsecured. But again, that's not an issue today as much as working capital might be. As far as Al Mann purchasing assets is a 363 sale, he would have existing shareholders all over him with a conspiracy and/or fraudulent conveyance lawsuit if he tries eliminating other shareholders especially if he then gives stock to friends and family to cover shares loss in the old company (insider asset purchases can be deem a fraudulent conveyance). Remember, there are a lot of "deep pocket" institutional investors involved who will not stand for such a transaction. So, the likelihood that happening is nil IMO.
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Post by stevil on Feb 7, 2016 13:20:19 GMT -5
From the 2015 annual report, the debt to 2019 is $80 million. Are bankruptcy prognosticators trying to say in a worse case scenario that Al would not increase the amount from the Mann Group and lose his $billion investment? I'm assuming I'm one of the "bankruptcy prognosticators", but I have no idea what Al will do. He's already had a paper loss of $800 million or so. In theory, it makes sense to spend $80 mil to "save" $800 mil, but at what point do you stop throwing good money after bad? Infusing another $80 mil doesn't solve the problem long term. It's similar to what Congress (thanks Nylefty ) is doing by raising the debt ceiling every year. You can't just keep kicking the can down the road. Eventually changes need to be made because over $1 billion was needed to get us to where we are now. Sure, we're light years ahead of where we were $1 billion ago, but how much more do we really need? We still need a significant chunk to market Afrezza as well as instill confidence in the market that we're not just going to survive, but actually thrive. That may require $500 mil or more, who knows? So $80 mil will keep us alive (trusting your research) until 2019 if we spent no more money on anything else, but will we be better off by then? I guess it's worth the risk, but it still doesn't take into account cash burn or any additional expenses that would need to be funded to get us over the hump. Al publically stated he had no idea how much money it was going to take to bring a drug to market and he grossly underestimated that figure. He hasn't spoken up about his plans, so no one really knows.
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Post by LosingMyBullishness on Feb 7, 2016 13:33:35 GMT -5
Garrett that is why a Sale of the Company or Afrezza is necessary. You can't just further dilute the shares. Adding 400 million shares would drive the company to bankruptcy. The real answer is take this valuable product in Afrezza and sell it to a Pharma committed. My view is the entire company should be sold to get the maximum potential of the patents that MannKind holds. It take money to move forward and you can't continue to do it on a shoestring. This company was destroyed financially in 2010 when the Martin Shekreli letter was sent the FDA. That is when the company started having serious money issue. That guy hopefully will burn in Hell but until then MannKind needs to survive to insure that Afrezza becomes a game changer for Diabetes. You jump a lot of guns here. Someone asks about a bankruptcy which is not a killer issue right now, someone is concerned about one of Matt's famous 'needs to be said' statement and now we learn that this company has been broke for +5/years and sale is the only option left. I wonder if that comment was meant ironically.
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Post by nylefty on Feb 7, 2016 13:34:40 GMT -5
From the 2015 annual report, the debt to 2019 is $80 million. Are bankruptcy prognosticators trying to say in a worse case scenario that Al would not increase the amount from the Mann Group and lose his $billion investment? I'm assuming I'm one of the "bankruptcy prognosticators", but I have no idea what Al will do. He's already had a paper loss of $800 million or so. In theory, it makes sense to spend $80 mil to "save" $800 mil, but at what point do you stop throwing good money after bad? Infusing another $80 mil doesn't solve the problem long term. It's similar to what the FED is doing by raising the debt ceiling every year. You can't just keep kicking the can down the road. Eventually changes need to be made because over $1 billion was needed to get us to where we are now. Sure, we're light years ahead of where we were $1 billion ago, but how much more do we really need? We still need a significant chunk to market Afrezza as well as instill confidence in the market that we're not just going to survive, but actually thrive. That may require $500 mil or more, who knows? Bad analogy. And the Fed doesn't raise the debt ceiling. Congress does.
