It's curious that it's not going better than it is. $480k in consumable revenues over a 13 week period is $37k per week. Let's say each antenna is $1k and they do one procedure per week. Then that's 37 machines. If they only get $500 per antenna (because of 50% revenue sharing with Terumo), that's 74 machines, tops. Terumo is selling into 100 countries. That's less than 1 per country, not particularly remarkable. This is a market that is taking a long time to develop. The 5% drop in revenue this quarter is troublesome. Hope it's not a sign the low lying fruit has all been picked.
Fair comparison with Apple. It's all in the user interface folks. That's what has made Apple the success story that it is. And the cult following when Jobs was alive. Same here. Al Mann, like Steve Jobs and Elon Musk, has a cult following, and that's what all these valuation models on Seeking Alpha are failing to take into account. Tesla's business model was widely panned because its valuation was way out of line and the shorts were having a field day. Then they showed a profit. The stock ran 4x. It's all in the user interface and the cult following. Think about it.
Ask Bill what cities in the US the FPU program is operating in and how many hospitals. There is no Terumo involved. He should be able to tell you. Then report back to us. This would confirm your theory.
Now let's talk about the recurring revenue stream. Let's say they sell 150 MTX-180's in Europe and the US and that the machines are used to do 2 ablations per week, with each taking 1.5 antennae on average at $1,000 a pop. That's $3,000 per machine per week or $23.4M per year in revenue. Take 2x sales or $46.8M as as the valuation for consumables. This doesn't take into account sales in Asia or S. America or India which will surely come once approvals are in place.
There are 33,982,000 shares diluted, with another 5,457,305 in warrants (exercise price of 2.93) and 4,062,239 in options (exercise price of 2.80), which if fully vested and exercised, bring in a total of $27M.
On a per share basis, that gives us ($155M + $120M + $27M + $47M)/44M = $7.93 per share
A potential suitor will typically pay more than the most recent high peak to get all shareholders to buy-in to avoid costly shareholder litigation. The peak on 11/20/2014 was $7.40. If they pay $7.50 or more, they can avoid that and acquire a diamond in the rough. In the right hands, with a deep pocketed suitor, this company can soar and its technology become mainstream.
Big companies are snapping up small companies right and left with the stock market at an all time high. They could buy BSD with a combination of cash and shares and it would cost them very little. Medtronic bought Covidien for $43B. Boston Scientific and Stryker have no microwave thermal ablation equipment. BSD could be had for a song. Think about it.
Covidien, formerly Valleylab, a subsidiary of Tyco Healthcare, bought Vivant Medical in July 2005. Vivant only had 17 employees and a single microwave thermal ablation product (Vivawave rebranded as Evident), which was not FDA approved at the time (that came in April 2006). Tyco paid a total of $101M for the company. Based on the medical sector inflation since that time from the Bureau of Labor Statistics website of 41.6%, the valuation on the deal is $143M in 2014 dollars.
Now BSD Medical has 45+ employees, a fully paid for FDA-certified manufacturing facility, a patent portfolio, 2 fully FDA approved products (with a far superior microwave offering), CE mark, and a world-class award-winning hyperthermia line with no debt and about $12M book value. So just the microwave ablation business alone is worth at least $155M using the Vivant purchase as a guide.
BSD hyperthermia has achieved widespread acclaim in Germany, the Netherlands, and other parts of Europe. Microwave ablation is starting to gain traction there. Taiwan is open for the hyperthermia business, and the China renewal for that product line is just around the corner. S. Korea is sure to follow.
Now at least 16 machines have already been sold in the short time BSD Medical had approval in China. There are some 20,000 hospitals, public and private, in China. Let's say only 1% ultimately buy a BSD-2000 3D/MRI. That would be 200 hospitals. At $300k a pop (I'm assuming they will be discounted as China can't afford to pay top dollar), you are talking $60M in potential revenue from China alone, not to mention S. Korea, Taiwan, Russia, the rest of Europe, and the untapped potential in S. America and India. The valuation of that line of business is well over $60M and probably much more with its potential to ultimately become a standard of care (the fourth pillar) in the treatment of cancer. So let's put a price tag of a very conservative $120M on that business. (cont'd)
It would be more lucrative for Cranshire to press for a sale. Buying the company out would not put their warrants "in the money". To get the shareholders to sign off on such a deal, they'd have to offer in the $7 range. They key is Sennewald who holds 6.3M shares. Butch owns arounds 609k. Surely he needs the cash for his retirement. I say a sale is in the works.
Surely Cranshire wants the share price up so that their warrants will kick in. There are 5,457,305 in warrants with an average exercise price of 2.93. Maybe they will press for an "Exploring Strategic Options" PR to juice the share price or take the company private altogether.
ok, I am wrong on point 1. According to the 8-K:
“at-the-market” offerings will constitute Variable Rate Transactions (as defined in the Settlement Agreement), and (v) the Company has agreed to terminate, within five business days after the date of the Settlement Agreement, that certain At-the-Market Issuance Sales Agreement entered into by the Company on May 9, 2014 (the “ATM Agreement”), which was filed as Exhibit 10.1 to a Current Report on Form 8-K by the Company on May 9, 2013 and is incorporated herein by reference."
"issue or sell any convertible securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of, or quotations for, the shares of our common stock at any time after the initial issuance of such convertible securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such convertible securities or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for our common stock, other than pursuant to a customary “weighted average” anti-dilution provision; or " ATM is not convertible so doesn't apply.
"enter into any agreement (including, without limitation, an “equity line of credit”) whereby we may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights). " Future determined price doesn't apply to an ATM. The price is not pre-determined.
"We will agree with the purchasers that, subject to certain exceptions, if we issue securities within the 12 months following the closing of this offering, the purchasers shall have the right to purchase all of the securities on the same terms, conditions and price provided for in the proposed issuance of securities." This has expired.
Coupled with the insider buying, this news tells me something big is about to break. Buyout?
Just look at the pictures of the two, side-by-side. Exubera looked like a bong; Afreeza is the size of a whistle. A woman can put it in her purse and discreetly use it in a restaurant. She couldn't do that with Exubera. That makes all the difference in the world. Besides, the Exubera wasn't as effective.
The user interface is what made Apple's iPod, iPad, and iPhones the success stories that they are.
Uh, IDIX was just bought by Merck for $3.3B, 350% of its current share price. Just think what MNKD will go for. FYI, 30% of IDIX shares are short. Will be interesting to see what the shorts do. MNKD has 28% shares short. You do the math.
And the pain killer market which will use Mannkind's platform for delivery is huge too! With the 28% short interest, this may do a Dendreon on us -- from 4 to 50 in a couple of months.
Have you seen a picture of Exubera? It was the size of a bong and looked like one two. Can you imagine using that in public, not to mention fitting it in a purse? Think human factors! It's what made Apple a success. Afrezza device is the size of a whistle. Very discreet. And fast acting. That's what will sell it in droves.
Hanover is dumb. They should have waited until the company issued positive news, then dumped their stock. The market is on to their shenanigans now. They can't find willing buyers any more.