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Post by matt on Feb 1, 2017 11:44:57 GMT -5
Obviously it's bonus time! Those are free shares rather than options. A4 code - Annual equity award vesting in 36 equal monthly installments commencing one month from date of grant, being fully vested on the third anniversary of grant date Agreed for Codes 1, 2 and 3. But for Code A4, the Exercise Price is shown as $.91. Doesn't that mean they have to pony up in cash for the difference between .91 and the closing market price at the end of the day? For the shares listed with an exercise price of 91 cents, those are clearly labelled as "Employee Stock Options", vest over 36 months, and remain exercisable for ten years. Like any other option, nothing happens until the date of exercise and if the stock is trading below 91 cents, the options will simply expire worthless. Nobody has to pony up any cash until exercised.
The way SEC insider reporting works, the employee must disclose any acquisition or right to acquire stock, whether that acquisition actually happens or not. A lot of times when shareholders freak out about annual compensation reported for an officer in SEC filings, they don't realize that in many cases the big dollars are phantom profits from option grants that are way underwater and will never generate a penny of income to the executive.
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Post by matt on Jan 31, 2017 12:13:18 GMT -5
A previously announced conference call that allows any member of the public to listen in meets the requirements of Regulation FD. The company is not required to issue an 8-K or PR in addition to the call to satisfy the SEC, although most companies issue some form of follow-up as a matter of courtesy.
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Post by matt on Jan 30, 2017 11:01:59 GMT -5
The negative spinmeisters want the conversation to be about a reverse split. I personally don't see the need to have an investor call on this subject since nothing they say is going to have any major effect on the pps. The reason to have a call about a reverse split, if indeed that is the topic, is because the technical and legal requirements are more demanding than for other shareholder votes. It is not a bad idea to communicate to the shareholders the importance of their participation otherwise the company could wind up with the double whammy of the price impact of a pending reverse split, and then getting delisted because the reverse split vote didn't pass. That is the worst of all worlds.
On the positive side, any of those are possible with varying degrees of probability. The one that has the highest probability / realistic impact is announcement of an international distribution deal in a major market. We would have to see which market(s) and which partner before we could evaluate that.
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Post by matt on Jan 29, 2017 17:33:47 GMT -5
If you were making $700K a year with a company with a market cap of $114B would YOU jump ship to participate in a company about to do a R/S? No, I wouldn't, but you assume that everyone applying for a job from another pharma company understands how the financial markets and securities law works. I can guarantee you from personal experience that this is not the case. I have been asked extremely basic questions by senior vice presidents at a Fortune 100 company that would cause many people on this board to roll their eyes in disbelief.
Expertise and prior career success in science, sales, marketing, and many other disciplines does not presume familiarity with finance. Similarly, expertise and prior career success in finance does not presume understanding of science or sales. There are few people I have met in the industry who have a broad base of understanding in multiple fields.
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Post by matt on Jan 28, 2017 8:56:02 GMT -5
If they have good news then why R/S? If the SP does not go above $1 then let the MNKD be de-listed and focus on sales or partnerships. For the simple reason that the company still needs money to operate as sales are a very long way from breakeven. Raising money on a national exchange is easier (read cheaper) and less dilutive than when done on the OTC.
It is easy to say that the company should focus on sales, but if the cash runs out they will be unable to maintain the sales force. Likewise it is easy to talk about partnerships, but much more difficult to actually land one especially after a major pharma was already a partner and chose to walk away. Shareholders might complain that Sanofi was not a good partner, not sufficiently focused on Afrezza, or that they did not "try hard enough", but that doesn't remove the taint. Don't expect that another big pharma is going to come knocking on the door, and second or third tier players are not what this product needs.
Which leaves the R/S. Painful, no doubt, but the other feasible alternatives are more painful. There are no guarantees of success, but this is the best option management has available at the moment.
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Post by matt on Jan 27, 2017 13:41:38 GMT -5
Once a stock is delisted, what does it take to get it relisted on NASDAQ? If we really started to see W/W NRx growth of 10% minimum and corresponding refill rates improving shortly thereafter, a three month extension without RS and I think SP would go over $1 in the March - May timeframe. Thoughts? Once a stock is delisted, NASDAQ treats the company like any other which means the company is subject to all initial listing requirements which includes a $4 share price instead of $1, and shareholder equity of $4 million (versus MNKD's current equity that is at least two hundred million into negative territory). Thus to relist MNKD would have to raise a few hundred million in fresh capital and reverse split the shares anyway. It is far easier to stay listed than to relist.
