Additional Capital

[kball]

Can folks chime in as to the conundrum issuing any more shares to raise more money Mannkind has to potentially deal with?

Which may not be next month, but by the end of the year would seem prudent.

I would think at this price, any more shares issued would keep the stock price well below the 1.00 nasdaq threshold and could threaten delisting?

Just what i'm currently worrying about now, not being negative

[figglebird]

Aug 18, 2016 9:57:50 GMT -5 kball said:

Can folks chime in as to the conundrum issuing any more shares to raise more money Mannkind has to potentially deal with?

Which may not be next month, but by the end of the year would seem prudent.

I would think at this price, any more shares issued would keep the stock price well below the 1.00 nasdaq threshold and could threaten delisting?

Just what i'm currently worrying about now, not being negative

If they stay on top of covenants they may be able to find more attractive opportunities, but any which way you look at it, one should continue to expect dilution... If they are strapped and have know other means other than dilution at low prices they may rs first.  

[saxcmann]

Aug 18, 2016 9:57:50 GMT -5 kball said:

Can folks chime in as to the conundrum issuing any more shares to raise more money Mannkind has to potentially deal with?

Which may not be next month, but by the end of the year would seem prudent.

I would think at this price, any more shares issued would keep the stock price well below the 1.00 nasdaq threshold and could threaten delisting?

Just what i'm currently worrying about now, not being negative

I think more dilution is coming as well kball. Most likely before end of year unless we get partner/deal which is unlikely at this point. RLS milestone and/or sanofi settlement could happen and help extend runway. Management is probably wanting the pps between $2-3 before ATM. Not sure they'll get it? Maybe price jumps after label improvement is filed (sept/nov) and scripts begin to rise around then.

[matt]

This is not a company that can do a public secondary offering, so Mannkind will need to go the PIPE route. Investors in PIPEs are looking for a deal, which means they are not going to pay market price, but rather something less than market. There are different ways to discount the stock to create the incentive to buy, but normally it is either a discount on the price, warrants, or, most commonly, a bit of both. When a deal is announced at a discount, the price can be expected to drop to that new price (give or take a penny) because if the company just sold shares for 70 or 80 cents why should anybody buy in the market at $1.00? We can debate that logic all you want, but few offerings go out at a discount without immediately reducing the price.

I don't think the ATM is a viable financing vehicle at this time. When shares are sold ATM, the company is essentially putting new shares into the market at the bid price. The weekly burn rate is roughly $2.5 million, and I don't know that there is enough demand to soak up 2.5 million new shares every week without moving the bid lower. If the bid price moves, more and more shares need to be issued to yield the same amount of cash and that scenario is not sustainable. We may see a little ATM activity, but nothing close to the $50 million.

Whatever it does, the company should move sooner rather than later because the closer the cash is to zero, the more expensive the next financing round will be. There may be little difference between doing a raise in August and doing one in early October, but as we get into the holiday season the markets slow down. The markets are essentially closed between Thanksgiving and New Year's. January the cash start to run low and that is when the predators come out of the woodwork and the discounts get larger. The only reason to wait is if Q3 results are going to be so impressive that it will be easier to raise money in mid-November after the 10Q is published. Shareholders might not know what Q3 will bring until the 10Q is published, but management will have a very good idea of how the quarter will look by mid-September.

Don't get too obsessed about the NASDAQ delisting; that is far off. A reverse split is the easiest way to deal with that, but it also requires a shareholder vote and those can be expensive. If a reverse is needed, it is better to wait until the annual meeting when votes have to be taken for board seats and such anyway. While it is possible to call a special meeting at any time, that requires yet more SEC filings and a solicitation process that is not cheap. There is no reason to do it earlier than the annual meeting just to maintain NASDAQ compliance because there is a one year grace period.

No matter what happens, there will be more dilution coming, and no matter what more dilution is preferable to the alternatives. Dilution is your friend, not your enemy.

[kball]

Thanks Matt.

Exactly the type of commentary i was hoping for to put things in proper perspective.

[gamblerjag]

Hey Matt, your post made a lot of sense.. of course there is always the possibility beyond your stated "Q3 surprise" of scripts ... and that's a domestic partner since is sounded like from the last conference call foreign country is not happening at this time.  If that does happen...  all other scenarios are gone gone gone.  

