MannKind: Weekly Data Updates- 10/30/15 Data
POSTED 11/10/2015
The following are key features from the Quarter 3rd Report:
1.Paid out of cash reserves $64.3 million to resolve the August debt obligation.
2.This leaves MannKind with a meager $32.9 Million in cash as of the end of September.
3.This cash reserve is only $7.9 million above the required $25 million that MannKind must keep on hand, or be in default with their loan covenants for other outstanding debt obligations ($185.4 million).
4.Considering that MannKind's operating expenses for the 3rd Quarter ran around $26 million, or $8.6 million per month, this simply means that as of November, 2015, MannKind is operating with no cash on hand. ($7.9M-$8.6 M = Deficit Cash of $700,000.) Extrapolating this out to the end of the 4th Quarter, 2015, this will place MannKind's cash deficit at $17.2 million.
5.A key covenant of the Sanofi loan facility is that no advances may be made under the Sanofi Loan Agreement if Deerfield has commenced enforcement proceedings in connection with an event of default under the Facility Agreement. This simply means that if MannKind defaults on this particular debt obligations, Sanofi will not loan them anymore money.
6.With no cash on hand, it appears that even the one asset they might have left is also encumbered by Sanofi. If the Company sells its Valencia facility, the Company is required to prepay the loans under the Sanofi Loan Facility in an amount equal to 100% of the net cash proceeds of the sale within five business days of receipt.
7.As of the 3rd Quarter, MannKind has drawn down $43.7 million under the Sanofi loan facility.
8.With MannKind borrowing the $43.7 million this means that Sanofi has spent approximately $125 million in their overall marketing efforts. This translates into Afrezza's revenue bringing in $0.04 for each dollars being spent in this effort.
9.During the ensuing conference call, when pressed on certain issues, management would revert back to stating that it wasn't their decision on that particular issue and answers would have to come from Sanofi.
10.Also, when pressed for relevant answers as to why the lack of prescriptions, MannKind would always throw the blame back to Sanofi. The excuse being that since the partnership was created, Sanofi had not being able to resolve the matter with the third party payers. Blaming Sanofi doesn't explain that for a long period of time before Afrezza was approved, MannKind reported that they were working with the insurance companies to ensure that the product would be covered under their formularies.
Now that more than a year has passed, other more recent drugs have been approved by the FDA. These drugs have gained favorable insurance coverage, yet a drug projected to be a multi-billion dollar revenue producer and one of the world's largest drug companies can't convince insurance companies to provide better Tier coverage. I think it safe to assume the previous reported issue of pricing a product that has no clinical data indicating it's has more efficacy than current products hasn't changed third party payers position as for their level of coverage.
