Is this the Shorts Last Hurrah?

[mannmade]

Today is 07.15.16 and we are exactly two weeks into the launch of MannKind 2.0... and the price seems to have been walked down during the past two weeks (on 07.01.16 we closed at $1.22) to a low of .99 as of today... So far...

So I started to think about what I/We as investors should expect during the next 5 1/2 months which seems to be the time period we have with current cash reserves to quote "Make or Break" MannKind... Now I am not a technical not fundamental investor.  I do my own DD and all my opinions are personal but thought I might share some thoughts today...

We all know the possible events that could occur between now and the end of the year to turn MannKind around:

Sanofi Settlement, with cash and release of all debt
TS Partnership Announcement
AFREZZA Distribution Partnership
RLS Milestone Payment (if Significant)
Distribution in Another Country
Increase in AFREZZA Scripts and Renewals

However, of the above, it currently seems that MannKind's stock price is most likely to be measured in terms of AFREZZA TRx and NRx as the others are all pure speculation until something concrete is announced.  

So we are back to a weekly waiting game to see what the numbers are each Friday. And given that the sales force has just hit the bricks, that the new sample packs are not yet distributed and when they are they will now last a bit longer, new SKU's will take time to integrate into inventory, I am of the opinion that we may not see nor expect any positive sales lift until end of August 2016 if not a bit later.  We may see in the interim slight increases from doctors who now realize AFREZZA is not going away and are willing to re-engage in writing prescriptions, but we must remember they are not the ones who will help drive sales as they had previously been writing scripts and included in past totals.  It's the new doctors that we need to get on board...

So between now and say mid-September I/we really should have no expectations as longs.  However, imho this will be exactly the time for the shorts to make their "last hurrah."  Witness the beginning of this with today's low of .99 pps as of this writing.  The shorts prey on uncertainty and no news and so for the next 6 to 8 weeks this will be their moment in time to make noise especially as the focus is now back on weekly scripts and cash on hand.

If you believe that Matt, Mike, et al... will be able to get the script lift we need, (exactly what that is I do not know and is a different conversation. But for my purposes, I would be happy with 1,000 to 2,000 TRx per week by the end of the year.  I realize this is not break even by a long shot but it reduces negative cash flow and shows a trend towards positive cash flow that can be projected and give the stock a look forward revenue stream that will be factored into the pps.)

So with 1,000 to 2,000 scripts per week (assuming appropriate retention etc...) we now as discussed have a theoretically higher stock price with forward earnings factored to a degree.  This will allow for a better opportunity to finance and issue more shares.  Let's say for purposes of this discussion, the scripts hit 1,000 per week by October 2016.  And with that the pps is now at $2.00 per share.  (Both script numbers and share price are pure speculation on my part for purposes of this conversation)  Now Mnkd can issue 50m additional shares and raise $100m which is another full year of operating revenue. (And yes I am aware of the warrants at $1.50 would have most likely been exercised on the way up adding more revenue to the Mnkd coffers and also outstanding shares which is why I  chose a very low stock price at which to issue additional shares)

Under this scenario, MannKind is now increasing scripts and has taken cash off the table as an issue and therefor imho the dilution should not have as severe a negative impact on the then current stock price.  And this takes me back to my original thought... Is this the last hurrah for the shorts?  I do not believe there will be a short squeeze of any real significance but I do think we may start to see a draw down of short interest come September/October if the above scenario plays out and therefore perhaps we are beginning to hit a true bottom...

I wish all longs good luck and good fortune with the toast of "Bottoms Up!!!"  

 
  

 

[babaoriley]

Very realistic, mannmade; but you know me, I look at current affairs and say, "Is this the last hurrah for the longs."

This whole thing has become so complex, so problematic; remember when it was this easy, "Afrezza will sell itself." Obviously, it never was that easy or even close to it. What most of us did not realize, and I include myself at the top of that list, is that we needed a Mike Castagna-type guy on board at the time we got approved. Hopefully, we snagged him in time.

[sportsrancho]

Cheers and great post Mann! I'm going with this plan:-) To buy a few more shares in Aug. and 2019 calls in Nov.

