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Post by ricguy on May 9, 2016 20:42:38 GMT -5
Thanks Matt for not asking people to refer TS partners on the call, much appreciated.
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Post by Deleted on May 9, 2016 20:42:59 GMT -5
It has been interesting how light the volume has been the past week or so. Like the institutions were sitting out for some reason. For the first time in the couple of years the relentless shorting seemed to have abated. And now this dilution , at a $1 number. What a strange number with such GS overtones. Have always wondered , as have many, how the shorts might exit. Here , indeed, is one way for a good chunk of them to get out. Would this be collusion, another rigged event? I shock myself when I say: maybe not. The shorts hypothesis only worked if BK is firmly on the table. Well its not. MNKD can still trade. Yes its a new, seemingly ugly model. But they can still trade. And I tell you, the plan coverage is going up. The copays are going down. If the Longs hypothesis is valid, and this new insulin delivery will sell at a comparable price then the smart shorts will exit. I'm so glad SNY is out. I 'm glad Matt will do whatever has to be done to keep MNKD operating. Here's a guy suffering terrible issues with his retina and he is doing what is necessary for MNKD to continue. This evening I just see grit. Ultimately what drives share price is revenue growth and profit. Hope can also drive SP a bit and even though this is not the first crack at commercializing Afrezza, if they get some traction with steady week over week growth in NRx and TRx, after a few months, it would start to help SP. I was pleasantly surprised to know that the sales team calling on doctors would be on the street in June. The first month or so it is going to be slow. With a lower price on Afrezza, a plan to reduce the adverse impact of the Spirometry test, and Castagna clearly saying that prior authorization will not be an impediment it was thought to be, we should see assuming the marketing strategy is right and properly executed, some traction by Late July or early August. Keep in mind, you have all of this infrastructure being built: Marketing, Managed care contracted, renewing relationships with distributors, online marketing initiatives so if the initial 80 or so salespeople demonstrate that the plan is working, SP will jump a bit and getting another few dozen reps hired via the outsourced sales team Mannkind is using is pretty simple. Of course, there is always the risk that the strategy is wrong or improperly executed. The good news is that the wait is over. We will know this year if Afrezza gets traction and if the results are good enough and the math warrants it, Mannkind will hire more sales people. Big pharma is working hard to find new revenue streams ....
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Post by rockstarrick on May 9, 2016 20:49:17 GMT -5
I just listened again to the webcast. Picking up at the 11:30 mark Matt says the international deals won't fit the timeline for financing and therefore........... Then the pause. It's as though the ink wasn't even dry on the offering and he was about to explain then someone gave him the cut sign. Matt is going to have to give a big mea culpa and B of A this week and explain the rationale the way he should have today. I think many of us would have swallowed this better with an appropriate explanation. Mnkd is illiquid with $27mm of cash on hand and $25 of this is restricted by loan covenants. So the offering makes sense, the way it was handled was off putting to say the least This was a reply from Matt, to an e-mail from a disappointed investor about the way the dilution was announced. I apologize for disappointing you. I believe today’s call was chock full of news about everything going on at the company. There were also scripted remarks about financing that were removed literally as I was speaking for legal reasons. It could not be helped. But it has since been released via press release. Definitely not what I intended. I am also sure many will be disappointed for our need to do this offering. Luckily, I will have a chance to address this in a presentation in just a few days. Matt Im not making excuses for Matt, but it seemed to me like things were very fluid as he spoke, like the script was constantly being changed as he tried to speak. Matt is faced with trying to salvage whatever we have left after the Sanofi fiasco, (I know, that's why he makes the big bucks), regardless, it's not a pleasant position to be in, and it's not all his fault, he is doing the best he can given the circumstances. I am actually very happy to know we now have enough money to get the sales force up and running, before the PR, we didn't know this !!! Good Luck Everybody
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Post by anderson on May 9, 2016 20:57:52 GMT -5
I hope one of the "select institutions" is the Al Mann foundation. I also hope it buys the majority of the offering. It could then exercise warrants throughout the year when MNKD needs some cash. Just wishful thinking. Actually, wasn't there news AH that the Mann Foundation gave notice it was considering SELLING shares? I hope I do not sound like a FUDSTER, as I am pretty sure I read that on this board or on one of the SEC filings posted AH. I'm sure someone else here remembers where it was. Please post a link if you do. This was in the 10-Q under risks to common stock. It says they can sell under a 10b-1 rule(preplanned sales) and it is a risk and could negatively affect the stock price. But did not say that they are going to do it.
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Post by agedhippie on May 9, 2016 21:00:24 GMT -5
Lets break down what the 'select institutions' actually paid for their shares.
Split out the warrants - A is a 2 yr warrant worth 0.75 of a share, B is an 18 month warrant worth 0.25 of a share. Between them that makes up a share with an option expiry of Jan 2018 +/- 3 months (mostly weight to the back months). OTM Call options that far out are mostly time value so looking at Jan 2018 LEAPS (because I cannot be bothered to calculate this properly) that it has value between about $0.52 and $0.56, take the lower $0.52 to account for dilution a bit as well.