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Post by stevil on Feb 7, 2016 13:48:42 GMT -5
Not a bad analogy when our company is similar to our country- our expenses > income. Our budget is not balanced. Adding $80 mil from Al would not change that equation. It would only prolong the inevitable- another cash infusion or BK. Unlike our nation, we are currently in the black, but we won't be after 6 months unless we start turning a profit or somehow dilute. People keep making the assumption that all we need is time. That very well may be the case, but it also may very well not be the case. I would contend that we need a lot of time and a lot of money, but that's required just to have a chance to make MNKD into what we hope it will be. We still don't even know if time + money is really all it would take. All that we know for certain, right now, is that we only have about 6 months of operating budget left.
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Post by rch51 on Feb 7, 2016 14:09:20 GMT -5
Come on guys! This thread is all just an exercise in mental masturbation. Matt could not have been more clear. MNKD is not going BK! His statement was definitive. Of course he cannot say what will or will not happen a year from now - nobody can. Debt is currently being re-negotiated. Overhead (cash burn) is being appropriately adjusted. There is simply no justification for this ongoing speculation. Let's try to be reasonable and a little more positive, please.
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Post by kc on Feb 7, 2016 14:11:49 GMT -5
Garrett that is why a Sale of the Company or Afrezza is necessary. You can't just further dilute the shares. Adding 400 million shares would drive the company to bankruptcy. The real answer is take this valuable product in Afrezza and sell it to a Pharma committed. My view is the entire company should be sold to get the maximum potential of the patents that MannKind holds. It take money to move forward and you can't continue to do it on a shoestring. This company was destroyed financially in 2010 when the Martin Shekreli letter was sent the FDA. That is when the company started having serious money issue. That guy hopefully will burn in Hell but until then MannKind needs to survive to insure that Afrezza becomes a game changer for Diabetes. kc - issued shares has nothing to do with the need for a company to file Chapter 11 bankruptcy. The key is to provide Mannkind with enough time to cash flow and thus to achieve and maintain sufficient working capital. I am ok with my shares someday being worth half of their value with dilution then zero without. Also, selling Mannkind now would yield very little, perhaps enough to only pay debt. Company value and thus share price is determined by earnings (and EBITDA) - at this point there are none. In other words, Mannkind and it's product has the potential to make money and once this happen, value will follow. That is why the entire company needs to be sold to somebody with Deep pockets. You want to save the patient than you need to take drastic measures. selling pieces will not work. The ultimate cash cow for near term future will be Afrezza. TS is still a developing item.
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Post by stevil on Feb 7, 2016 14:18:07 GMT -5
Come on guys! This thread is all just an exercise in mental masturbation. Matt could not have been more clear. MNKD is not going BK! His statement was definitive. Of course he cannot say what will or will not happen a year from now - nobody can. Debt is currently being re-negotiated. Overhead (cash burn) is being appropriately adjusted. There is simply no justification for this ongoing speculation. Let's try to be reasonable and a little more positive, please. I'm not trying to infuse negativity into the board, just reality. Matt said that "at this time" BK was not an option and would be a last resort- he never said MNKD wasn't going BK. While it's very possible that the debt will be restructured and operating expenses reduced (my guess is there will be more layoffs... since that's the easiest thing to control. Still don't understand the Hakan severance/retirement package, but that's another issue for another day) There absolutely is justification for the ongoing speculation. Money doesn't grow on trees and won't fall from the sky. While I agree with you that it may be mental masturbation to keep dwelling on the "how" we'll stay alive or "what" will eventually become of us, it very much is a topic that can and should be discussed. But it is all speculation at this point because Matt did not outline his plan for how he would get us to the lands of profitability. We're casting our sails to the winds of the diabetes clinics and the milestones from our recent deal as well as the hopes of making more TS deals. But it's a very real issue that as of now, we do not have enough money to successfully run this company past 6 months. For the record: I don't want BK or a sale. I would love for Al to step up and keep funding this. But there are so many extra variables that go into all of this- As Al has admitted to not knowing beforehand. So it's not a foregone conclusion that he will keep stepping up, or that it will lead us to success even if he does. So my arguments are more negative than my hopes because I don't think it's as likely as other people on here who keep saying Al will keep writing blank checks. No one has heard from him in months and no one really even knows how much he has left in his piggy bank even if he did want to keep funding us.
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Post by sportsrancho on Feb 7, 2016 14:30:59 GMT -5
IMO we are going to kick the can down the road till things take off. And Al is not about to give up yet or think he is putting in good money after bad at this point. He has just now been proven right after all these years!
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