|
Post by casualinvestor on Nov 9, 2017 16:43:01 GMT -5
I finally got to go through the entire CC transcript, and figured I'd look at the cash a bit and what they said. The past cash action was not intended to last through 2018, and they have roughly $60M on hand. They are projecting an increase in cash burn for Q4 to $30-32M from ~22M, and this is to cover advertising initiatives (just 9 regions to start) and testing.
That's a $9 million increase in burn for Q4. It's not hard to project that a full advertising push could ramp that up to be 5x that cost? That would bring quarterly burn up to $66M eventually (yikes) as they add markets. But to plan for that expenditure:
Q4: $31M Q1: $40M Q2: $49M Q3: $58M Q4: $67M ---- $245M
Assuming PPS stays low (~$4, although if sales start a harder upswing I don't thing it will stay low), that's going to require the sale 60M shares just to get through 2018. Even assuming nothing more than $31M per quarter they will need to sell 35M shares at $4. I still think they went to high, but diluting and spending on advertising is better than waiting on slow growth
Maybe they won't need to push ads through the entire year, or they could round-robin the regions, or other sources of revenue might materialize, or the PPS could go up nicely and there would be less dilution.
But I'm starting to think that going low on the # of shares would be short sighted, and 70M shares is the minimum that I would want them to increase the # of authorized shares by.
|
|
|
Post by lakers on Nov 9, 2017 16:54:27 GMT -5
DBC, the vote would not happen w/o the tacit prior approval of Mann Foundation and Dr. D. They are savvy and act as check and balance b/c they would be diluted too! They could be privy to details. Small investors' vote won't matter much. You either trust the big investors and Mgmt or you don't.
Obviously, We need the additional shares for possible equity stake by future partners among other things. The buy-in price needs to be >= $6 to protect the 1st PIPE investors including the CoB.
The co. pulls in TV Ads to grease the skid for accelerating rev thereby lending itself to partnership at more favorable terms.
|
|
|
Post by babaoriley on Nov 9, 2017 19:14:03 GMT -5
This vote will be a breeze, DBC, I can't imagine it not passing overwhelmingly. Let's just say they hadn't asked for any more shares to be authorized, would that have made you feel more secure? It may have made me feel more secure, but would leave me wondering what wonderful thing or things are going to happen such that we don't need any more shares authorized.
These shares are insurance against a shortfall of cash and a commodity with which to do other things, like partner in various arenas.
Management is doing pretty well right now, in fact, they are arguably on a roll, the first such (upward) roll since inking the Sanofi deal (and I blame no one for that, it may have been the greatest thing ever but for the change at the top). We've had plenty of downward rolls since then, but since August or so, that trend has been reversed.
|
|
|
Post by slugworth008 on Nov 9, 2017 19:26:57 GMT -5
This vote will be a breeze, DBC, I can't imagine it not passing overwhelmingly. Let's just say they hadn't asked for any more shares to be authorized, would that have made you feel more secure? It may have made me feel more secure, but would leave me wondering what wonderful thing or things are going to happen such that we don't need any more shares authorized. These shares are insurance against a shortfall of cash and a commodity with which to do other things, like partner in various arenas. Management is doing pretty well right now, in fact, they are arguably on a roll, the first such (upward) roll since inking the Sanofi deal (and I blame no one for that, it may have been the greatest thing ever but for the change at the top). We've had plenty of downward rolls since then, but since August or so, that trend has been reversed. No pun intended right ? "Reversed" lol - sorry couldn't help it
|
|
|
Post by myocat on Nov 9, 2017 19:59:54 GMT -5
Assuming MNKD dilutes at $3, 140*3=420Mil 2018 op expenses ~250M, MNKD has 170M in the pocket book. Of 170Mil MNKD will have to pay its debts etc, thus, there is not much left.