[matt]

A lot will come down to the cash flow numbers for Q2 as released in the 10Q due around August 10. The cash runway continues to be the biggest risk to this company, and the ability to raise more cash is a combination of share price and NASDAQ limits on the number of shares that can be issued with a discount in any six month period. If the share price is too low, the maximum number of shares sold will be high relative to the cash proceeds obtainable. Realistically, the new sales program won't make any serious contribution until after Labor Day so there will really have to be a sharp uptick in script numbers for any October financing to be successful, but waiting longer might be a bad idea if the cash is running low. The vulture investors that buy into small biotechs with low cash balances will demand even larger discounts simply because they know they can get whatever terms they ask for.

I don't know what kind of weekly script numbers there would have to be to get the price into the range you estimated, but my gut tells me 1,000 NRx isn't going to cut it, especially since the refill numbers on the new program won't be visible until very late in the year. Here is hoping for bigger relaunch numbers.

[mannmade]

Thanks Baba and Sports... If you are still a long at this point then you should at least be celebrated for putting your money where your mouth is and having the strength of your convictions... No small feat at this point in time...

Now I am not a PWD nor do I pretend to know what they go through although I have had a first hand look for 50 years plus with a brother who has been a mostly out of control T1 since age of 8. I do feel like I know enough to know that the current situation is literally crazy!!!

Really hard to believe when it seems so simple that Tresiba, AFREZZA and a Dexcom seems to be a cure (without being a true cure) for many (will not say all) PWD. Better than a pump and better than an artificial pancreas, both too expensive (so what's the problem with insurance for AFREZZA here???) And subject to inconvenience for sports, shower or travel and always the possibility of breakdown... Wow! When will doctors and insurance wake up!!!! Ok rant over... Enjoy your weekend...

[dme306]

Very balanced view of the overall situation with MNKD. If we can show an uptick in the script trend, then I expect those who have been waiting on the sidelines will begin adding in tranches. As far as a partner, I don't know what they want to see? Production/manufacturing/distribution and script numbers but, who wants "which piece of the MNKD pie?" Also, Afrezza or Technosphere?

[mannmade]

Jul 15, 2016 13:54:17 GMT -5 matt said:

A lot will come down to the cash flow numbers for Q2 as released in the 10Q due around August 10. The cash runway continues to be the biggest risk to this company, and the ability to raise more cash is a combination of share price and NASDAQ limits on the number of shares that can be issued with a discount in any six month period. If the share price is too low, the maximum number of shares sold will be high relative to the cash proceeds obtainable. Realistically, the new sales program won't make any serious contribution until after Labor Day so there will really have to be a sharp uptick in script numbers for any October financing to be successful, but waiting longer might be a bad idea if the cash is running low. The vulture investors that buy into small biotechs with low cash balances will demand even larger discounts simply because they know they can get whatever terms they ask for.

I don't know what kind of weekly script numbers there would have to be to get the price into the range you estimated, but my gut tells me 1,000 NRx isn't going to cut it, especially since the refill numbers on the new program won't be visible until very late in the year. Here is hoping for bigger relaunch numbers.

The only thing I can tell you about why I choose between 1,000 and 2,000 scripts per week is that after a year Sanofi could only barely get past 600.  If Mnkd can get to 1,000 plus (starting with a base of 224 or so TRx) within 12 to 16 weeks (Sept/Oct) then I think there is a positive story to be told.  As for effect on pps share, I as mentioned, guessed and I cannot really say.  However it would have to be a bit better than where we are today so chose what I felt was low enough and reasonable number.  

[sportsrancho]

The way I see it, we're having a two for one special:-) Buy at one, sell at 2. Take half of that and buy leaps.
Image from 4.bp.blogspot.com/-LPKgbdmuRLg/Vx3RHvCZi8I/AAAAAAAABfk/gt1vQx1QPWsg_b_lIQEu4tXRsd20jC3GgCLcB/s1600/anne%2Batulaegwu%2BHOW%2BTO%2BTURN%2BA%2BBAD%2BDAY%2BAROUND.png.

[op2778]

I'm going to be advocate devil here. 

1. Do we really think Matt can force SNY to give us something good? Honestly, i dont think so. Matt has no balls and Sanofi will try to keep us on BK edge until last moment.

