Tuesday, May 15, 2012

Bull Case for MNKD


Jockey CEO

Al Mann is a billionaire with a series of startups that he has successfully exited from including Minimed which made insulin pumps. He also owns something akin to 40% of the company and has a line of debt open to the company as well.


FDA 

  • Clinical Trials: They have completed Phase III clinical trials and have not had any CRLs where the FDA pushed back on Afrezza (the actual drug). 2 more Phase III clinical trials under way (catalyst 3)
  • CRLS: this is where the company has fallen short to date. The last CRL was a result of MNKD management making a decision to switch inhalers from Gen 1 to Gen 2 (a big mistake in my mind). The Gen 2 inhaler is much superior (less drug required, better design) but got roadblocked due to an inter-departmental issue at the FDA...and hence, the current Phase III trails are aimed at proving that the amount of Afrezza delivered between the two inhalers are equivalent (and this essentially has nothing to do with the efficacy of the drug)! Interesting note on this...as a side note: an FDA insider  got caught on insider trading had traded with the expectation that MNKD to be approved at the last submission...


Partnership

Al has a reputation of being an extremely hard-nosed at negotiations...so where others would have partnered earlier, I expect the partnership for Afrezza to come closer to FDA approval. (catalyst 2a)


Pipeline

They have a few cancer drugs in the pipeline. No one (including me) give this any value because if Affrezza doesn't come to market, the company will go under.


Funding

A huge question mark as to how this will happen. They currently have funding through the end of 2012 (combination of cash on hand and the $38M remaining on Al Mann's line of credit). The next round of funding, if equity or debt will likely see Al Mann also adding more money as he has in each past round of equity based funding. (This catalyst can go either way depending on whether the additional funds are equity or debt or partnership).


Product

  • AFREZZA - is an inhalable insulin. The FDA has had no issues with this drug at all through clinical trials and has recommended a study on kids as young as 4 years old. This addresses the Type 1 & 2 diabetes market and has shown amazing results..ie blood glucose response similar to normal insulin produced in non-diabetic people and fast acting response (approx 15 minutes or less). It also has shown an ability to blunt weight gain ( a common problem with diabetics). The inhaler is the size of a whistle (unlike Pfizer's which was the size of a tennis ball can).
  • Technosphere - this is the wildcard. It is the excipient used to deliver AFREZZA but could be used with a large number of other drugs. No one gives this any value (just like the cancer drugs in the pipeline). However, this technology provides MNKD interesting non-Afrezza related partnership opportunities. (Catalyst 2b)


Competition

All competitors for inhalable insulin have essentially dropped out of the race. Competition is now only with pills, below-tongue dissolving tablets, skin patches and needles. The under-tongue tablets and skin patches are still early in their developmental cycle.

Tuesday, April 17, 2012

Thoughts on Leverage in Personal Investing

With the financial meltdown; personal leverage in investing has gotten a bad wrap.  Lets examine the types of leverage and than discuss the types of behaviors that led many to get burned.

There are several types of leverage:
1. Overspending on your credit cards---ie financial leverage to drive personal consumption
2. Maxing the amount of your mortgage to get the biggest house for your current salary
3. Borrowing money to invest in real-estate
4. Borrowing money to invest in a business
5. Borrowing money to invest in liquid investments (ie. stock markets)
6. Using your "buying power" to invest in equities
7. Lending your shares out for a fee to others who would like to short them.

There are probably others, but these types of leverage cover ones that most people will encounter.

#1 & #2 are about personal consumption.  The first is just a bad idea.  Buying an item that starts losing money the moment you buy it and paying 18+% per annum for the privilege is just plain bad.  If you need to do this to put food on the table than that is another story.  Unfortunately, for most people in the US, this is about consumption of non-necessity type of goods (ie. non-food items).  There are plenty of articles on why this is bad, do a google search for "credit card debt stories". 

#2 -- is a common misnomer.  Buying a house is also personal consumption although it is commonly thought of as buying an "asset".  If you look at financial accounting rules, the house is an asset -- for your bank (the one that provides your mortgage).  A house is not an asset!  It is a "home".  The building depreciates and looses value.  The land may gain value.  But, does it gain sufficient value to not only cover the building depreciation but also any improvements you may make as well as the interest you pay on it?  In today's environment, this is not an easy answer.  We can look at financial calculators or build fancy excel sheets to prove this--but at the end of the day, don't think of your house as an "asset" unless you are willing to sell it at a moment's notice and move if the market makes your asset profitable or if your asset looses value just like you would for any equity investments you may have.

