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Cash
May 10, 2017 17:22:33 GMT -5
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Post by mockingjay on May 10, 2017 17:22:33 GMT -5
something is not right . compared to $22.9 million at the end of 2016. During the first quarter of 2017, we received $30.6 million from Sanofi, pursuant to the settlement of the insulin put option, $16.7 million from the sale of a surplus building, and $2.1 million from shipments of Afrezza.
So at the beginning of 2017 , mannkind should have: 22.9M + 30.6M + 16.7M + 2.1M = 72.3M
And The net loss for the first quarter of 2017 was $16.3 million .
So 72.3M - 16.3M = 56M (but they report: Cash and cash equivalents at March 31, 2017 were $48.0 million)
So where the 8M difference ? they paid Deerfield ?
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Cash
May 10, 2017 17:36:54 GMT -5
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Post by me on May 10, 2017 17:36:54 GMT -5
something is not right . compared to $22.9 million at the end of 2016. During the first quarter of 2017, we received $30.6 million from Sanofi, pursuant to the settlement of the insulin put option, $16.7 million from the sale of a surplus building, and $2.1 million from shipments of Afrezza. So at the beginning of 2017 , mannkind should have: 22.9M + 30.6M + 16.7M + 2.1M = 72.3M And The net loss for the first quarter of 2017 was $16.3 million . So 72.3M - 16.3M = 56M (but they report: Cash and cash equivalents at March 31, 2017 were $48.0 million) So where the 8M difference ? they paid Deerfield ? Check the cash flow statement in the 10Q: ($16.3) (Net Loss) + $30.6 (SNY pmt) - $6.6 (Change in Warr Liab) + $0.8 (other Operating Activities) + $16.7 (Sale of Valencia building) - $.1 (Employment Taxes) = $25.1 + $22.9 (Prior Period Cash) = $48.0, the reported cash. The company reports on an accrual basis, so you'll never have the cash change equal the net income/loss change.
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Cash
May 10, 2017 17:45:15 GMT -5
peppy likes this
Post by mockingjay on May 10, 2017 17:45:15 GMT -5
something is not right . compared to $22.9 million at the end of 2016. During the first quarter of 2017, we received $30.6 million from Sanofi, pursuant to the settlement of the insulin put option, $16.7 million from the sale of a surplus building, and $2.1 million from shipments of Afrezza. So at the beginning of 2017 , mannkind should have: 22.9M + 30.6M + 16.7M + 2.1M = 72.3M And The net loss for the first quarter of 2017 was $16.3 million . So 72.3M - 16.3M = 56M (but they report: Cash and cash equivalents at March 31, 2017 were $48.0 million) So where the 8M difference ? they paid Deerfield ? Check the cash flow statement in the 10Q: ($16.3) (Net Loss) + $30.6 (SNY pmt) - $6.6 (Change in Warr Liab) + $0.8 (other Operating Activities) + $16.7 (Sale of Valencia building) - $.1 (Employment Taxes) = $25.1 + $22.9 (Prior Period Cash) = $48.0, the reported cash. The company reports on an accrual basis, so you'll never have the cash change equal the net income/loss change. so they burn 8M per month ?
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Cash
May 10, 2017 18:33:44 GMT -5
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Post by boytroy88 on May 10, 2017 18:33:44 GMT -5
Check the cash flow statement in the 10Q: ($16.3) (Net Loss) + $30.6 (SNY pmt) - $6.6 (Change in Warr Liab) + $0.8 (other Operating Activities) + $16.7 (Sale of Valencia building) - $.1 (Employment Taxes) = $25.1 + $22.9 (Prior Period Cash) = $48.0, the reported cash. The company reports on an accrual basis, so you'll never have the cash change equal the net income/loss change. so they burn 8M per month ? 7.4M now.
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May 10, 2017 20:04:48 GMT -5
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Post by derek2 on May 10, 2017 20:04:48 GMT -5
Without the one-time credit due to the change in warrant liability (due to the share price cratering), the loss would have been $24M, not 18M.