2. I mostly agree with you, but honestly, i dont think we will see 1.000 Prescrptions soon (i saw that number very very big right now).

3. My only faith (i don't know why, but have a good feeling about this, is RLS). I look at them as our life vest.

4. I know this hurts, but i see unfortunately a R/S very soon. Tell me one time Matt give something good to long shareholders. Until now, just Bad news, diluition and pure crap. Hope he has the silver bullet, but doubt of it.

GLTA

Btw: I'm long, but decided not to add anymore. Probably will add calls If some improvement will arrive, but not adding more oil to the fire for now.

[mannmade]

op, understand... I am not suggesting anything to expect or wait for at this point except script count (hopefully upward.) A R/S may be in the works but am not sure what it accomplishes if the underlying issues do not change. Will still be tough to get financing at this point.

A 1,000 scripts may be high but they already have 224. So only need 776. That's roughly 100 scripts per rep in 3 months. Is it doable, I do not know but think it should be.

If eacb rep sees 2 docs per day at 60 reps that's 600 docs per week and 2,400 docs per month. So theoretically it would only take 30% of docs called on in the first month to write 1 script each per week. Seems doable but who really knows until we know...?

[Deleted]

Jul 15, 2016 14:30:43 GMT -5 mannmade said:

op, understand... I am not suggesting anything to expect or wait for at this point except script count (hopefully upward.) A R/S may be in the works but am not sure what it accomplishes if the underlying issues do not change. Will still be tough to get financing at this point.

A 1,000 scripts may be high but they already have 224. So only need 776. That's roughly 100 scripts per rep in 3 months. Is it doable, I do not know but think it should be.

If eacb rep sees 2 docs per day at 60 reps that's 600 docs per week and 2,400 docs per month. So theoretically it would only take 30% of docs called on in the first month to write 1 script each per week. Seems doable but who really knows until we know...?

assuming 60 reps in field - only 12 per rep?

[Deleted]

I didn't expect the price to come down so quick. I have to imagine the short interest is up significantly especially now that shares do not cost as much to borrow. I think we see some really violent moves in the coming weeks. It won't take much for the Mann Foundation to pull the trigger on selling shares if scripts look like they do today. Its found money to them so I would think they will probably give very little room for error.. People say they will go down with a sinking ship but once all that FUD starts hitting people will bail. If you have profits I hope that you have been taking them since the offering.

[mannmade]

reverelo, nor did I and is in part what prompted me to begin this thread... I don't know how the Mann Foundation is structured from a legal standpoint but if their is a trust/trustee involved then they must act in the best interest of the beneficiaries so would be legally obligated to protect them and thus you would be right if they have not done so to some extent already.. Have a good weekend...

[op2778]

About Trustee: If you remember, on april or may, there Was a huge volume on a down day. I dont remember exactly the volume and i cannot see it on my iPad, but Was really huge. Those days were the ones when Matt done the famous diluition just after the ER or close to it. A lot of ppl were speculating about family selling their shares. 

Volume was really big and probably they already sold, but, to be honest i hope they don't. It will not surprise If they did, but just to remember that day of huge volume.

have a nice weekend
op

[LosingMyBullishness]

Jul 15, 2016 14:21:01 GMT -5 op2778 said:

I'm going to be advocate devil here. 

1. Do we really think Matt can force SNY to give us something good? Honestly, i dont think so. Matt has no balls and Sanofi will try to keep us on BK edge until last moment.

2. I mostly agree with you, but honestly, i dont think we will see 1.000 Prescrptions soon (i saw that number very very big right now).

3. My only faith (i don't know why, but have a good feeling about this, is RLS). I look at them as our life vest.

4. I know this hurts, but i see unfortunately a R/S very soon. Tell me one time Matt give something good to long shareholders. Until now, just Bad news, diluition and pure crap. Hope he has the silver bullet, but doubt of it.

GLTA

Btw: I'm long, but decided not to add anymore. Probably will add calls If some improvement will arrive, but not adding more oil to the fire for now.

Mannmade's arguments were solid and balanced. He was not playing the God's advocate and therefore there is little reason to act as a Devil's advocate. As self-proclaimed Devil's advocate your historical role would be to dilligently collect solid arguments.  I doubt that you meticulously investigated to argue that 'Matt has no balls'.