You do the math if there is a dilution discount.
|
|
|
Post by babaoriley on Nov 9, 2017 20:01:32 GMT -5
Assuming MNKD dilutes at $3, 140*3=420Mil 2018 op expenses ~250M, MNKD has 170M in the pocket book. Of 170Mil MNKD will have to pay its debts etc, thus, there is not much left. You do the math if there is a dilution discount. Huh? ?
|
|
Tinkerbell
Researcher
Watcher of the Skies
Posts: 143
|
Post by Tinkerbell on Nov 9, 2017 20:05:53 GMT -5
I just wanted to tie a few things together that hopefully provides some thoughts on how it's important to consider many factors and not just the 140M shares people will vote on in December.
1) IF: the STAT study is positive, it will lead to better insurance coverage; 2) IF: the commercials in the 9 test markets prove effective, it will lead to more requests for Afrezza and at the PCP level (not just Endos); 3) IF: PCPs start seeing these commercials, they too will investigate the drug on their own to prepare for script requests; 4) IF: script counts ramp up thru year end and into Q1 2018 (especially in the 9 test markets), this will the stage for a raise in 2018 (c below); 5) IF: as Pat alluded to in his presentation, the methodology for recognizing revenues for Afrezza is successfully implemented and very clear; THEN:
The stock price will begin to move up commensurate with those revenues. So now, what about the ATM limit? The vote in Decemember should address it because $50M is undeniably inadequate and so it must be increased to $150M. This assures that any raise shareholders are asked to vote on will sustain the company's operation for one full year including more aggressive marketing.
So then, when the stock price reaches the $7.00 price point (per Wainwright), say in March 2018, then it would make all the sense in the world to issue 21.5 million shares to raise ~ $150M. This would see the company through until March 2019 or later when the price would be closer to $14 a share (perhaps more - right?). A second infusion of cash (say $150M again) would only require 10.75M shares in 2019. Do I think that in March 2020 a raise to this level would be required? No because by then, Mike will have his partner(s) in place.
Finally, with additional shares in pocket and increasing sales, MannKind has NEVER been in a better position going into January 2018 - never better and not since it's IPO in 2004. Again, just my opinion.
|
|
|
Post by lb on Nov 9, 2017 20:54:36 GMT -5
Speaking of blindly trusting the management, how many time have we all heard before MC (and from the very MC at least once), "on non-dilutive basis", just to discover that we're been diluted, over and over again? I recall at least 3 times over the years. And yet again, we're been asked to blindly trust them to make our shares worth 40% of what they are now, without explanation. So, what are they going to do with all the shares? TV commercials? Before removing prior authorization from each and every insurance provider? So, what will all the people do when they start asking their doctors about Afrezza, just to be turned away by their insurance? No wonder doctors are not prescribing it "because it takes too much time" to deal with it, and who can blame them? I'd say, first remove prior authorizations from each and every insurance, and only then start spending shareholder money on TV commercials! Otherwise, Exubera 2.0.
|
|
|
Post by bill on Nov 9, 2017 21:38:00 GMT -5
"I'm hoping this board can share other possible reasons for doubling the shares." MannKind has to reach positive cashflow, that will take longer than most people want to believe; in order to accomplish it they need access to cash. One option is common shares, many, hence the doubling. @kastanes Perhaps all they really need is a prescription trajectory that demonstrates they WILL be cash flow positive in a reasonable period of time . If the prescription growth starts to trend to more than linear; arithmetic, geometric, exponential, that might be enough to increase their wall street valuation at a much higher level. Just saying...
|
|
|
Post by sellhighdrinklow on Nov 9, 2017 21:52:37 GMT -5
I finally got to go through the entire CC transcript, and figured I'd look at the cash a bit and what they said. The past cash action was not intended to last through 2018, and they have roughly $60M on hand. They are projecting an increase in cash burn for Q4 to $30-32M from ~22M, and this is to cover advertising initiatives (just 9 regions to start) and testing. That's a $9 million increase in burn for Q4. It's not hard to project that a full advertising push could ramp that up to be 5x that cost? That would bring quarterly burn up to $66M eventually (yikes) as they add markets. But to plan for that expenditure: Q4: $31M Q1: $40M Q2: $49M Q3: $58M Q4: $67M ---- $245M Assuming PPS stays low (~$4, although if sales start a harder upswing I don't thing it will stay low), that's going to require the sale 60M shares just to get through 2018. Even assuming nothing more than $31M per quarter they will need to sell 35M shares at $4. I still think they went to high, but diluting and spending on advertising is better than waiting on slow growth Maybe they won't need to push ads through the entire year, or they could round-robin the regions, or other sources of revenue might materialize, or the PPS could go up nicely and there would be less dilution. But I'm starting to think that going low on the # of shares would be short sighted, and 70M shares is the minimum that I would want them to increase the # of authorized shares by. You're missing the release of the STAT study which should run mnkd to $10++. Fingers crossed.