They won't have a repeat of that next quarter, so you would be well advised to use $8M - $9M per month.
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May 10, 2017 21:39:41 GMT -5
Post by mockingjay on May 10, 2017 21:39:41 GMT -5
Without the one-time credit due to the change in warrant liability (due to the share price cratering), the loss would have been $24M, not 18M. They won't have a repeat of that next quarter, so you would be well advised to use $8M - $9M per month. hmm looks like they need to draw the credit line , because they need to maintain at least 25M right ? by the end of june .
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Post by mnholdem on May 10, 2017 21:43:17 GMT -5
Matt clarified that misconception at the last earnings call. MannKind only needs to have access to $25M, which they do with their current line of credit with the Mann Group.
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Post by scoy on May 10, 2017 21:57:35 GMT -5
Without the one-time credit due to the change in warrant liability (due to the share price cratering), the loss would have been $24M, not 18M. They won't have a repeat of that next quarter, so you would be well advised to use $8M - $9M per month. Warrants, and all other options, are non-cash items so they have no affect on how much cash is used monthly.
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Post by me on May 11, 2017 7:14:24 GMT -5
Without the one-time credit due to the change in warrant liability (due to the share price cratering), the loss would have been $24M, not 18M. They won't have a repeat of that next quarter, so you would be well advised to use $8M - $9M per month. The warrants were a non-cash item impacting only income, not cash. Sorry, just got to your post, scoy.
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Cash
May 11, 2017 7:39:05 GMT -5
peppy likes this
Post by oldfishtowner on May 11, 2017 7:39:05 GMT -5
something is not right . compared to $22.9 million at the end of 2016. During the first quarter of 2017, we received $30.6 million from Sanofi, pursuant to the settlement of the insulin put option, $16.7 million from the sale of a surplus building, and $2.1 million from shipments of Afrezza. So at the beginning of 2017 , mannkind should have: 22.9M + 30.6M + 16.7M + 2.1M = 72.3M And The net loss for the first quarter of 2017 was $16.3 million . So 72.3M - 16.3M = 56M (but they report: Cash and cash equivalents at March 31, 2017 were $48.0 million) So where the 8M difference ? they paid Deerfield ? Check the cash flow statement in the 10Q: ($16.3) (Net Loss) + $30.6 (SNY pmt) - $6.6 (Change in Warr Liab) + $0.8 (other Operating Activities) + $16.7 (Sale of Valencia building) - $.1 (Employment Taxes) = $25.1 + $22.9 (Prior Period Cash) = $48.0, the reported cash. The company reports on an accrual basis, so you'll never have the cash change equal the net income/loss change. Accrual had nothing to do with it. The warrant liability gain was a non-cash gain which reduced losses but did not affect cash. So it was subtracted from income (a loss in this case) to yield the correct cash flow.
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May 11, 2017 7:50:55 GMT -5
via mobile
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Post by me on May 11, 2017 7:50:55 GMT -5
Check the cash flow statement in the 10Q: ($16.3) (Net Loss) + $30.6 (SNY pmt) - $6.6 (Change in Warr Liab) + $0.8 (other Operating Activities) + $16.7 (Sale of Valencia building) - $.1 (Employment Taxes) = $25.1 + $22.9 (Prior Period Cash) = $48.0, the reported cash. The company reports on an accrual basis, so you'll never have the cash change equal the net income/loss change. Accrual had nothing to do with it. The warranty liability gain was a non-cash gain which reduced losses but did not affect cash. So it was subtracted from income (a loss in this case) to yield the correct cash flow. The "accrual reporting basis" was the reason the OP's numbers did not add up. Had MNKD been on a "cash reporting basis," then the original OP's numbers would have made sense. My comment was not referencing an accrued item, only the differences that occur between the two reporting methods.
