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Post by matt on Apr 20, 2017 8:00:40 GMT -5
This is the most likely scenario in my opinion. MNKD owed them debt and repaid in shares at a discount, diluting existing stockholders. Deerfield then turns around and covers their short (with discounted shares) and then sells the discounted shares, again making a profit. That is the way most of the deals with hedge funds work. They create a short position, buy discounted shares, and deliver the new shares to close out the short. So long as the investor has a bona fide economic risk, either in the same security or a different security issued by the same company, this is considered a hedge instead of a naked short. Deerfield might have been in discussions on how to handle the May payments for a month or two, and could have been short from just after the RS when the price was still north of $2. If so they might have covered their interest coupon for May and made 85 cents a share on the short play.
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Post by matt on Apr 19, 2017 15:40:56 GMT -5
Your item 2. probably would be illegal in would find Deerfield in a courthouse On the contrary, taking a short position in the shares of a company where you have a long position in the debt is the very nature of hedging. Naked shorts are naked because they only have one side of the exposure (better on the price decline), but if somebody is trying to use one security to reduce the risk is holding another security of the same issuer then that is considered fair game. This is what hedge funds do all the time; they buy and sell different baskets of securities to obtain a superior portfolio return.
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Post by matt on Apr 19, 2017 12:23:27 GMT -5
To me, pretty much a non-event. What's Deerfield gonna do, watch MNKD go BK and get next to nothing for their notes, or convert their notes to stock and maybe get a bigger payday than interest on those Notes? Not sure if those notes were convertible, by the way. The conversion price was fine, but, again, pretty much irrelevant under our current circumstances. I gotta think Deerfield is going to sell many of those shares, otherwise they are afraid they will get nothing (and end up in the same boat as us, and NO ONE wants to be in THAT boat). So, it's a good deal for Deerfield, cuz now they can get some cash for their note, where they otherwise would get a lot less cash, possibly nothing (well, they may want to take over the business and see if they can sell Afrezza). And it's good for us, too, although I'm not sure at all that Deerfield would have exercised their remedies if we hadn't paid. They probably would have extended the maturity. But it is a way of getting poor, poor Deerfield a little more cash for their fooling mistake of lending to us! Deerfield has a reputation for playing hardball so I think if it came down to a choice between extending the maturity date and foreclosing on the note, they almost certainly would have foreclosed. With this transaction Deerfield gets $4 million of cash now instead of $5 million in May, and they get some shares they can sell to get more cash so they are almost whole on the May obligations. On the July payments, there is still a loss waiting for them as the company will have a hard time coming up with the remaining $10 million in cash and the shares will not net $5 million after costs. However, Deerfield still has control of the collateral in a worst case scenario and that is the leverage they need to call the shots going forward. Deerfield is not looking to win, they are looking to minimize their risk of loss on their notes going forward. Keep that in mind as it will be predictive of their next move as the remaining cash portion of the July payment comes due.
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Post by matt on Apr 19, 2017 8:18:38 GMT -5
These would be newly issued shares so they would reduce the amount available for issuance. I did the math a week or two ago and concluded that between issued and outstanding shares, plus shares reserved for issuance against various obligations (warrants, employee purchase, etc.) the company had about 30 million shares that it could issue. This issue is about 5 million shares, so that leaves 25 million to go.
On a net basis, this is positive. The near term hit to cash is reduced a bit ($4 million in cash & $1 million in shares versus the $5 million due in May), and the $15 million due in July is now a $5 million conversion to shares with presumably the remaining $10 million still due in cash. So the expected hit to cash of $20 million in the coming months is now $14 million.
As for Deerfield, these are not the kind of guys to sit on shares, but the discount could have been a lot bigger. All things considered, these are decent terms.
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Post by matt on Apr 17, 2017 17:04:03 GMT -5
articles.latimes.com/2001/may/31/business/fi-4587Medtronic said it will pay $48 a share for MiniMed, a 9.1% premium over Tuesday's closing stock price, but a near doubling of the $25-per-share price seen in April, before rumors of a MiniMed sale began circulating. There were a couple of deep pocketed companies in the hunt for Minimed at the time, including the company I worked for back then. It was not just about insulin but the full range of drugs that needed to be administered slowly over time including pain medications, antibiotics for HIV patients, and others. Though we had a big pump business, we backed out of the running because it was a difficult electromechanical device to manufacture and that is something where Medtronic excelled and we didn't. I doubt anybody else could have made a business out of it.