#3-#6 are truely about investing.  #3-#5 involve borrowing money at a (typically) variable interest rate and investing it in something that will hopefully provide a return above that interest rate.  The pros and cons on these will be discussed later.

#6 is a very different type of leverage--and something that you will find in your brokerage accounts if you try to buy/sell options.  Brokerage companies will compute the "risk" of your cash & equity holdings in terms of the loss of value based on volatility and call it "Initial Maintenance Margin" or something of this type.  They will also calculate an "Available Margin" which is the additional value that your positions have today beyond the "Initial Maintenance Margin".  What these mean is that basically, if you have $X of equity, they will allow you to borrow $Y against $X as long as you maintain a minimum of $Z of value in your account where $Z is often less than $X. 

But, what makes this different from #6 is that you can use this value to sell options which impact "borrowing power" but do not require you to actually borrow any money.  When you sell an option, depending on the type of option, you are telling the person you sold the option to that you will be the other end of the trade if/when they wish to exercise their option.  For this privilege, they will pay you a fee upfront and your brokerage company will calculate the risk on the option being exercised and add that to your "Initial Maintenance Margin" and reduce that amount from your "Available Margin". 

#7 is another very different type of leverage...one that the average investor rarely sees and one that institutional investors take advantage of all the time to either juice their returns or increase their own profits.  It involves lending shares (that are owned by the lender) to others.  The buyers will typically use these shares to create short positions and in return will pay a fee to the lender and also give the lender cash collateral equivalent to the value of shares lent.  Only in very rare cases does the lender not get back their stock (ie. their brokerage company goes out of business)--as the brokerage company acts as an intermediary and is the counter-party (not the actual borrower).  If you have a brokerage company (like Interactive Brokers) that is transparent about this--they will give you a percent of the fee for borrowing.  If you don't (most brokerage companies), than you will not ever be told about this--but they will lend your stock and keep 100% of the fees.  If you have an equity account and positions that have any sort of short interest, this is the most risk-free way of leveraging your returns.

Monday, February 06, 2012

Mannkind Financing Summary (February 6, 2012)

Al Mann's Investment
Summary: Al Mann gets 31,250,000 shares of Mnkd in exchange for $77.2m debt cancellation (and potentially reducing the revolving debt line by $77.2m). 

In short, he is protecting himself from some of the dilution but he remains a debt holder for Mannkind.  This debt-to-equity conversion was probably required by the investors as a way for Al Mann to show that he has skin in the game for this round of fund-raising but provides Mannkind with no incremental cash.

External Investment
Underwriters: Jefferies & Company, Inc., Piper Jaffray & Co. and Cowen and Company, LLC
Issuance: 31,250,000 units = 31,250,000 stock + 18,750,000 call options (strike = $2.40, expiry = ~2/2016)
Price: $2.4 / unit

Cash raised net of underwriting expenses: $70,500,000 (@$2.256 / unit that the underwriters are paying to Mannkind)

What is the valuation of stock & warrant in each unit?

1 unit (@$2.4) = 1 stock + .6 of a call option (strike price: $2.40, expiry ~2/2016)

There are no publicly trading options with 4 year expiry dates...without reverting to Black Scholes, the
$2.5 option expiring in 1/2014 is valued at $0.60 (2 years to expiry).  Same option expiring in 1/2013 is valued at $0.39.

Using a volatility calculator and daily closing prices for Feb 7, 2011 - Feb 7, 2012 we get a range of volatility values (16%-71%) using 4 different volatility calculations.  Than using a Black-Scholes calculator (Inputs: high & low end of volatility, 1004 trading days, stock & strike price of $2.4, risk free rate of 2%),  we get the price of the warrant to be in the range of $0.328 - $1.1029.