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May 11, 2017 8:00:15 GMT -5
peppy likes this
Post by oldfishtowner on May 11, 2017 8:00:15 GMT -5
Check the cash flow statement in the 10Q: ($16.3) (Net Loss) + $30.6 (SNY pmt) - $6.6 (Change in Warr Liab) + $0.8 (other Operating Activities) + $16.7 (Sale of Valencia building) - $.1 (Employment Taxes) = $25.1 + $22.9 (Prior Period Cash) = $48.0, the reported cash. The company reports on an accrual basis, so you'll never have the cash change equal the net income/loss change. Accrual had nothing to do with it. The warrant liability gain was a non-cash gain which reduced losses but did not affect cash. So it was subtracted from income (a loss in this case) to yield the correct cash flow. Sorry. It takes me too long to write and didn't see you had corrected your reply before I finished making several edits to my post. But that raises another question - doesn't MNKD take depreciation? Depreciation is a non-cash loss that should be added to income in the cash flow calculation. Or was the manufacturing facility written down so much that the depreciation is insignificant? Maybe it is included in "Other", but I wouldn't consider that an "operating activity".
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Post by derek2 on May 11, 2017 8:15:26 GMT -5
Derek was not being truthful. That's a pretty hot statement. How about you friendly it up a bit? You may think that I'm not correct, or that my statement lacked nuance (cash vs income/loss), but I was not untruthful which requires intent. It is to laugh, on a board that talks about Amgen takeover, UAE shipments, Apple, etc. that to not be specific enough between items affecting cash and items affecting loss earns an attempt at character assassination. I don't get your abrasive, domineering tone. Maybe you need a hug.
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Post by matt on May 11, 2017 8:42:41 GMT -5
But that raises another question - doesn't MNKD take depreciation? Depreciation is a non-cash loss that should be added to income in the cash flow calculation Yes, MNKD takes depreciation and amortization. For the quarter it was $908 thousand and you are correct that this is a non-cash expense thus is a source of cash (in accounting terms). This accounting depreciation is much lower than the true economic depreciation because of the big write-down for accounting purposes in Q4 2015 (i.e. accounting was ahead of economics). Don't try to wrap your brain around cash by looking at the income statement, just go directly to the Statement of Cash Flow in the 10-Q. The net cash provided by operations was $8,507, of which $30,557 was a one-time event from the Sanofi settlement, leaving a net cash usage of $22,050. Divide by 3 months and you have your $7.4 million burn rate. So looking ahead, if the cash burn remains at that level the cash remaining at June 30 will be $48.0 less (3 X 7.4) = $25.8 million with a $10 million debt payment due on July 11. So that is $15.8 million plus the $30.1 Mann Group credit line heading into Q3. That will get the company through Q3 but not into Q4. The company doesn't have many authorized shares available to issue as of this date; there are 140 authorized, 101 issued and outstanding, and 17.2 million restricted for issuance against warrants and convertible securities. That leaves 21.8 million available to issue unless there is a special shareholders meeting to authorize more. I can easily see Deerfield doing another discounted debt for equity swap to settle the $10 million that is coming due in July, but that would exhaust most of the remaining shares. The only thing that troubles me is that Matt assumes that he can avoid dilution by raising $20 to $30 million of debt in Q3. Deerfield has a lien on substantially all of the assets as security for their senior notes, so Matt needs to raise $20 to $30 million of subordinated, unsecured, non-convertible debt with no warrants. The company already owes $284 million and is burning $22 million a quarter with no near-term turnaround in sight. I think raising debt under those circumstances will be almost impossible and that was the one thing in the conference call that stood out as being less than credible.
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Post by jred on May 11, 2017 9:03:09 GMT -5
Derek2 - I don't always agree with your conclusions, but I appreciate your perspective. I have learned a lot from your posts along with the substantial catalog of data and external links you have provided. imo, brotherm1's comment was way over the line and I hope it doesn't impact your participation on the board.
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