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Post by matt on Apr 15, 2017 7:15:41 GMT -5
Just remember to separate the Type II diabetics, the majority of which are not insulin dependent, from the Type I and Type II diabetics who are. Frequently you will see the numbers presented in the medical and epidemiological literature in abbreviated form as NIDDM and IDDM for Non-insulin-dependent diabetes mellitus and Insulin-dependent diabetes mellitus, respectively.
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Post by matt on Apr 11, 2017 8:56:31 GMT -5
where is the data to back up your claim insulin breaks down at room temperature??? Essentially all human proteins degrade over time, insulin included, and that is why all insulin products on the market have an expiration date. The data you are looking for is in the stability study results that each manufacturer has submitted to FDA as part of the CMC submission when the drug is approved. Every insulin manufacturer recommends refrigerated storage at 5 degrees Celsius for long-term storage, and several have documented potency degradation when stored at 10 degrees Celsius for as little as 14 days. Running a temperature segregated warehouse and temperature controlled distribution system is a pain in the backside, and is expensive to manage. No manufacturer signs up for anything other than room temperature storage (defined for the medical industry as 6 to 30 degrees C) unless their stability tests prove that it is needed.
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Post by matt on Apr 10, 2017 11:06:08 GMT -5
In a BK situation golden parachutes are more like lead parachutes; they are very difficult to collect because they have no special priority and are therefore an unsecured claim (except for the small statutory amount for unpaid wages of every employee). However, such contracts have a psychological value and board might be trying to limit any early departures in anticipation of a material event.
Personally, I don't think MNKD is ripe for a takeout by some other pharma. The diabetes market is essentially down to Lilly, Novo, and Sanofi, and the competition is pretty brutal. Any company with a single product doesn't have a snowball's chance in hell of surviving in the sector, so that really only leaves Lilly and Novo as possible suitors (Sanofi had their chance). If Afrezza was really critical to either company, they would step up and buy it at whatever the price simply to protect their franchise. Big pharma doesn't behave like stock traders; they have a value-based price in mind and they are willing to pay 100% of that price no matter what. Similarly, they don't buy drugs they don't value so few big pharmas scoop up assets in bankruptcy liquidations; that is left to opportunists like Concordia. If there has not been a serious offer made for the company at this point, there probably won't be.
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Post by matt on Apr 9, 2017 10:38:35 GMT -5
I doubt it. Change of control provisions are pretty standard and I am surprised they didn't have them in place before. It is a little surprising the sheer number of people covered by the provisions as it is generally just the top two or three officers; here I think there were seven. At any rate, the debt holders are entitled to what they are entitled to per the securities purchase agreement so the contracts don't affect them unless Deerfield takes everything of value and in a distress situation nobody bids anything for the IP, which is a distinct possibility.
One purpose of the parachutes is to create incentives for management to go along with whatever plans the board comes up with. You don't want eighteen months of salary standing in the way of an acquisition so, indirectly, such agreements benefit the shareholders by making a transaction more likely. Obviously the acquiring company factors the cost into the price they pay so it does reduce the amount offered, but it is probably beneficial to the shareholders just the same. If the company does BK such provisions are still valid, but they become last-in-line unsecured debt and are usually settled for a few pennies on the dollar or are wiped out entirely. If management wants a pay day, they need to get the company sold even though that will be tough to accomplish under the present circumstances.
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Post by matt on Apr 9, 2017 7:46:55 GMT -5
If you want to play detective, you can go back and find the first date a debt appeared on the balance sheet and then go hunting for slightly earlier 8-K or 10-Q filings where the debt was first disclosed. There you will find additional details (buried in the exhibits numbered 10.XX) which may, or may not, detail the holders. In many cases when a straight bond issue is sold, all you see is the name of the investment banker and the trustee, but not the names of the individual bond holders.
