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Post by silentknight on Nov 9, 2017 10:16:36 GMT -5
Well, there's the old saying that "those who forget history are doomed to repeat it." Lb isn't wrong. If the BoD had raised capital after FDA approval, we might not even be talking about raising the share count today. But, we are. All of us are going to have to swallow the pill that dilution is coming (AGAIN). The question is, how much are you willing to accept? Are you willing to give MNKD the ability to dilute you to the tune of another 140 million shares? Personally, I am not. I'd happily vote to approve an increase in share count of 40-50 million, but I just can't swallow the pill of potentially doubling the share count. I've looked for examples of other companies that have gone to shareholders with requests for a 100% increase in available shares and I can't find any. I certainly have never heard of it before, but perhaps I'm not looking hard enough. MNKD needs room to issue shares in the future, that much is obvious because they're tapped out currently. Do they need 140 million shares worth of room? Personally, I don't think so but that's just my opinion and I'll vote my shares according to my conscious. I think the company has a good plan to increase sales but I don't think they need 140 million more shares (if necessary) to achieve it, especially if things are truly looking up and they have sales trajectories moving in the right direction, as they claim. Look a little harder, even do a cursory search. You said you didn't find "any" examples. While I am not making a comparison between the companies or their situations, Whole Foods in 2009 comes to mind. Not to open a new can of worms unrelated to MNKD's situation, but in looking at the Whole Foods situation in 2009, it appears they requested permission from shareholders to double the amount of shares available to their Stock Incentive Plan for employees by an additional 12 million shares. That is vastly different in requesting shareholders approve a doubling of the TOTAL number of available shares. Apples to oranges, I know, but I'm still looking for an example of a company increasing their authorized shares to the magnitude of MNKD's proxy statement's information. I'm not saying it's never happened, I'm just saying I'm not aware of it happening. Either way, it's not the request for shares that gives me pause. It's the number they're requesting.
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Post by mnholdem on Nov 9, 2017 11:14:03 GMT -5
Another issue related to CEO/management confidentiality is the oft-discussed potential of a buy in by a major BP, an event that Michael Kovacocy suggests as a very real possibility of happening, given MNKD's current market capitalization (which both Kovacocy and Pile advocate is extremely undervalued). None of us has a clue whether a buy-in/strategic partner will happen or not and my intent here is NOT to reignite that well-worn discussion. I'm merely pointing out that authorizing 140 million shares gives MannKind the flexibility to be able to facilitate this financing option, along with the others being discussed.
Good fortune all.
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Post by jred on Nov 9, 2017 11:15:37 GMT -5
Just as a point of reference: List of stock symbols that have at least 50% more authorized shares than issued (what management is asking for) 2 names mentioned AAPL TSLA Biotechs AMGN GILD REGN ILMN Smaller Biotechs BLUE INSM ECYT XOMA EXAS and AVEO have issued 60% of authorized. These are syms I quickly grabbed from looking at biotech indexes. These are the numbers reported on financial summaries, and while I haven't deeply researched each one to verify, the point is it's not at all unique or uncommon. And it certainly shows authorized shares aren't all issued and result in max dilution. fwiw - 50-60% issued to authorized is a typical recommended ratio in business best practices for startups and ipos. Not saying all cases - just that I've heard it recommended a number of times. Law firm Cooley Go's recommendation - example
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Post by jred on Nov 9, 2017 11:51:06 GMT -5
silentknight - off the top of my head I don't know of an example of a successful company that had to ask for 100% increase - wish i could, but I'll take a look. Not saying they don't exist, but off the top of my head I also can't name -a small biotech that successfully relaunched its drug after its mega BP partner dropped them -much less one that accomplished that while also losing the company's founder, visionary leader and major financial supporter -a successful small biotech that needed 3 tries to get thru the FDA and limped through with a sub par label -a success story after a 1-5 reverse split to stave off delisting in the face of a large and persistent short seller contingent My point is that MNKD's story is about as far from the norm as I can recall. And after Al Mann's passing, I was beginning to mentally write off my investment. But I think what Mike and his new team have accomplished has been extraordinary and strategically sound. Imo this is still a very speculative investment, but I have never been more optimistic than I am now based on that groundwork and have tripled my personal investment over the last 5 months. Not that I don't carry the mental scars of being a long time holder, but I am essentially evaluating Mike, his team and the company's performance as a new entity. Success is far from guaranteed, but as an investor I really like the risk/reward potential right now.
