Dilution?

[mannmade]

With the end of September we see that scripts are climbing albeit much slower than one would have hoped, so the inevitable issue must be addressed... Dilution? When, How Many Shares, On what terms, and what effect will dilution have on the stock price and the future of MannKind...?  Any answers are purely a guess or personal speculation at this point...

Imho, I continue to be a cautious optimist, although I do find myself revising and revisiting my MannKind investment plan regularly as opposed to my original Buy and Hold strategy.  As a result, given the view of my current "snap shot" of MannKind I do not see dilution as a necessarily bad thing at this point.  

However, I must give two caveats, first; scripts must continue to rise and eventually attain a weekly level that can help financially sustain the company in whole or in part (in combination with other products such as epi).  Second, MannKind needs to raise enough money to gain enough time to get to the first caveat.

So while we are facing a tough time at the moment I have reasons for my cautious optimism as follows: 

1. At .70 a share or so it looks like the pending dilution may have been baked in to some degree, although am not sure how much that might be, as s/p is also a reflection of weekly script totals.  (However, s/p has held fairly steady the last few weeks since it declined to this level and weekly script counts remain mostly constant with slight upticks.)

2. If we get dilution and get enough money to have the time for scripts to ramp up and the epi launch or some other form of partnership, say 12 months, then once dilution occurs MannKind has effectively taken the financial issue off the table for a time.  Ironically this may actually help keep the share price from going too low as money is one of the two big issues right now.

3. Even with 150m or more new shares on the market I think having the time to get scripts to a sustainable level is worth it at this point.  Then once the s/p climbs back to say $2.50 to $3.00 based on script numbers of weekly trends and growth with real revenue, MannKind can do a reverse split to downsize the number of outstanding shares.

At the end of the day this is not what most of us were looking for, and I am not a professional at this, but for what it's worth I believe there is still reason to be optimistic so I thought it might generate an interesting discussion while we wait to see what happens over the next 6 to 8 weeks.  

 

[dreamboatcruise]

Would there be enough buyers for that number of shares without some empirical data that 2nd launch will be more successful than first? I think it is pure guessing game as to when and at what price dilution will occur. I just don't have that sort of feeling that enough people would have a grasp on probabilities to have anything meaningful "baked" into current price. We've held steady at levels before only to crash through them.

[mannmade]

dbc, you may be right... all pure speculation as I mentioned earlier.

Money has to come from somewhere, sooner than later at this point... Doubt it will be from Al Mann's estate but just my opinion. So would likely have to come from open market or private party who gets access to info we don't have that gives them enough confidence to do a deal. Either way, as I see it, money is the big issue right now and it will need to be resolved first so that scripts have the time to take care of themselves as the resolution to the second big issue imho...

[bioexec25]

Sept 21, 2016 18:22:10 GMT -5 dreamboatcruise said:

Would there be enough buyers for that number of shares without some empirical data that 2nd launch will be more successful than first? I think it is pure guessing game as to when and at what price dilution will occur. I just don't have that sort of feeling that enough people would have a grasp on probabilities to have anything meaningful "baked" into current price. We've held steady at levels before only to crash through them.

Pretty well said DBC.

I'll reinforce with the caveat that the next few weeks for reasons discussed might offer support to the acceleration thus tipping point argument. To your point it does feel pps is being held at this .69-70 wall waiting for more mostly flat scripts & no deals, little formulary acceptance, & pending massive per capital dilution or worse.

If that worse case happens they drop this to .35 followed by bleed out or if scripts rise and/or deal announced then $1ish and bleed up. And then what would have gone down will go up a lot imo. Street basing argument mostly on financials and lack of immediate demand on the surface. We know drug development & acceptance is not so simple.

[u1682002]

I become a dreamer after I started to invest in MNKD stock. I am still dreaming that MNKD can get out of this financial mess without additional dilution. I am hoping the following miracles will happen:

1. Script number increases 30%/weekly for the 3 weeks in row starting this week.

2. Shorts start to be panic and push our stock price back to $1.5/share.

3. Mann's foundation announces additional ~100mil line of credit.

4. Stock price is pushed back up to $2.5/share.

5. MNKD sell $50m ATM for additional 5month working capital.

6. DTC starting in Nov. will eventually help us to reach the self-sustaining point.

[mannmade]

Would be nice...

[Deleted]

Sept 21, 2016 18:44:17 GMT -5 u1682002 said:

I become a dreamer after I started to invest in MNKD stock. I am still dreaming that MNKD can get out of this financial mess without additional dilution. I am hoping the following miracles will happen:

1. Script number increases 30%/weekly for the 3 weeks in row starting this week.

2. Shorts start to be panic and push our stock price back to $1.5/share.

3. Mann's foundation announces additional ~100mil line of credit.

4. Stock price is pushed back up to $2.5/share.

5. MNKD sell $50m ATM for additional 5month working capital.

6. DTC starting in Nov. will eventually help us to reach the self-sustaining point.

Mnkd doesn't need to use ATM if all other things happen. There are 50 million share warrants @ 1.50 which should bring 75 mil. But the holders of the warrants would short any price above as they are covered by the warrants. Ironically

[Deleted]

Why would Mann announce credit rather than purchasing 100 mil in equity if it comes to that

[dreamboatcruise]

Sept 21, 2016 18:44:17 GMT -5 u1682002 said:

I become a dreamer after I started to invest in MNKD stock. I am still dreaming that MNKD can get out of this financial mess without additional dilution. I am hoping the following miracles will happen:

1. Script number increases 30%/weekly for the 3 weeks in row starting this week.

2. Shorts start to be panic and push our stock price back to $1.5/share.

3. Mann's foundation announces additional ~100mil line of credit.

4. Stock price is pushed back up to $2.5/share.

5. MNKD sell $50m ATM for additional 5month working capital.

6. DTC starting in Nov. will eventually help us to reach the self-sustaining point.

ATM is dilution.