Value of 1 warrant: $0.328 - $1.1029 (ie. value of .6 warrants = $0.1968 - $0.66174)
Value of 1 stock: $2.20 - $1.73826 (8.2% - 27.6% discount to the $2.4 value of the stock)

Additional: 
Underwriters have an option, exercisable for 30 days, to purchase up to an additional 4,687,500 shares of common stock and warrants to purchase 2,812,500 shares of common stock to cover any over-allotments.

Dilution
Current Shares Outstanding: 122.34M
New shares added as a result of this deal: 81.25M (assuming the warrants are eventually exercised.  If they are never exercised, chances are that Mannkind is out of business and this discussion is moot).
Total Shares Outstanding after Offering: 203.59M
Dilution: 33.5%


Other Fund Raising
Separate private offering of convertible senior secured notes  not considered a part of this offering.  No details are provided on what these are or to whom.

Conclusion
This deal sounds like it was negotiated with Warren Buffet in terms of extracting an ounce of flesh for financing. While I have confidence in Al Mann it looks like the investors that the underwriters shopped this deal to do not--hence the failure of the original private debt placement and the current valuation for the equity placement.  On the other hand, they could just be negotiating from a position of power vis-a-vis Al Mann and thus able to extract these generous terms.   

References
http://biz.yahoo.com/e/120206/mnkd8-k.html
http://finance.yahoo.com/news/MannKind-Announces-Proposed-bw-1380749394.html?x=0
http://finance.yahoo.com/news/MannKind-Receives-Commitment-bw-2160821953.html?x=0

Note: I am long MNKD

Saturday, October 22, 2011

Setting up RackSpace Cloud Server

Setup Php5, apache

sudo apt-get install php5 php5-cli libapache2-mod-php5 apache2
export EDITOR=/usr/bin/vim

vmstat -m (shows memory listing)

Memory ran out while trying to do this (free -m showed 40M free)...restarting the server 'shutdown -r now' freed up alot of memory (200M free after reboot).

configure virtual host setup (support multiple domains)
http://www.debian-administration.org/articles/412

my friend installed mysql for me...

to test the subdomain--need to have godaddy point to my new server (since they are also my registrar)....to do this, go into the godaddy domain manager and than you can enter a new 'A' record under the "total dns" manager.

Install APC on debian (lenny)
http://www.electrictoolbox.com/install-apc-php-debian-5-lenny/

---
Not sure if this is the kind of level you are after but this is what I wrote
up for use in my organisation if we need to perform a complete disaster
recovery of our wiki. This has been tested numerous times for both recovery
on the same server, as well as migrating to another server. I haven't tried
between OS though but don't see there would be any issues with that.

Before doing this, Apache2 needs to be configured in the same manner (ie
same directory root etc), correct php version installed and compiled, etc.

A couple of things: wikidb.servername.$DAY is just a gzipped mysql dump of
the database. wikifiles.$DAY.tbz is simply a tar of the entire directory
structure. I have a cron job run daily to backup both.

Create Database
Mysql –u root –p
Create database wikidb;
Exit
Restore Database files
Cd /
Gunzip wikidb.servername.$DAY.gz
Mysql –u root –p wikidb < wikidb.servername.$DAY Ensure database restored mysql -u root -p wikidb show tables; User account in MYSQL
Mysql –u root -p
create user 'wikiuser'@'localhost' IDENTIFIED BY 'password to be used'
IMPORTANT make sure this is also the same as in the LocalSettings.php
file!';
Grant privileges to wikiuser on wikidb database
Mysql –u root –p
GRANT ALL ON wikidb.* TO wikiuser [at] localhost


Flush privileges;

Restore wiki config files and images
Cd /
Tar –xvjf //wikifiles.$DAY.tbz
Complete restore process complete – to make sure, perform test plan again

Potential things that ** may ** be required are:
//maintenance/php5 rebuildall.php
Double double check the correct database, username, password are used in the
//LocalSettings.php file
Make sure apache is set up correctly, and the wiki location set
appropriately in the LocalSettings.php file

MySql Setup
first install it

mysql -u root -p

mysql> create database hindupedia;

mysql> grant index, create, select, insert, update, delete, alter, lock tables on hindupedia.* to 'user'@'localhost' identified by 'password';

mysql> flush privileges;


Locking down the server

http://blog.jtclark.ca/2010/02/configuring-zend-server-ce-in-ubuntu-9-10-on-a-rackspace-cloud-server/

Tuesday, June 07, 2011

Media Lies (or should we say unresearched facts)...

