|
|
Post by straightly on Jul 12, 2017 23:59:55 GMT -5
I was surprised how many insightful comments I got out of my previous posting, considering how many blunders I made in it, starting with the title.
The followings are just a few samples I read:
1. Surprise #3 revised: We need about 4500 scripts per week to be cash positive. It still surprised me how low this number.
2. Our reported revenue is only a very small fraction of what the we charged for Afrezza. We are selling more than $3M Afrezza but our reported revenue was only $1.2M. This confirms Sportys' assertion on refill retention that MANY new prescriptions were subsided one way to another, making costs/insurance the major culprit of our very low retention rate. We cannot just try to get a doctor to write the first Afrezza, we also have to “get the first paid prescription” from the patient somehow.
3. In reality retention rate is 15%: It really sucks. OTOH, clearly room for improvements? For example, if insurance/costs IS the issue maybe we should focusing on the rich areas of the country? May we do want to start Afrezza as a luxury drug?
4. The growth rate never got off the ground. True, but here is the hope. My thought on this is also retention. If we can recruit doctors AND retain doctors, the nrx and refills will be compounding. And yes, compounding will be the key.
Still cannot resisting playing with the numbers some more. Here are some numbers which might mean something.
***Get (somewhat) real: Changed the cash burn to $7.5M per 4 weeks. All other assumptions stay. I left the revenue number alone, to highlight my hope that “if these WERE paid prescriptions”. With this change, we will run out cash at end of October and will need $27M additional cash to reach break even, without considering payments to Deerfield and the discounts to our revenues.
***To avoid running out cash, we ONLY need to
a. Change growth rate to 11%
b. Change growth rate to 8%, also change retention rate to 80%
In other words, none realistic.
What these numbers tell me is that Not Really Surprise: We haven't figured out how to get first paid prescription, yet.
|
|
|
|
Post by buyitonsale on Jul 13, 2017 0:25:48 GMT -5
First things first... 20000 Rx per week from the international expansion.
|
|
|
|
Post by agedhippie on Jul 13, 2017 7:26:41 GMT -5
The simple answer to this question is that we are a long way from running out of money. The company can keep on doing funding rounds as long as it offers enough incentive to the financiers. Yes that means a lot of dilution but we don't run out of money.
|
|
|
|
Post by saxcmann on Jul 13, 2017 9:09:09 GMT -5
The simple answer to this question is that we are a long way from running out of money. The company can keep on doing funding rounds as long as it offers enough incentive to the financiers. Yes that means a lot of dilution but we don't run out of money. technically you might be correct but they kill shareholders "value" with every round. |
|
|
|
Post by matt on Jul 13, 2017 10:43:55 GMT -5
Two things to think about:
1. The breakeven script number is higher than 4,500 due to some accounting anomalies which, though technically correct, are not reflective of on-going breakeven economics. The number is substantially higher than 4,500 but without access to the detailed accounting ledgers I can't offer a number more exact than "substantially higher". The anomaly has to do with the write-offs that took place at the end of 2015, thereby accelerating certain costs into 2015. As these costs are not reflected in the 2017 accounting (because they were written off in 2015), what appears in recent accounting statements does not reflect the replacement cost or the true breakeven point.
2. It is true that the company can do financing rounds forever (subject to getting shareholder approval for more shares), but each round become incrementally more expensive and punitive to existing longs. Companies living on recurrent equity raises need lots of buying volume because the kind of financiers that place money into an enterprise like MNKD are not long-term buy-and-hold type investors; they want to buy the shares and flip them for a few pennies of profit. A good rule of thumb is that this kind of new money wants to be out of the investment within 20 trading days, and selling by the new investors cannot add more than about 10% of average daily volume without affecting the stock price. Average volume is roughly 1.5M if you remove a few days that are big outliers, and the investors will want at least a 20% discount. Many would say 20% is an overly generous assumption for the discount, that it should be more like 30-40% when fees are included, but let's use 20%.
Assuming that the investor buy at 80% of market, that caps the amount of money that can be raised without punitive dilution at about 150K X $1.15 X 80% = $138K per trading day. At 20 trading days per month, the maximum amount that can be raised through equity sales without crushing the PPS is $138K X 20 = $2.75 million. That only covers about a third of the monthly cash burn before financing costs. Anything more than that will cause significant loss in value for existing shareholders.
