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Post by Deleted on May 9, 2016 20:30:07 GMT -5
Not happy about the dilution but we are where we are and BK not an option.
Trying to get a handle on what our cash burn will be.
On today's call, Matt said burn rate would be $10 - $12 mm / month through the end of the year.
I have listed below the sales / marketing jobs with my best guess. If others have better info, I am all ears.
Per todays #:
Cash & Cash Equiv 12-31-15 were $59.1 mm
Cash & Cash Equiv 1-31-16 were $27.7 mm
So they burned through $10.1 mm / month for Q1
I thought they had to keep $25 mm on hand so on 4-1-16 they had $2.7 mm in cash they could use for operations.
Direct and indirect payroll are going to jump big.
How much for the two VPs that report to Mike Castagna? VP Base - $140 - $180? PS - Mike gets I think $400K
The are hiring 2 Regional Business Directors ($135 - $150) and each will have 3 regional sales managers ($115 - $130) reporting to them.
National Account Executive - given the job description, they will need several, my guess is three ($150)
These positions are thought Publicis Selling Solutions so they get a fee on top of everything
12 Diabetes Educators - $90 - $105
60 - 70 Reps - $75 - $85
Just posted today on Mannkinds website:
Sr. Director Marketing - $135
Marketing Coordinator - $60
Sr. Director - Trade / Account - $120
My back of the napkin says that Mike and his team to include sales leadership have an annual base salary cost of $2.15mm
The nurse educators and field sales team being hired through publicist I have estimated at a base salary of $6.30mm
The three new marketing positions I mentioned that just posted I have at $315k for base salary
So with bonus, benefits, travel costs etc how much does that add to the base salaries for the marketing and sales management team? I do not know how much the company that has hired the contract sales team makes but the sales people get benefits, car expenses, they bring lunch to doctors etc.
All of the above base salaries are $8.765mm
Say 20% for benefits is $1.75 mm
10% bonus $870k
Travel, Training & Conventions another 15% = $1.35 mm
TOTAL is $12,735,000 annually or a little over $1mm per month.
My numbers I suspect are a bit low. To hire good people who are gainfully employed to take a risk takes money and stock options.
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Post by anderson on May 9, 2016 21:03:40 GMT -5
I thought they had to keep $25 mm on hand so on 4-1-16 they had $2.7 mm in cash they could use for operations. That is covered by the Mann Group loan agreement of $30 Mil. So they had $27.7Mil they can spend at the end of Q1. |
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Post by capnbob on May 9, 2016 21:24:09 GMT -5
I thought they had to keep $25 mm on hand so on 4-1-16 they had $2.7 mm in cash they could use for operations. That is covered by the Mann Group loan agreement of $30 Mil. So they had $27.7Mil they can spend at the end of Q1. "So they had $27.7Mil they can spend at the end of Q1." No, the loans have a covenant requiring MNKD to keep 25 million in cash on the balance sheet, so only 2.7 million was available. Figure six weeks since then and burning about 2.5 mil a week means they have probably started using the Mann credit line. The worrisome feature is that MNKD has no experience in marketing, distribution, and sales. I, for one, have no idea how to go about estimating what setting up such a system would cost, but if Sanofi expended somewhere north of 200 million for 11 months, it seems like it could get quite expensive. |
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Post by anderson on May 9, 2016 23:34:13 GMT -5
Really capnbob...........Okay lets go to the 10-K " July 1, 2013 (as amended, the “Facility Agreement”) that requires us to maintain at least $25.0 million in cash and cash equivalents or available borrowings under the loan arrangement," Please cite and quote your sources. link to 10-k investors.mannkindcorp.com/secfiling.cfm?filingID=1193125-16-505366&CIK=899460search for the above line so you can verify for yourself.....trust but verify. |
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Post by matt on May 10, 2016 6:51:23 GMT -5
I think this is an argument of semantics. Loan covenants specify cash balances to protect the lender in a worst case scenario and while the Mann Group loan can be tapped to get that cash, it would have to be in the form of cash. If the company did ever go into BK without the credit line having been tapped to fund the cash requirement, the unsecured creditors would object to borrowing an additional $25 million to give Deerfield a better payout. Deerfield wants to see cash in the bank because that is the only thing that protects their position and, failing that, would declare the company in default.