Mann Foundation would have done that sooner if they had any plan to.  Do you have any data to support that they would even have that much?

[Deleted]

Sept 21, 2016 19:21:03 GMT -5 dreamboatcruise said:

Sept 21, 2016 18:44:17 GMT -5 u1682002 said:

I become a dreamer after I started to invest in MNKD stock. I am still dreaming that MNKD can get out of this financial mess without additional dilution. I am hoping the following miracles will happen:

1. Script number increases 30%/weekly for the 3 weeks in row starting this week.

2. Shorts start to be panic and push our stock price back to $1.5/share.

3. Mann's foundation announces additional ~100mil line of credit.

4. Stock price is pushed back up to $2.5/share.

5. MNKD sell $50m ATM for additional 5month working capital.

6. DTC starting in Nov. will eventually help us to reach the self-sustaining point.

ATM is dilution.

Mann Foundation would have done that sooner if they had any plan to.  Do you have any data to support that they would even have that much?

Even if they wanted .. they wouldn't do so until SNY is out of the picture. And final contract termination

[brotherm1]

If the Mann foundation would up the loan to say 100 million, that would get us back to a a share price with good volume to even enable us to sell additional shares to bring in an additional $100 million . We would not only be set with cash for another year but we would also have enough to do some serious marketing and keep the ball rolling long enough to be profitable with sales in the US and oversees. That's what is going to happen by the way. That's my story and I'm sticking to it.

[factspls88]

Sept 21, 2016 18:26:34 GMT -5 mannmade said:

dbc, you may be right... all pure speculation as I mentioned earlier.

Money has to come from somewhere, sooner than later at this point... Doubt it will be from Al Mann's estate but just my opinion. So would likely have to come from open market or private party who gets access to info we don't have that gives them enough confidence to do a deal. Either way, as I see it, money is the big issue right now and it will need to be resolved first so that scripts have the time to take care of themselves as the resolution to the second big issue imho...

Agree... Time is of the essence to infuse more cash into the business.  I have to wonder how Castagna was convinced to take the CCO position given the state of affairs at the time of recruitment.  Cash was an issue then as it is now.  I can't believe he took the position without assurances from management that cash would be forthcoming to adequately fund the business, either that or that he would be rewarded monetarily for the risk he is taking should sufficient cash prove impossible to raise. Dilution is certainly an option, but I would much prefer that the cash come from elsewhere - perhaps a setttlement with Sanofi, a milestone payment from RLS or a sizeable gift from Mann's estate for example.  In my wildest dreams I fantasize that Castagna is a plant from Allergan sent to Mannkind to assess the internal state of affairs prior to a takeover bid- haha. I don't know, but I'm getting concerned about the cash crunch.  Perhaps Friday's scipts will so large as to ease my concerns but the number would have to be a blowout and I don't see that in the cards as yet.  Oh well, nothing to do but wait and see what happens.  Let's hope Matt pulls a rabbit out of his hat. 

[Deleted]

Mike would have been briefed on the upcoming dilution in may when he was hired. Matt cannot pull a rabbit out of hat . If he could have , he would already have raised $$$ after FDA approval

[bthomas55ep]

Sept 21, 2016 19:57:50 GMT -5 factspls88 said:

Sept 21, 2016 18:26:34 GMT -5 mannmade said:

dbc, you may be right... all pure speculation as I mentioned earlier.

Money has to come from somewhere, sooner than later at this point... Doubt it will be from Al Mann's estate but just my opinion. So would likely have to come from open market or private party who gets access to info we don't have that gives them enough confidence to do a deal. Either way, as I see it, money is the big issue right now and it will need to be resolved first so that scripts have the time to take care of themselves as the resolution to the second big issue imho...

Agree... Time is of the essence to infuse more cash into the business.  I have to wonder how Castagna was convinced to take the CCO position given the state of affairs at the time of recruitment.  Cash was an issue then as it is now.  I can't believe he took the position without assurances from management that cash would be forthcoming to adequately fund the business, either that or that he would be rewarded monetarily for the risk he is taking should sufficient cash prove impossible to raise. Dilution is certainly an option, but I would much prefer that the cash come from elsewhere - perhaps a setttlement with Sanofi, a milestone payment from RLS or a sizeable gift from Mann's estate for example.  In my wildest dreams I fantasize that Castagna is a plant from Allergan sent to Mannkind to assess the internal state of affairs prior to a takeover bid- haha. I don't know, but I'm getting concerned about the cash crunch.  Perhaps Friday's scipts will so large as to ease my concerns but the number would have to be a blowout and I don't see that in the cards as yet.  Oh well, nothing to do but wait and see what happens.  Let's hope Matt pulls a rabbit out of his hat. 

Mike not only took the position, but just bought 25000 more shares. That purchase is much more recent confidence than when he took the position.

[mannmade]

facts, I am sure Mike did his own DD and that does give me confidence that this issue will soon be addressed as it is hanging over Mnkd like a dark cloud at the moment. I think dilution imho is the only realistic solution at this point unless we get some sort of private equity deal done based on positive info not available to the public. The rest of the opportunities to raise funds or receive revenue again imo are purely wishful thinking at this point.

Sanofi not likely to settle while scripts are still low
RSL payment if it does come likely to be nominal at this point
Doubt we see a gift from the Mann Foundation as they have a business and other investments to support, however we might see some kind of bridge loan or equity swap as part of dilution event.

Right now it seems the best approach is to solve the money issue for the next 12 months and it will give the scripts time to grow... And then at last we may all be able to "Just breathe..."