|
|
|
|
Post by traderdennis on Jul 13, 2017 10:55:01 GMT -5
Two things to think about: 1. The breakeven script number is higher than 4,500 due to some accounting anomalies which, though technically correct, are not reflective of on-going breakeven economics. The number is substantially higher than 4,500 but without access to the detailed accounting ledgers I can't offer a number more exact than "substantially higher". The anomaly has to do with the write-offs that took place at the end of 2015, thereby accelerating certain costs into 2015. As these costs are not reflected in the 2017 accounting (because they were written off in 2015), what appears in recent accounting statements does not reflect the replacement cost or the true breakeven point. 2. It is true that the company can do financing rounds forever (subject to getting shareholder approval for more shares), but each round become incrementally more expensive and punitive to existing longs. Companies living on recurrent equity raises need lots of buying volume because the kind of financiers that place money into an enterprise like MNKD are not long-term buy-and-hold type investors; they want to buy the shares and flip them for a few pennies of profit. A good rule of thumb is that this kind of new money wants to be out of the investment within 20 trading days, and selling by the new investors cannot add more than about 10% of average daily volume without affecting the stock price. Average volume is roughly 1.5M if you remove a few days that are big outliers, and the investors will want at least a 20% discount. Many would say 20% is an overly generous assumption for the discount, that it should be more like 30-40% when fees are included, but let's use 20%. Assuming that the investor buy at 80% of market, that caps the amount of money that can be raised without punitive dilution at about 150K X $1.15 X 80% = $138K per trading day. At 20 trading days per month, the maximum amount that can be raised through equity sales without crushing the PPS is $138K X 20 = $2.75 million. That only covers about a third of the monthly cash burn before financing costs. Anything more than that will cause significant loss in value for existing shareholders. At least when I speak of break even scripts, I am speaking of EBITDA to determine future financing and cash needs. How much higher do you see scripts when you take out the anomalies? |
|
|
|
Post by me on Jul 13, 2017 11:32:38 GMT -5
Two things to think about: 1. The breakeven script number is higher than 4,500 due to some accounting anomalies which, though technically correct, are not reflective of on-going breakeven economics. The number is substantially higher than 4,500 but without access to the detailed accounting ledgers I can't offer a number more exact than "substantially higher". The anomaly has to do with the write-offs that took place at the end of 2015, thereby accelerating certain costs into 2015. As these costs are not reflected in the 2017 accounting (because they were written off in 2015), what appears in recent accounting statements does not reflect the replacement cost or the true breakeven point. 2. It is true that the company can do financing rounds forever (subject to getting shareholder approval for more shares), but each round become incrementally more expensive and punitive to existing longs. Companies living on recurrent equity raises need lots of buying volume because the kind of financiers that place money into an enterprise like MNKD are not long-term buy-and-hold type investors; they want to buy the shares and flip them for a few pennies of profit. A good rule of thumb is that this kind of new money wants to be out of the investment within 20 trading days, and selling by the new investors cannot add more than about 10% of average daily volume without affecting the stock price. Average volume is roughly 1.5M if you remove a few days that are big outliers, and the investors will want at least a 20% discount. Many would say 20% is an overly generous assumption for the discount, that it should be more like 30-40% when fees are included, but let's use 20%. Assuming that the investor buy at 80% of market, that caps the amount of money that can be raised without punitive dilution at about 150K X $1.15 X 80% = $138K per trading day. At 20 trading days per month, the maximum amount that can be raised through equity sales without crushing the PPS is $138K X 20 = $2.75 million. That only covers about a third of the monthly cash burn before financing costs. Anything more than that will cause significant loss in value for existing shareholders. At least when I speak of break even scripts, I am speaking of EBITDA to determine future financing and cash needs. How much higher do you see scripts when you take out the anomalies? I'm sticking with the number I posted 10 months ago: 19,000 per week. Read more: mnkd.proboards.com/post/79163/thread |
|
|
|
Post by saxcmann on Jul 13, 2017 12:14:24 GMT -5
At least when I speak of break even scripts, I am speaking of EBITDA to determine future financing and cash needs. How much higher do you see scripts when you take out the anomalies? I'm sticking with the number I posted 10 months ago: 19,000 per week. Read more: mnkd.proboards.com/post/79163/threadI'm sticking to my original comments as well...if we get anywhere remotely close to 19k scripts per week us longs will have nothing to worry about besides what to do with all our money! 😊 |
|
|
|
Post by parrerob on Jul 13, 2017 16:05:30 GMT -5
We always suppose that Afrezza must cover our pipeline costs.... It isn't. The pipeline has a value and it should be reflected in the value of the company helping raising cash. This is not today... But when Afrezza will cover it's own costs Afrezza will become a great value and will start producing value.
By absurd (sorry if the word doesn't exist in English) if the pipeline has no value You can stop it and improve and produce only Afrezza.
By absurd, obviously, because if Afrezza become sustainable alone the pipeline will be our gold mine.
If....
Ciao
|
|
|
|
Post by akemp3000 on Jul 13, 2017 16:17:54 GMT -5
I agree "We Will Never Run Out of Cash". This evaluation is not based on the financial analytics that's interesting for conversation but frankly never turns out to be accurate. I'm basing this on the slow, methodical turn-around that Mike C is driving. Whereas prior leadership spoke of an embarrassment of riches related to TS pipeline opportunities, Mike C is creating a pipeline of sales opportunities. It doesn't matter if the sales growth comes from T1s, T2s, juvenile, label change, One Drop, Locust Walk, RLS, Brazil, Middle East, etc., etc. All that matters is the coming growth from any or all that results in never running out of cash...IMHO
|
|