[Deleted]

Aug 18, 2016 11:44:16 GMT -5 gamblerjag said:

Hey Matt, your post made a lot of sense.. of course there is always the possibility beyond your stated "Q3 surprise" of scripts ... and that's a domestic partner since is sounded like from the last conference call foreign country is not happening at this time.  If that does happen...  all other scenarios are gone gone gone.  

in your dreams.. the heavy lifting is done . who needs one now?

[peppy]

The product is excellent. Let's see what the diabetic community does.

let's get some revenue.

screencast.com/t/zTeZLVRCV5

[kbrion77]

Aug 18, 2016 11:44:16 GMT -5 gamblerjag said:

Hey Matt, your post made a lot of sense.. of course there is always the possibility beyond your stated "Q3 surprise" of scripts ... and that's a domestic partner since is sounded like from the last conference call foreign country is not happening at this time.  If that does happen...  all other scenarios are gone gone gone.  

"Partners" being mid-big pharma will be waiting to pick up the MNKD asset scraps with a cheap sale or company bankruptcy.  I still think they sell Afrezza if they gain any type of traction to keep the company afloat.  

[surplusvalue]

The only thing we should count on is what we know is coming and that is a milestone payment (the figure of which is unknown).I would thus expect more dilution given the financial situation. Warrants from the last round kick in around $1.50 if I recall correctly. As others have indicated delisting is not such an issue;it takes a very long time for a stock to actually be delisted with plenty of opportunities to meet listing requirements.
As for a reverse split in this situation it's a kiss of death. Every time a company in this kind of situation does one everyone can see it is an act of desperation and the consequences are negative. For those who want to say that in a split the ratio and value for the shareholders is the same don't bother since the argument doesn't wash: it is much more difficult to go from $5 to $25 than it is from $1 to $5. This is because after the split everyone knows the value has been artificially propped up. An RS from a position of strength and growth is the only time I have seen it work and MNKD is nowhere near these conditions.

[agedhippie]

The other option is the one RLYP took when they decided to sell. The borrowed at a truly horrible interest rate because they knew a sale was a couple of months out so they would not need to carry the interest for long and it avoided dilution. I don't see that applying here though because there is no intention to sell but I thought I would mention it.

[slugworth008]

Aug 18, 2016 11:04:14 GMT -5 matt said:

This is not a company that can do a public secondary offering, so Mannkind will need to go the PIPE route. Investors in PIPEs are looking for a deal, which means they are not going to pay market price, but rather something less than market. There are different ways to discount the stock to create the incentive to buy, but normally it is either a discount on the price, warrants, or, most commonly, a bit of both. When a deal is announced at a discount, the price can be expected to drop to that new price (give or take a penny) because if the company just sold shares for 70 or 80 cents why should anybody buy in the market at $1.00? We can debate that logic all you want, but few offerings go out at a discount without immediately reducing the price.

I don't think the ATM is a viable financing vehicle at this time. When shares are sold ATM, the company is essentially putting new shares into the market at the bid price. The weekly burn rate is roughly $2.5 million, and I don't know that there is enough demand to soak up 2.5 million new shares every week without moving the bid lower. If the bid price moves, more and more shares need to be issued to yield the same amount of cash and that scenario is not sustainable. We may see a little ATM activity, but nothing close to the $50 million.

Whatever it does, the company should move sooner rather than later because the closer the cash is to zero, the more expensive the next financing round will be. There may be little difference between doing a raise in August and doing one in early October, but as we get into the holiday season the markets slow down. The markets are essentially closed between Thanksgiving and New Year's. January the cash start to run low and that is when the predators come out of the woodwork and the discounts get larger. The only reason to wait is if Q3 results are going to be so impressive that it will be easier to raise money in mid-November after the 10Q is published. Shareholders might not know what Q3 will bring until the 10Q is published, but management will have a very good idea of how the quarter will look by mid-September.

Don't get too obsessed about the NASDAQ delisting; that is far off. A reverse split is the easiest way to deal with that, but it also requires a shareholder vote and those can be expensive. If a reverse is needed, it is better to wait until the annual meeting when votes have to be taken for board seats and such anyway. While it is possible to call a special meeting at any time, that requires yet more SEC filings and a solicitation process that is not cheap. There is no reason to do it earlier than the annual meeting just to maintain NASDAQ compliance because there is a one year grace period.

No matter what happens, there will be more dilution coming, and no matter what more dilution is preferable to the alternatives. Dilution is your friend, not your enemy.