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Post by matt on Apr 7, 2017 14:41:05 GMT -5
There are few markets with less regulation than the US that also present significant market opportunities. Most countries with a stream-lined approval process will rely on an FDA or EMA approval in lieu of their own process, but you still have to have FDA or EMA approval first and, for most drugs, there is little difference between what the FDA and EMA will require for approval.
dreamboatcruise hinted about pricing with national health systems, which is only partly true since most countries have a dual public/private market with differing prices, but even when private reimbursement is available it is almost always less than in the US. Germany, Netherlands, Austria, some of the Nordic countries reimburse on the order of 80% of US price for many scripts, but the rest of Europe is more price sensitive with the Mediterranean countries very price sensitive. About the only large country with prices higher than the US is Japan, but then the approval process is similar to FDA with significant added costs and a much longer time line.
The fact that the world contains 7 billion people while the US only has 300 million is true, but the idea that foreign countries are easier to penetrate or that untold riches await those willing to hop on a plane is largely an illusion. I have spent a good part of my career doing business development both here and abroad (I have 3 million frequent flyer miles to prove it) and I can tell you that the grass is not always greener on the other side of the ocean. Far from it.
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Post by matt on Apr 5, 2017 10:15:30 GMT -5
You can't add up fails to deliver and conclude that there are 6 million naked shares. Those shorts all have to close their position or they get bought in at some point, so somebody who was naked short at March 1 might have been subject to a forced buy on March 5 at which point they are no longer short, let alone naked short. The only number that is relevant is the last one reported.
That said, over the short-term (days) the volatility is amplified by short who do have an affect on the price.
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Post by matt on Apr 5, 2017 4:15:39 GMT -5
All should become clear shortly. Whether the company wants to authorize more shares, obtain another R/S authorization, create a new class of stock, etc. all require a shareholder vote, and that is most economically done as part of the annual meeting. When the DEF 14A is published calling for the meeting, read the proxy carefully and the proposed resolutions should tell you which way this is headed. In recent years the DEF 14A came out in mid to late April, so that is just a few weeks away.
Until then, all anybody can do is guess and that creates more panic than anything else.
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Post by matt on Mar 31, 2017 12:42:53 GMT -5
While waiting for FDA to approve MNKD's ad, can MNKD spare a little money to sponsor VDEX for some ad, at least through radio stations? Obviously VDEX is in early stage of acquiring patients. If fully booked, they should be able to serve at least 100 patients a week (100 NRX). So they definitely need some visibility locally. Drug companies can't give things to doctors or clinics. Drug companies can give doctors anything they want so long as the physician services are not reimbursed by the federal government. However, if that physician also treats Medicare that pretty much makes it illegal under the Stark Act. Even if the doctor does not see Medicare patients, there are many state laws that are similar to the Stark Act to make the strategy not worth it. Cooperative advertising is allowed, but if Mannkind is sponsoring the ad and Afrezza is mentioned by name then all the same warnings have to be displayed. It is swapping one FDA holding pattern for another. It would be convenient to have a middle man circumvent the regulations, but life is not that easy.
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Post by matt on Mar 30, 2017 7:30:38 GMT -5
Only person I've seen on any of these discussions forums that seems to know the pharmaceutical industry is Matt from this board. I'd vote for him. Nice of you to say but: 1. I am in the process of launching a new company of my own that has been in the works for several years, and 2. I honestly don't know what I would do with Mannkind. Once you have partnered with a logical big pharma company it is almost impossible to do so again. You can scream that it was all Sanofi's fault, and that might be true to some extent, that is a very tough message to sell to the next guy. Besides, it takes any management team a minimum of six months, and more like twelve months, to become effective and Mannkind may not have twelve months. The company has a strategy that makes sense, all things considered, and changing horses at this point is probably counterproductive. The issue is cash and the financial markets are going to do what they are going to do. The balance sheet is not conducive to any form or shareholder friendly financing due to the combination of debt overhang and lack of operating results. If anybody wants the asset they can simply wait a while longer and pick it up for pennies. So pray for Matt (the other one) and Mike to drive some results; they are the best bet.
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