As for your other question, it is debatable whether script growth alone would translate into a $1 share price. At that point it would all be market perception of whether such growth can continue. Three months at a compound weekly growth rate of 10% would only be 842 weekly scripts, and the weekly scripts needed to breakeven is in the tens of thousands. Would that be enough to convince the market that the tide has turned in MNKD's favor? Honestly, I don't know.
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Post by matt on Jan 27, 2017 11:47:39 GMT -5
If it was good news, wouldn't they just announce it now? Especially if it is material; they would have a limited time just to file the necessary SEC filings if it were. Please correct me if I'm wrong. even is it was bad news and it is material , wouldnt they have to file on time and not delay? if you look @ sanofi exit deal, they timed the filing with earnings call and I dont believe Sanofi did it at the nth moment. It was MNKD that timed it . The filing requirement for an 8-K disclosure in almost all cases is four business days. If something material happens on a Friday, an 8-K filed on or before Wednesday would still be a timely filing. Most companies don't wait and file immediately, but I am reciting the SEC requirement and not typical corporate practice.
Companies schedule conference calls when something needs explaining, and that goes double for calls not connected with earnings releases. Since the company is under audit for full year 2016, this is far too early to be announcing earnings for Q4 so it has to be something else. I suspect it does have to do with calling of a special meeting to approve a reverse split given that time is running out to complete that move. In order to regain compliance with NASDAQ standards, the deadline to reach the $1 bid is March 6 in order to have ten closing bids before the March 17 delisting deadline.
While Matt is entirely correct that the company can apply for an appeal hearing, any company faced with delisting can apply for a hearing but that doesn't mean that an extension will be granted. By convening a special meeting now and executing a reverse split it takes the decision out of the hands of the NASDAQ listing panel into the hands of the shareholders where it belongs and puts the company squarely back into compliance. On balance, that is the best choice available.
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Post by matt on Jan 27, 2017 9:05:21 GMT -5
I do not believe that sales will pick up enough rapidly to avoid a RS unless MNKD get an extension from the NASDAQ...which I doubt if sales are not coming in. Even if MNKD gets an extension from NASDAQ, it will come with an obligation to execute a R/S. That is actually stated explicitly in the NASDAQ Marketplace Rules.
Any time something unpleasant is looming, like ripping off a Band-Aid, it is better to get it over with. Shareholders do not like reverse splits because the share price usually adjusts to the split ratio, which is just simple math, but then it is usually followed by a further substantial price decline but so is moving to the OTC market. Unpleasant as it may be, the only thing worse that doing a reverse split at this point is not doing a reverse split and losing the listing. Life is much better on NASDAQ which is why companies fight tooth and nail to stay listed. If script numbers are not improving enough to push the price over $1, it is best to get on with it.
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Post by matt on Jan 24, 2017 15:13:20 GMT -5
I agree that they said the only thing they can. They certainly aren't going to come out and say their backs are up going to quickly be against a proverbial wall in regards to delisting. I'm sure the company knows more than us, and I certainly hope they get it the extension, as it appears they are going to need it or turn to the dreaded reverse-split to stay in compliance. The stock doesn't appear to be approaching $1 any time soon. In looking at the delisting 8-K rules in conjunction with the initial listing rules (which are required to be met in order to qualify for an extension), it doesn't appear that the company is eligible. Initial listing rules requires a minimum $4 million in shareholder equity. MNKD's last 10-Q from November indicated that the company had a shareholder DEFICIT of $238.6 million which would, as per the rules, make them ineligible because they wouldn't meet the initial listing requirements. However, all this is moot if the share price rises above $1 for 10 consecutive days. They might know another way around it, but on face value, they don't qualify for an extension. I have had the pleasure of dealing with the NASDAQ Listing Qualifications Group in the past, and it is a little bit like trying to nail Jell-O to a wall. You are correct that the NASDAQ listing qualifications, which are part of the NASDAQ Marketplace Rules, do not provide a quantitative basis for Mannkind to stay listed, not do they provide a quantitative basis for a 180 day extension while a reverse split is accomplished. If the reverse split isn't submitted and voted on before the March 17 deadline then the Marketplace Rules require a delisting notice. The text of the rule states: "If the Company has publicly announced information (e.g., in an earnings release) indicating that it no longer satisfies the applicable listing criteria, it shall not be eligible for the additional compliance period under this rule."and since MNKD has issued a 10Q (and by then perhaps a 10K as well) that shows it does not meet the shareholder equity standard, the company is not eligible for the additional 180 day compliance period. Receipt of a final delisting notice is just a matter of time absent a major unforeseen event. Which leaves an appeal to the NASDAQ Office of the General Counsel which can grant a hearing, which generally happens within 45 days, to consider the matter. The company may submit to the Hearings Department a written plan of compliance and request that the Hearings Panel grant an exception to the listing standards for a limited time period, which cannot exceed 180 days. Since the company has been on notice that they might have to do a reverse split since at least September, but did nothing, this might fall on deaf ears, especially with the continued unresolved deficiency in shareholder equity. The winning strategy is to move forward with the reverse split NOW and if they miss the cut-off date for implementation by a few days the panel is likely to give management a scolding but take no further action. However, the company is on notice already so I don't think they can just blow it off and hope for the best.