  While I agree that dilution is not necessarily our enemy - I hate the fact that we are even in a position to have this type of discussion. Is there no "White Knight" to ride in and save the day financially to provide a longer runway to a better PPS? Probably not hence we wait fingers crossed that increased script numbers will lead to an increase in the PPS so that whatever dilution comes our way it is as favorable as possible. Looks like I picked the wrong week to quit drinking - lol

[chuck]

Not sure I get the anxiety about financing as they said they can go to early 2017. If so, either they significantly outperform sny (thus demonstrating a trajectory to profitability in which case financing will be no problemo) or they don't significantly outperform sny (and they demonstrate that sales of afrezza will be insufficient to sustain this company) and in such a case I would suspect financing will be impossible and afrezza gets sold for less than debt outstanding and the equity gets wiped out.

[babaoriley]

Partnering does not in any way get around dilution, it is the essence of dilution.

About the only thing that I can see that might save us are numbers of scripts, both new and total, encouraging reports back from the sales force (hooked up to a polygraph, of course), favorable reports from doctors who have prescribed Afrezza, encouraging word re insurance, and a whole lot of satisfied customer testimonials - all of which may not move the stock much at first, but enough to get the Foundation or other related party to take a chance on increasing that line of credit, seeing that the turnaround is in full flight, and the future looks very promising.  Even a convertible debenture would be fine, if the conversion price isn't horrible.

I can't believe that under certain positive circumstances some related party not extend a lifeline.  Assuming that related party already holds lots and lots of shares, they'd be helping themselves, and maybe they'd be willing to help the long time shareholders, cuz if they don't care all that much, they might just take a PIPE at very favorable terms.  Again, though, only if the decision-maker is convinced that the turnaround is going to be successful.

[Deleted]

Aug 18, 2016 11:04:14 GMT -5 matt said:

This is not a company that can do a public secondary offering, so Mannkind will need to go the PIPE route. Investors in PIPEs are looking for a deal, which means they are not going to pay market price, but rather something less than market. There are different ways to discount the stock to create the incentive to buy, but normally it is either a discount on the price, warrants, or, most commonly, a bit of both. When a deal is announced at a discount, the price can be expected to drop to that new price (give or take a penny) because if the company just sold shares for 70 or 80 cents why should anybody buy in the market at $1.00? We can debate that logic all you want, but few offerings go out at a discount without immediately reducing the price.

I don't think the ATM is a viable financing vehicle at this time. When shares are sold ATM, the company is essentially putting new shares into the market at the bid price. The weekly burn rate is roughly $2.5 million, and I don't know that there is enough demand to soak up 2.5 million new shares every week without moving the bid lower. If the bid price moves, more and more shares need to be issued to yield the same amount of cash and that scenario is not sustainable. We may see a little ATM activity, but nothing close to the $50 million.

Whatever it does, the company should move sooner rather than later because the closer the cash is to zero, the more expensive the next financing round will be. There may be little difference between doing a raise in August and doing one in early October, but as we get into the holiday season the markets slow down. The markets are essentially closed between Thanksgiving and New Year's. January the cash start to run low and that is when the predators come out of the woodwork and the discounts get larger. The only reason to wait is if Q3 results are going to be so impressive that it will be easier to raise money in mid-November after the 10Q is published. Shareholders might not know what Q3 will bring until the 10Q is published, but management will have a very good idea of how the quarter will look by mid-September.

Don't get too obsessed about the NASDAQ delisting; that is far off. A reverse split is the easiest way to deal with that, but it also requires a shareholder vote and those can be expensive. If a reverse is needed, it is better to wait until the annual meeting when votes have to be taken for board seats and such anyway. While it is possible to call a special meeting at any time, that requires yet more SEC filings and a solicitation process that is not cheap. There is no reason to do it earlier than the annual meeting just to maintain NASDAQ compliance because there is a one year grace period.

No matter what happens, there will be more dilution coming, and no matter what more dilution is preferable to the alternatives. Dilution is your friend, not your enemy.

Do the buyers of PIPEs get some type of preferred status if there is a BK?  If not, fair assumption they believe the company remains a going concern or they can get their $$ back if MNKD has to sell assets or is this simply a different form of gambling by HNW individuals via their bank or investment vehicle?  Are PIPEs senior typically to common?  If MNKD needs another $50mm to run 5 mos and the PIPEs show a discounted price of 0.80, we are talking another 62.5mm shares perhaps in a format that does not immediately dilute but it still impacts SP.