New trial started to show that the insulin purchased from Pfizer will work the same as that purchased from Organon-Merck. This will also provide a dual source, once they run through the billions in retail value of the current inventory. This looks alot like a company that is gearing up for a launch.
Once Deerfield converts the remainder, Mannkind will be close to a positive book value or net worth for the first time in 5 years. It has been fairly clear Deerfield is targeting the 5 dollar level for months. Therefore, they would expect any equity component of a partnership to price between 6-8 dollars per share.
Assuming the sale of 25 million shares at 8 for 200 million plus an upfront cash component of 400 million on a royalty.revenue split..OETM agreement. If such an agreement was struck in March, after a final Deerfield conversion, Mannkind would end the 1st Quarter with a positive net book value of more than 500 Million.
Replacement Value: Adding 500 million to the replacement value of the Property, Plant, and Equipment for manufacturing as well as the off the book expensed and stored insulin, you could clearly produce a number close to1 Billion. Factoring in intellectual property and a 2.3 Billion Tax Loss Carry Forward, you could argue that the company is trading at a theoretical book multiple of 1X
The question is, how high does this multiple go with an approval. As soon as a Big pharma strikes a deal, this will likely be assumed. There lies the Krux, as Big pharma likely doesn't want to pay half a billion to make Al Mann 2-3 Billion, as a price of 4-5x theoretical book as above would bring.
FDA regulated drug products can be expensive to market, however, if they wait too long, Big pharma better hope Al Mann is not as Savvy a marketer as Beyonce...
They cannot raise capital prior to the 74 day response at these levels...they would risk a law suit given recent comments and they don't need the money. Also, they are in the middle of negotiation talks which likely include and equity component, therefore, they cannot raise at these levels. The stock price is meaningless and is obviously being manipulated, i.e. the high to low today is exactly 50 cents and the after hours tape is a mess. At this point, it is verly likely that a desk and a prospective partner/competitor is working to depress, as well as hege funds and sell side desks that whould like to clear and close the books prior to Yead end.
First, we don't know who owns it all and if there were any buyins. Second, Deerfield will provide another 40 million as soon as the payment is made. If you can't do the math PSTFU.
TO REACAP, Mannkind will end the year with about 30-35 Million in cash and approximately 30 million remaining on its Line of Credit with Al Mann. Again, they are burning 11-12 million per month in cash.
For those having trouble with the third grade math:
94+45+40+30(loc)=209-30(4th Q cash expenses)=179
interest and capitalized interest will change these estimates plus or minus a few million, but the company will have much less debt service next year vs. this year.
Bottom Line, they have plenty of cash, since they are only burning 11-12 million per month, to get them to mid year at the current burn. If they issue equity to raise cash prior to a deal, the stock price will likely need to go up substantially since they didn't see fit to issue equity over the summer above 7.
The only things that matter now are the 74 day response and the PDUFA. Any deal will likely bring in a minimum of 200 million in cash with a total initial commitment of 600 million, likely with an equity piece of 5-10 percent of the company, etc. This deal may not be completed prior to PDUFA, but they don't need the cash until then, and Al has already said he has a contingency up his sleeve. And, of course, if the price spikes to 9-10 in March, they could always raise another 50 million with the ATM and Al could lend the company another 300 million..
Stock could go to 7 in a day and the 7.5 strike is trading at 20cents. Represents a 50% annualized Vol on a stock that has had nearly a 50% move in a month. This contract should be closing on a dollar as the price of the stock rises.
Anyone read this report...how do they come to this number? Are they assuming a drop in EBITDA or X interest coverage on debt or do they foresee another potential write down? How safe are the Bakken assets from any potential write down?
If the company wasn't worried about dilution, they would have pulled the trigger on the ATM last summer. A bit curious that they did not, but they likely wanted to reserve those shares as part of the potential deal.
Any solutions? Oh...wait, Mannkind already has an individual billionaire who controls more than a third of the capitalization. He's not going to tell you his plans, although it is not that hard to speculate, but post PDUFA, the conversations change to... name your price.
Any regarding dilution....it has been clear for years that they will have about 400 million on a fully diluted basis by PDUFA, that includes the ATM and Deerfield conversion and a BoFA convertible 2015 conversion and employee option grants, etc.... Get over it, the company is worth 6-10 Billion if it is worth a dime, and that is the going rate for a blockbuster buy out. If Al was in his sixties he would go it alone believeing he has a 50 billion dollar plus company on his hands. Take a look at the top Pharmas globally on a rolling 5 year basis. The change is continuous and shocking, the first shall become last and the last first as it were. This industry lives and dies by the blockbuster drug, Mannkind has one potentially. Watch what happens if no deal is struck, Afrezza gets approved and Al Mann finances the initial commercialization. The stock will skyrocket and the competitiors will scramble.
See how easy that is..If you are listening to the clowns on this board, positive or negative, when manking an investment decision, you are making a mistake. Who cares what DP does with her 100K shares. She gets them for near nothing and has been selling for years. She is an attorney, not a hedge fund manager, invest accordingly. Also, there are very few global 50 billion dollar plus businesses on this planet and Diabetes care is one of them; many of them cause wars that kelling tens of thousands each year. The negotiations are going to go down to the wire and the Billionaire who owns 50 percent of the stock is not going to tell you or anyone else what his plan B is until the FDA speaks. This BS will go on for another 4 weeks when the FDA 74 day review conveniently coincides with about the last day Hedge funds will have to Buy the stock and get it in their 13Fs prior to the run up to approval. Should be interesting
If they can operate these assets and pay down the debt accumulated in the past year over the next 18 months they will be safe, however, if they don't have the success they expect on the new acerage and have to take any write down the stock will tank.
That's a good question for the editors over at seekingalpha. Did she file the piece under Mannkind or Oramed, sounds as if she filed under Mannkind and the editors linked it to yahoo as such. Now they a running around deleting responses. Quite interesting, and brings up some legal questions.
The fact that 2015 Bonds are quoting above par while the stock is short more than 30% of the float points toward short term equity trading and arbitrage that will flip on a dime in the December/January time period.
You mean like it did this year....As soon as bonuses are locked in and guys want this to show up on their owned list in April, the buying begins. The mgmt doesn't sound like a group that is worried about much. The trial transcripts for the FDA chemist who got stung basically guarantees approval as it opens the FDA up to a business model infringment suit worth tens of billions.
No kidding...I said convert the debt and X by price. If you assume debt is not converting, you assume no FDA approval, which makes the whole thing moot.
EV is meaningless as 3/4 of their debt will be converted - just assume full dilution and X. They just said last night that they will have capacity and pricing to due 8 billion in top line sales by the end of 2014. It is speculation that they will be successful, however, there have been internet companies with #$%$ margins valued at 10 billion with 50 million in revs in the past few years. shorts simply believe they have inside track on if and when a global partner will sign a deal, end of story.
Hakan commented, in response to the BofA analyst, that they would have three lines, with a total capacity to handle as many as 4 million patients per year average, by Mid 2014 not end 2014 and that quote - our plan is to certainly be commercially ready within six months of approval. Both Hakan and Al have now made suggestions that this product will be available to the market prior to July 2014. This may be symantic, but they sound very confident.