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Post by silentknight on Nov 9, 2017 12:29:50 GMT -5
silentknight - off the top of my head I don't know of an example of a successful company that had to ask for 100% increase - wish i could, but I'll take a look. Not saying they don't exist, but off the top of my head I also can't name -a small biotech that successfully relaunched its drug after its mega BP partner dropped them -much less one that accomplished that while also losing the company's founder, visionary leader and major financial supporter -a successful small biotech that needed 3 tries to get thru the FDA and limped through with a sub par label -a success story after a 1-5 reverse split to stave off delisting in the face of a large and persistent short seller contingent My point is that MNKD's story is about as far from the norm as I can recall. And after Al Mann's passing, I was beginning to mentally write off my investment. But I think what Mike and his new team have accomplished has been extraordinary and strategically sound. Imo this is still a very speculative investment, but I have never been more optimistic than I am now based on that groundwork and have tripled my personal investment over the last 5 months. Not that I don't carry the mental scars of being a long time holder, but I am essentially evaluating Mike, his team and the company's performance as a new entity. Success is far from guaranteed, but as an investor I really like the risk/reward potential right now. Point taken on the uniqueness of MNKD's situation and I completely agree with you in that regard. I believe that after many, many years, MNKD finally has an executive team in place that has a sound strategy in how to move the company forward. Trust me, after suffering through several years of quarterly calls that ended up doing more harm that good for the most part, it's refreshing to hear the team speak with confidence, backed up (at least for now) with numbers. I've also increased my share count over the past year, and in hindsight, I'm glad I did. Not only did I bring my average down, but the shares I picked up when the stock was trading under $1 are now safely in the green. I'm still severely underwater overall, but I too am optimistic that things will get better. That being said, and my confidence in the ability of the management team notwithstanding, for me, it's a question of what is reasonable with respect to the increase in share count. I think it unreasonable for the BoD and management team to ask shareholders for that big of a concession in regards to their ability to dilute (if necessary) in the future. Granted, each person's perspective will be different and everyone is entitled to their opinion and should vote their shares as they see fit. I can only speak for myself. MNKD shareholders have sacrificed a great deal over the past few years, especially for those of us that bought and held prior to the ADCOM. A doubling of the authorized share count seems excessive for a company that has a history of using shares as the fall back to pay debt, raise funds, and pass out to employees in options. Much of it is necessary, I'm aware. I'm sure no shareholder envisioned the company using all of the currently available shares but here we are. In voting for the increase, I think one must assume that the company will, at some point, have the need to use them. I'm willing to give the company the latitude to raise additional funds, but I'm just not comfortable giving them the ability to to it to the tune of an eventual 100% dilution. I find their request to be unreasonable, pending better communication to shareholders on why they feel such a drastic request is appropriate.
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Post by kbrion77 on Nov 9, 2017 12:41:47 GMT -5
Another issue related to CEO/management confidentiality is the oft-discussed potential of a buy in by a major BP, an event that Michael Kovacocy suggests as a very real possibility of happening, given MNKD's current market capitalization (which both Kovacocy and Pile advocate is extremely undervalued). None of us has a clue whether a buy-in/strategic partner will happen or not and my intent here is NOT to reignite that well-worn discussion. I'm merely pointing out that authorizing 140 million shares gives MannKind the flexibility to be able to facilitate this financing option, along with the others being discussed.
Good fortune all. Bring on a hostile buy in. That would definitely bring on a sizeable squeeze. I'm not buying that theory at all because any interested BP could have got hostile when the company had a market value of around $100MM.
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Post by kc on Nov 9, 2017 13:22:36 GMT -5
one has to wonder who the genie is behind the curtain. Somebody bought into the plan in a big way when they raised the 60(57) million dollars that is helping to fund the advertising campaign. Now we have the issuance of new shares which might also be to help a friendly party or partner buy into the company with real equity that will help the company achieve a 2-5 year advertising campaign.
I am hopeful that is the reality and not my fantasy.
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Post by compound26 on Nov 9, 2017 13:34:26 GMT -5
KC, I think Mannkind management has a well laid out plan and is executing it well.
Mike mentioned in the CC that some of the actions they are taking may not have an immediate effect on the earnings, but we will realize they are import when we look in the rearview mirror a few quarters from now.
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Post by kc on Nov 9, 2017 13:39:38 GMT -5
KC, I think Mannkind management has a well laid out plan and is executing it well. Mike mentioned in the CC that some of the actions they are taking may not have an immediate effect on the earnings, but we will realize they are import when we look in the rearview mirror a few quarters from now. Agree! I think he is executing perfectly and getting great advice from his management team, Board and outside advisors. Can MannKind pull off what Exact Sciences has achieved since starting advertising?
Look at the PPS of Exact Sciences on March 1, 2016 trading at $5.05 per share. Today its about $59.00 per shares. They needed capital just like MannKind did to get over the hump.
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Post by sportsrancho on Nov 9, 2017 13:55:34 GMT -5
KC, I think Mannkind management has a well laid out plan and is executing it well. Mike mentioned in the CC that some of the actions they are taking may not have an immediate effect on the earnings, but we will realize they are import when we look in the rearview mirror a few quarters from now. Agree! I think he is executing perfectly and getting great advice from his management team, Board and outside advisors. Can MannKind pull off what Exact Sciences has achieved since starting advertising?