Therefore at $1.03 for the the share and both warrants you end up with a share price of $0.51 when you strip off and sell the warrants. That's rough but not far off.
I can see the price going well under a dollar since that is where this deal values the stock currently.
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Post by Deleted on May 9, 2016 21:06:21 GMT -5
Lets break down what the 'select institutions' actually paid for their shares. Split out the warrants - A is a 2 yr warrant worth 0.75 of a share, B is an 18 month warrant worth 0.25 of a share. Between them that makes up a share with an option expiry of Jan 2018 +/- 3 months (mostly weight to the back months). OTM Call options that far out are mostly time value so looking at Jan 2018 LEAPS (because I cannot be bothered to calculate this properly) that it has value between about $0.52 and $0.56, take the lower $0.52 to account for dilution a bit as well. Therefore at $1.03 for the the share and both warrants you end up with a share price of $0.51 when you strip off and sell the warrants. That's rough but not far off. I can see the price going well under a dollar since that is where this deal values the stock currently. If it goes to 0.51/share, I'll go rent a 52' tractor trailer.
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Post by uvula on May 9, 2016 21:14:46 GMT -5
The reduced chance of BK should be worth something.
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Post by mnholdem on May 9, 2016 21:17:14 GMT -5
I just listened again to the webcast. Picking up at the 11:30 mark Matt says the international deals won't fit the timeline for financing and therefore........... Then the pause. It's as though the ink wasn't even dry on the offering and he was about to explain then someone gave him the cut sign. This was a reply from Matt, to an e-mail from a disappointed investor about the way the dilution was announced. I apologize for disappointing you. I believe today’s call was chock full of news about everything going on at the company. There were also scripted remarks about financing that were removed literally as I was speaking for legal reasons. It could not be helped. But it has since been released via press release. Definitely not what I intended. I am also sure many will be disappointed for our need to do this offering. Luckily, I will have a chance to address this in a presentation in just a few days. Matt Im not making excuses for Matt, but it seemed to me like things were very fluid as he spoke, like the script was constantly being changed as he tried to speak. Matt is faced with trying to salvage whatever we have left after the Sanofi fiasco, (I know, that's why he makes the big bucks), regardless, it's not a pleasant position to be in, and it's not all his fault, he is doing the best he can given the circumstances. I am actually very happy to know we now have enough money to get the sales force up and running, before the PR, we didn't know this !!! Good Luck Everybody
If this email is legit, Matt appears to be saying that he plans to address this further in his presentation in just a few days at the upcoming investors conference at the Bank of America Merrill Lynch 2016 Health Care Conference (on Thursday, May 12, 2016 at 8:00 AM (PDT) at the Encore at Wynn Hotel in Las Vegas, Nevada).
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Post by tayl5 on May 9, 2016 21:20:30 GMT -5
Please keep in mind that the price at which the shares were sold is the price if you want to sell 48 million shares in one go. The sp will go down tomorrow but not anywhere near to $0.51.
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Post by capnbob on May 9, 2016 21:32:31 GMT -5
Please keep in mind that the price at which the shares were sold is the price if you want to sell 48 million shares in one go. The sp will go down tomorrow but not anywhere near to $0.51. Yes, but they are doing more than that. They are effectively selling almost 100 million shares in one go with half attributed to the warrants. I believe the warrants will be bad for the stock price because they represent a potential tool for hedging (e.g. shorting against the warrant) and that might keep some potential buyers at bay.
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Post by compound26 on May 9, 2016 21:41:43 GMT -5
Lets break down what the 'select institutions' actually paid for their shares. Split out the warrants - A is a 2 yr warrant worth 0.75 of a share, B is an 18 month warrant worth 0.25 of a share. Between them that makes up a share with an option expiry of Jan 2018 +/- 3 months (mostly weight to the back months). OTM Call options that far out are mostly time value so looking at Jan 2018 LEAPS (because I cannot be bothered to calculate this properly) that it has value between about $0.52 and $0.56, take the lower $0.52 to account for dilution a bit as well. Therefore at $1.03 for the the share and both warrants you end up with a share price of $0.51 when you strip off and sell the warrants. That's rough but not far off. I can see the price going well under a dollar since that is where this deal values the stock currently. The above calculation is incorrect. Mannkind is getting $50 million for 50 million shares right now and if all warrants are exercised, Mannkind will get another $75 million for another 50 million shares (exercise price is $1.00 a share), so a total of $125 million proceeds for 100 million shares. Since the warrants are only on 50 millions shares, if you give them a time value of $0.50 a share (that will be probably right at the current SP of $1.10), then the time value for these shares is $25 million. $125 million minus $25 million, and we get $100 million for 100 million shares. So roughly $1.00 a share is the offering price, after taking out the time value (warrants). And if any of the warrants are not exercised, then those additional shares (for warrants) are not issued and for that particular share issued, Mannkind get $1.03 per share.