The Shankaracharya of Govardhanpeetham (Puri) is H.H.Nischalananda Saraswati Swamiji.  However, it is interesting to note that the Press Trust of India (and other English language newspapers in India who print PTI without thinking about what is written) are now promoting a statement by Adhokshajanand Dev as the "Puri Shankaracharya" a title he gave himself.  Adhokshajanand has also been ordered by the Orissa high court to stay away from the Peetham.

So, given that this person is not a real shankaracharya...who cares what he says about Swami Ramdev...?  Furthermore, I have to ask the question to the media's credibility since they are highlighting what he is saying and highlighting his fake title as his real one...I don't see them quoting any other shankaracharya or Swami Nischalanandaji either!!!


(Story from PTI reproduced below):

Puri Shankaracharya supports govt action against Ramdev

Source: PTI      Date: 6/6/2011 4:02:05 PM



Shankaracharya Adhokshajanand Dev

Shankaracharya Adhokshajanand Dev


New Delhi, June 6 (PTI) : Supporting the government's action against Ramdev, Puri Shankaracharya Adhokshajanand Dev today blamed the yoga guru for all the trouble and said he should give up the saffron robe.
"Ramdev is responsible for all the disturbances. He hid the truth from his followers (about the deal struck with the government). He should apologise to them...He was misusing the saffron cloth for some years now. What happened (forceful eviction from New Delhi) is fine. He should not wear the saffron robe," he said.
He also accused Ramdev of having commercial interests in mind and said the yoga guru resorted to actions which were against the basic tenets of a saint.
"People who become gurus should give up commercial activities...Gurus and saints lead a life of renunciation and work for the welfare of others.





Friday, June 03, 2011


Differences in Mechanisms of Learning between Indian & Western systems
This is a really interesting article about mechanisms of learning in Indian (and eastern) systems and western systems and the inherent differences.  It also explains, at a very base level some aspects of our two cultures & societies.

Very interesting (albeit a bit heavy and scholarly) read as  it is especially relevant to our children who are/will be undergoing these experiences.

--


A mode of teaching, I said before, forms the way one learns. Stories are paradigmatic examples of our methods of teaching. Therefore, the form our learning actions exhibit is one of mimesis. This suggestion generates some surprising, non-trivial implications. Here are a few of them:

1. If mimetic learning is to succeed, meta-reflections about both what one is learning and how one is learning have to be avoided. In the best of cases, one realizes that one has learned, and that too only long after the learning process is completed. Such meta-reflections can only be avoided, if mimetic learning is the dominant learning scheme in a culture.

Consider what could happen otherwise, i.e., if there were many different learning schemes of equal importance or where, for example, mimetic learning is subordinated to other kinds of learning. The learning subject must have information present somewhere in his system which tells him whether a particular way of learning is appropriate in the given situation. Decision requires to be made both about what one wants to learn, and how one learns. One is forced, as it were, to be reflexive.

Perhaps, an example would prove instructive. Consider the way reading is taught in our cultures. In terms of efficacy, there is little to be said in favour of the superiority of Western methods as against our methods. Theoretically, the situation is equally bleak: existing pedagogic methods are through and through suspect with respect to psychological theories. In the most used teaching-to-read methods, the pedagogy of reading in the West rests upon what is called structural analysis. This involves an analysis of the structure of the words, i.e., an analysis of speech structure and word structure, both graphemically and phonemically. That is, one speaks out a word loud and one is taught to break it up into its constituent phonemes, which are then mapped to graphemes. Previously, a child used the word cat and made itself understood. There was nothing mysterious or puzzling about the word; it never occurred to the child that it ought to reflect about that or any other word. As it reaches appropriate levels at school, it is taught that cat is not the same thing as cat; the former is a word composed of phonemes k/a/th and that they correspond to the graphemes c/a/t; and that the word itself refers to the concept of the animal so named which, in turn, picks out an animal, etc. This process is deemed crucial to recognizing novel words.