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Post by anderson on May 10, 2016 8:43:04 GMT -5
The quote above "or available borrowings under the loan arrangement," is in the 10-k black and white. If MNKD falls below $25 million they do not have to tap the borrowing facility. What if MNKD goes bankrupt and doesnt touch the loan facility, guess that would be for the courts to figure out.
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Post by brotherm1 on May 10, 2016 8:51:57 GMT -5
I think this is an argument of semantics. Loan covenants specify cash balances to protect the lender in a worst case scenario and while the Mann Group loan can be tapped to get that cash, it would have to be in the form of cash. If the company did ever go into BK without the credit line having been tapped to fund the cash requirement, the unsecured creditors would object to borrowing an additional $25 million to give Deerfield a better payout. Deerfield wants to see cash in the bank because that is the only thing that protects their position and, failing that, would declare the company in default. |
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Post by brotherm1 on May 10, 2016 8:57:42 GMT -5
Matt, based upon your understanding, the only cash we now have access to is the $47 million or so from the offering plus what would be left of the roughly $27 million we had at the end of March which would be perhaps about $9 million now, and hence we only have about $56 millin total and nothing else?
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Post by lakon on May 10, 2016 11:01:32 GMT -5
The quote above "or available borrowings under the loan arrangement," is in the 10-k black and white. If MNKD falls below $25 million they do not have to tap the borrowing facility. What if MNKD goes bankrupt and doesnt touch the loan facility, guess that would be for the courts to figure out. I recall this being a favorite topic of GS Jay Olson. Each time it was addressed ad nauseam as anderson stated. The Mann Group was effectively a trusted backstop for Deerfield as I understood it. They knew that they would get their money. Also, the loan covenant only kicks in on the last day of the quarter from what I recall so it does not matter what happens any other day as long as the money is available on that day. I'm more interested in what happens if the Mann Group expands that $30 million to say, $300 million... |
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Post by laffs4sale on May 10, 2016 13:47:30 GMT -5
We also have the Valencia HQ. They were asking $20+ million. I don't know what the current status is, but at some point that will be a source of funds.
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Post by mnholdem on May 10, 2016 14:41:52 GMT -5
I believe the proceeds from a Valencia CA sale won't be available to MannKind Corporation unless Sanofi first forgives the Aventisub LLC loan facility used to help MannKind pay 35% of expenses related to Afrezza. The reason for this is that the Valencia property is listed as collateral against the loan. If the property is sold, the money must go to Aventisub as a payment.
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Post by compound26 on May 10, 2016 14:48:32 GMT -5
Here is the $25 million requirement: "to avoid defaulting under the covenant in our facility agreement with Deerfield Private Design Fund II, L.P. (“Deerfield Private Design Fund”) and Deerfield Private Design International II, L.P. (collectively, “Deerfield”) dated July 1, 2013 (as amended, the “Facility Agreement”) that requires us to maintain at least $25.0 million in cash and cash equivalents or available borrowings under the loan arrangement, dated as of October 2, 2007, between us and The Mann Group LLC (as amended, restated, or otherwise modified as of the date hereof, “The Mann Group Loan Arrangement”), as of the last day of each fiscal quarter." Seems like Mannkind can use all the available cash as long as they have at least $25 million available to borrow under the Mann Group facility. Since Mannkind had $27.7 million as of 3/31, as of today, 5/10, that $27.7 million probably still have $13.7 million (assuming they spent $10 million in April and then $4 million in May up to today). $13.7 + $47.5 = $61.2 million Plus, they can draw another $5 million under the Mann Group facility without violating covenants. $61.2 + $5 = $66.2 million. It appears Mannkind now has about $66.2 million available to spend. Since Matt has said he expected the burn rate to be $10-12 million per month, let's assuming the rate to be $11 million, $66.2 million will extend the runway for another six months, up to 11/10. Hope some additional funding will be secured within the next six months to further extend the runway. investors.mannkindcorp.com/secfiling.cfm?filingID=1193125-16-505366&CIK=899460 |
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