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Post by agedhippie on May 9, 2016 21:46:44 GMT -5
Please keep in mind that the price at which the shares were sold is the price if you want to sell 48 million shares in one go. The sp will go down tomorrow but not anywhere near to $0.51. I'm not saying the price will drop to $0.51, it was a back of the envelope to see what the institutions paid for the stock. The size of the discount to trading price is a comment on what the institutions think of the future prospects and where the price is going.
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Post by agedhippie on May 9, 2016 22:00:21 GMT -5
Lets break down what the 'select institutions' actually paid for their shares. Split out the warrants - A is a 2 yr warrant worth 0.75 of a share, B is an 18 month warrant worth 0.25 of a share. Between them that makes up a share with an option expiry of Jan 2018 +/- 3 months (mostly weight to the back months). OTM Call options that far out are mostly time value so looking at Jan 2018 LEAPS (because I cannot be bothered to calculate this properly) that it has value between about $0.52 and $0.56, take the lower $0.52 to account for dilution a bit as well. Therefore at $1.03 for the the share and both warrants you end up with a share price of $0.51 when you strip off and sell the warrants. That's rough but not far off. I can see the price going well under a dollar since that is where this deal values the stock currently. The above calculation is incorrect. Mannkind is getting $50 million for 50 million shares right now and if all warrants are exercised, Mannkind will get another $75 million for another 50 million shares (exercise price is $1.00 a share), so a total of $125 million proceeds for 100 million shares. Since the warrants are only on 50 millions shares, if you give them a time value of $0.50 a share (that will be probably right at the current SP of $1.10), then the time value for these shares is $25 million. $125 million minus $25 million, and we get $100 million for 100 million shares. So roughly $1.00 a share is the offering price, after taking out the time value (warrants). And if any of the warrants are not exercised, then those additional shares (for warrants) are not issued and for that particular share issued, Mannkind get $1.03 per share. The offer comprises warrants plus a share for $1.03. If we say the warrant is worth $0.5 that means the share must be the residual $0.53. You are adding the cost of exercising the warrant or not into the price which is wrong just as adding the price of exercising or not an option does not affect the price of an option.
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Post by slapshot on May 9, 2016 22:05:39 GMT -5
The above calculation is incorrect. Mannkind is getting $50 million for 50 million shares right now and if all warrants are exercised, Mannkind will get another $75 million for another 50 million shares (exercise price is $1.00 a share), so a total of $125 million proceeds for 100 million shares. Since the warrants are only on 50 millions shares, if you give them a time value of $0.50 a share (that will be probably right at the current SP of $1.10), then the time value for these shares is $25 million. $125 million minus $25 million, and we get $100 million for 100 million shares. So roughly $1.00 a share is the offering price, after taking out the time value (warrants). And if any of the warrants are not exercised, then those additional shares (for warrants) are not issued and for that particular share issued, Mannkind get $1.03 per share. The offer comprises warrants plus a share for $1.03. If we say the warrant is worth $0.5 that means the share must be the residual $0.53. You are adding the cost of exercising the warrant or not into the price which is wrong just as adding the price of exercising or not an option does not affect the price of an option. So if the warrants are never exercised, they are worthless and the 1.03 price is all for the shares... if the warrants are exercised then they are factored in as compound said which again results in approximately $1 / share... same / same, no?
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Post by mnkdfann on May 9, 2016 22:18:00 GMT -5
Actually, wasn't there news AH that the Mann Foundation gave notice it was considering SELLING shares? I hope I do not sound like a FUDSTER, as I am pretty sure I read that on this board or on one of the SEC filings posted AH. I'm sure someone else here remembers where it was. Please post a link if you do. This was in the 10-Q under risks to common stock. It says they can sell under a 10b-1 rule(preplanned sales) and it is a risk and could negatively affect the stock price. But did not say that they are going to do it. Thanks, what I saw was in the 10-Q. Mannkind noted that Mann Affiliated Entities trustees actually announced they may seek to sell. (Which in all likelihood means they probably will, otherwise why would Mann Affiliated Entities trustees even mention it?) That's a little more worrisome than a simple boilerplate 10-Q observation by Mannkind that the trustees can sell. "We have been informed by the trustees for the Mann Affiliated Entities that the trustees may seek to dispose of some or all of the shares beneficially owned by the Mann Affiliated Entities, pursuant to one or more trading plans under Rule 10b5-1 of the Exchange Act or otherwise. Although at this time we are not aware of any definitive decision by the trustees relating to the holding or disposition of the shares held by the Mann Affiliated Entities, any sales of our common stock by the Mann Affiliated Entities, or the perception that such sales may occur, including the entry into any such trading plans, could have a material adverse effect on the trading price of our common stock and could make it more difficult for us to raise capital through the sale of our common stock or securities convertible into or exercisable for our common stock, which could have a material adverse effect on our business and financial condition."
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