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Post by matt on Jan 24, 2017 14:17:53 GMT -5
In 2016 Q3 cc Matt said they had enough cash to get into Q3 2017. Which might be true; there really isn't much difference between the cash burn that gets you to June 30 and the one that gets you to July 1 but one date is in Q2 and the other is in Q3. The essence of the discussion needs to be whether the company will have to raise more money to stay in business beyond some date this summer (it will) and whether the financial markets will be open to a transaction of any significant size (they may not be). If not, then the $30 MM Mann Group line of credit will be the last reliable source of cash, and that will only last for so long.
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Post by matt on Jan 24, 2017 9:01:35 GMT -5
In private companies these are known as pre-emptive rights, and they give each shareholder the right to keep their percentage ownership intact so long as they can meet the call for more capital. It is less obvious when this happens with a public company, but it is essential the same process. In some countries the right itself has value, it is essentially a special form of a warrant, so if a shareholder has a stake in a fast growing stock but doesn't have the money to double down they can sell their warrant in the market. If demand is high for the stock, the warrant can have a lot of value and the shareholder reaps that value instead of the new investors.
As for EYES, I know precisely nothing about the company so I can't comment. It may be that one or more investors wants to keep their percentage intact without dilution, or it could be many other reasons. It will be interesting to watch as these are rare for US companies.
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Post by matt on Jan 23, 2017 15:56:14 GMT -5
Any company can do a rights offering at any time (in some countries companies are legally required to do so). The problem is that for a public company there are SEC filings required which costs money and takes time. In most cases the efficient thing to do is to issue shares against an S-3 shelf registration which can literally be done overnight.
How the money is raised is merely a legal detail. The pricing of the securities depends more on how well the company is doing. Selling to the existing shareholders is not necessarily cheaper than just going to the market, and having a rights offering where most of the shareholders do not buy into the offer is a guaranteed way to tank the share price.
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Post by matt on Jan 17, 2017 16:37:10 GMT -5
I got as far as the line that says "Net to MNKD $810". If you go back and look at Liane's weekly spreadsheet of the data reported by Ripano, it shows Q3 TRx of 3,694 while the 10Q for the same period reports $573 thousand in commercial sales. That implies gross sales to MNKD of $155 per script, and cost of sales for the period was $1,172 per script for a net to MNKD of negative $1,017 per script.
The cost of sales is driven in large part by poor fixed cost absorption on such a low unit volume so if unit volume improves the same fixed overhead will get allocated across more units, thereby lowering average unit cost. That will certainly help the numbers. However, even if you make an extreme assumption that the cost of production for Q3 was zero (which it wasn't) there would still be the difference between your assumed net of $810 and the reported actual of $155 per script.
Unfortunately I can't help explain that discrepancy away but before you spend more time on the rest of the model I think you need to have your revenue assumption thoroughly validated. The numbers reported by IMS and Symphony are not true revenue numbers; they are the full retail list price sales as reported by the pharmacies before rebates to insurers, discounts to supply chain partners, cost of the discount cards, etc. They bear no resemblance to the prices manufacturers will actually see. If you want to understand the accounting better, I recommend this presentation that was done by the accounting firm Deloitte:
Gross to Net Accounting
It is a very complicated topic and I am not sure anybody outside the company has enough visibility to the true numbers to make an intelligent guess at breakeven volume. However, since your whole model relies on having an accurate sales figure to which you can apply various discounts, you need to scrub that number thoroughly.
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Post by matt on Jan 5, 2017 16:26:13 GMT -5
I wouldn't expect many Touchpoint salesmen to transition simply because most contract employee agreements have a "no hire" clause that requires payment equivalent to a headhunter's fee to hire away their employee. Headhunters generally get 25-33% of a full year's salary when the employee gets hired, and that may not be a good use of Mannkind's cash.
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Post by matt on Jan 5, 2017 9:48:12 GMT -5
Amgen wants to acquire biotech companies, that much is clear, but MNKD is not really a biotech company. The research and manufacturing capabilities required to run a biotech business, either recombinant proteins or monoclonal antibodies, are quite different from MNKD which is arguably a drug delivery technology company. It really wouldn't be a good portfolio fit with what Amgen does well, but stranger things have happened.
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