|
|
|
Post by myocat on Nov 9, 2017 22:06:11 GMT -5
casualinvestor I think they are smart asking 140mil upfront instead of 60mil. It's always difficult to ask investors to vote for shares.
|
|
|
Post by pantaloons on Nov 9, 2017 22:24:32 GMT -5
I just wanted to tie a few things together that hopefully provides some thoughts on how it's important to consider many factors and not just the 140M shares people will vote on in December. 1) IF: the STAT study is positive, it will lead to better insurance coverage; 2) IF: the commercials in the 9 test markets prove effective, it will lead to more requests for Afrezza and at the PCP level (not just Endos); 3) IF: PCPs start seeing these commercials, they too will investigate the drug on their own to prepare for script requests; 4) IF: script counts ramp up thru year end and into Q1 2018 (especially in the 9 test markets), this will the stage for a raise in 2018 (c below); 5) IF: as Pat alluded to in his presentation, the methodology for recognizing revenues for Afrezza is successfully implemented and very clear; THEN: The stock price will begin to move up commensurate with those revenues. So now, what about the ATM limit? The vote in Decemember should address it because $50M is undeniably inadequate and so it must be increased to $150M. This assures that any raise shareholders are asked to vote on will sustain the company's operation for one full year including more aggressive marketing. So then, when the stock price reaches the $7.00 price point (per Wainwright), say in March 2018, then it would make all the sense in the world to issue 21.5 million shares to raise ~ $150M. This would see the company through until March 2019 or later when the price would be closer to $14 a share (perhaps more - right?). A second infusion of cash (say $150M again) would only require 10.75M shares in 2019. Do I think that in March 2020 a raise to this level would be required? No because by then, Mike will have his partner(s) in place. Finally, with additional shares in pocket and increasing sales, MannKind has NEVER been in a better position going into January 2018 - never better and not since it's IPO in 2004. Again, just my opinion. This is a nice summary of events that will definitely impact PPS. I think the basic idea is that management will very unlikely use all 140M authorized shares. More likely, it's a "wait and see" approach. As long as sales and PPS are increasing accordingly, they will use an appropriate amount of those new shares to keep it going. I think the DTC will be very telling of how things will unfold in the coming months and from what others have been posting, it's already in effect. Hopefully script numbers continue to progress in the direction they've been going.
|
|
|
Post by buyitonsale on Nov 10, 2017 1:02:21 GMT -5
For me the best position for the company was during summer of 2015 when share price was about 7 and they had over 100M of shares to ussue. That was the mistake that led to where we are today. I hope the newly authorized shares will give BOD and management a second chance to win.
|
|
|
Post by dreamboatcruise on Nov 10, 2017 1:31:59 GMT -5
DBC, the vote would not happen w/o the tacit prior approval of Mann Foundation and Dr. D. They are savvy and act as check and balance b/c they would be diluted too! They could be privy to details. Small investors' vote won't matter much. You either trust the big investors and Mgmt or you don't. Obviously, We need the additional shares for possible equity stake by future partners among other things. The buy-in price needs to be >= $6 to protect the 1st PIPE investors including the CoB. The co. pulls in TV Ads to grease the skid for accelerating rev thereby lending itself to partnership at more favorable terms. I don't have any illusion my vote will matter... none the less I will exercise my right to dissent.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 10, 2017 1:57:36 GMT -5
bill "Kastanes Perhaps all they really need is a prescription trajectory that demonstrates they WILL be cash flow positive in a reasonable period of time" Trajectories don't pay bills, if they did I would be living in a very nice house with a car of my choice.
|
|