Look at the PPS of Exact Sciences on March 1, 2016 trading at $5.05 per share. Today its about $59.00 per shares. They needed capital just like MannKind did to get over the hump.
Do you know how much capital? I think when Nate talked about his $27 target, he had factored in 30% dilution. So that’s what I expect.
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Post by compound26 on Nov 9, 2017 14:10:55 GMT -5
Agree! I think he is executing perfectly and getting great advice from his management team, Board and outside advisors. Can MannKind pull off what Exact Sciences has achieved since starting advertising?
Look at the PPS of Exact Sciences on March 1, 2016 trading at $5.05 per share. Today its about $59.00 per shares. They needed capital just like MannKind did to get over the hump.
Do you know how much capital? I think when Nate talked about his $27 target, he had factored in 30% dilution. So that’s what I expect. @sportsrancho I personally do not think we need to dilute beyond 30%. As management pointed out, the running rate (of Afrezza shipment) as of now is $24 million annually. If we continue the current growth rate (or even higher with Ads campaign kicked in), I see real chance of cash flow break even by end of 2019. Another $100 million from an equity raise, plus the ever growing cash generated from Afrezza shipment, will do the trick. If we can do an offering at $10, that's another 10 million shares. At $5, that's another 20 million shares. And that's not counting any other cash sources that Mike has mentioned.
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Post by dreamboatcruise on Nov 9, 2017 15:40:53 GMT -5
Would allowing the BoD to issue an unlimited amount of shares be even better for the company? Or is there a point where you think too many shares would evoke negative consequences from existing and potential shareholders that would actually end up weakening their ability to raise capital? As Ronnie once said, "there you go again," with your issuance of shares! The simple answer to your question above is that, no, if a BOD issues an unlimited number (<= unlimited means an infinity to me, i.e., no limit), then it would not be "even better" for the company. What's your point? As to your second question, the answer to that depends upon how many shares and for what purpose they are issuing shares. You either trust management to use the shares in such a way to benefit the company or you don't. Either way, you make your decisions accordingly. I think babaoriley summed it up nicely in an earlier post. Obviously, the first was not asking if issuing "infinite" shares was good. It was whether allowing the BoD to issue as many as they wish without asking for any approval from shareholders would be good. It seems to me from what you and Baba and others say that you trust the board so whatever number they want you as a shareholder would just rubber stamp, be it 140M or 500M or 1B. Perhaps you would still prefer the expense of a rubber stamp vote rather than simply giving the BoD full discretion to create new shares as and when they wish without further vote. I shall on the other hand be urging shareholders to vote against this... unless management is willing to address the usage of these shares in a much more transparent manner.
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Post by dreamboatcruise on Nov 9, 2017 15:51:13 GMT -5
Another issue related to CEO/management confidentiality is the oft-discussed potential of a buy in by a major BP, an event that Michael Kovacocy suggests as a very real possibility of happening, given MNKD's current market capitalization (which both Kovacocy and Pile advocate is extremely undervalued). None of us has a clue whether a buy-in/strategic partner will happen or not and my intent here is NOT to reignite that well-worn discussion. I'm merely pointing out that authorizing 140 million shares gives MannKind the flexibility to be able to facilitate this financing option, along with the others being discussed.
Good fortune all. Anything is possible. I'd be interested in what probability they attach to that. When pumping a stock it's easy enough to grab onto something people are pushing on YMB and state that it is possible. You can never be called on the rug for simply pointing out that anything is possible. That said, I would not at all be happy selling 140M shares to a BP at the current market capitalization (which I agree with those two is extremely undervalued if one assumes risk of insolvency is off the table).
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Post by roseylv on Nov 9, 2017 16:32:19 GMT -5
i know the subject at hand is dilution and 140m shares but,
Let's make sure we are in fact going to hit the bottom of our sales forecast. Mike (or mgmt) mentioned that we shouldn't look at week to week sales. I disagree! I in fact think they're rather important at this stage, don't you? Without a good trajectory, that 140m shares will be painful to all of us. On the contrary, if mgmt is able to beat the lower half of sales guidance, then the 140m dilution won't seem as painful. Meaning, we have some light at the end of tunnel and could perhaps shake the "niche drug" phrase (i.e. HOPE)
DBC, i fell your sentiment, but i, and i presume many, are in a wait and see approach. W/ a guidance miss, and dilution....I will be selling my position for pennies on the dollar.
My $.02 Onward!
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Post by dreamboatcruise on Nov 9, 2017 16:41:14 GMT -5
DBC, i fell your sentiment, but i, and i presume many, are in a wait and see approach. I wish them great success. I will be waiting as long as I can to vote on this authorization. When the time comes to vote I shall use the best information I have on what they've accomplished and what they have or have not told us. At the present my vote would be no. If scripts take off in the meantime and share price shoots up, I'll admit being totally wrong about negative consequences of 140M share authorization and vote yes.
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