For our purposes, the point of this example is the following: the way one is taught to read in the Western culture forces a child to think about what it is saying, how it is segmented phonemically, i.e., it is forced to become conscious of what it is doing, and to do consciously what it was doing all along without being aware that it was doing it. In the most used Western teaching-to-read methods, learning to read entails acquiring meta-level knowledge about the knowledge the child already had, viz., of its native language. In other words, it is taught to reflect consciously about its very learning itself. This is not limited to the pedagogy of reading alone.

2. The previous point helps generate the following hypothesis: socializing children by means of stories stands in some direct relation to the growth of reflexive selves. If it is the case that selves are reflexive in Europe, stories can only have entertainment value. The greater the degree a culture encourages the growth of reflexive selves, the less are also its stock of stories (legends, myths, fairy tales, etc.) A culture which stimulates reflexivity in its members cannot sustain stories as models.

3. There is another, albeit related, point to the previous hypothesis. In a culture where selves are not reflexive at all or are only partially so, but one whose ideal (or self-image) is governed by that of reflexivity, stories continue to be important but in a transmuted form. They continue to depict events and situations, but are powerless to teach. That is, they retain their instructional nature without being able to instruct. There is such a genre in Western culture: utopian thought. They are instructional in nature without really instructing. (That is exactly what the moral imperatives, the oughts, are.) They depict events and situations which are not real, i.e., not the is, but outside of it, viz., in utopia. They depict non-real situations and events with the explicit claim of doing so. Because of this, they can continue to exist only if they entertain and that depends on the aesthetic taste of the population at any given moment. The modern day utopian thought is known well enough to all of us to recognize it as so without doubt: science fiction.

4. If we learn to be moral beings through mimesis, it means that moral and ethical actions must be susceptible to being mimed. Contrast this stance with that of the West: a moral individual (an ideal priest or, say, Jesus Christ) is inimitable in principle. That is, a moral individual is actually a message, which does not say be like me, but one which proclaims hope for the humankind, brings glad tidings so to speak. And the hope is that the presence of such an inimitable, exceptional individual will save humankind. If one is righteous, it is not only because that is the way to ones salvation, but more importantly, because the salvation of humankind depends upon the righteous being present amongst them. One is moral so that other sinners may be delivered from their sins. Such figures cannot influence daily life positively, but do so negatively viz., as examples of what we ordinary mortals, cannot be. They are, literally, the embodiments of ought and, as such, outside the is (Not every human being can be an ideal priest or even, as the examples tell us, ought to be one.)

In Asia, such an ought is no moral example at all. A moral action must be capable of emulation in daily life and only as such can someone be an example. Moral actions are actions that a son, a father, a friend, a teacher, a wife, etc., can perform as a son, a father, a friend, a teacher, a wife, etc. Either moral actions are realizable in this world, and in circumstances we find ourselves in our daily lives or they are not moral actions at all. Therefore, those real or fictitious individuals whose actions we mime and who are, consequently, construed as exemplary individuals cannot find themselves outside our world, but in situations analogous to our own. (Such a view is consistent with our models of self, for obvious reasons.)

5. This suggests that the role of moral authorities in these two cultures is different. In the West, the moral authorities are rigid principles without mercy or forgiveness. All talk of autonomy notwithstanding, moral decisions are totally heteronymous. One has to reflect not only about the principle one has to apply, but also judge whether one has correctly applied it. As a consequence, moral domain becomes one of judgement. The objects of judgement are and can only be conceptual ones, viz., theories. To say that some action is moral is to say whether or not the description of that action satisfies some or other moral principle. We have noticed this already. Moral life gets impoverished by being reduced to a principle (e.g. utilitarianism) or by being at the mercy of anothers judgement (e.g., that of a priest).

In Asia, by contrast, the immediate physically recognizable authority figures (parents, teachers, elders) are also figures of moral authority. Mimesis in moral action requires figures recognized as moral authorities. Consequently, in a culture dominated by mimetic learning, not only do such authorities play an important role in regulating moral conduct, but are also so recognized. That is why, I suggest, parents, teachers, elders, ancestors have such a privileged position in our culture. They are not only familial or socially recognized authorities, but are individually recognized moral authorities also.

6. If socialization involves mimesis, and families are the primary units of socializing a human infant, the success of the socialization process depends very much on what the family exactly models. That is, an individual can be taught to live with others if and only if, the family stands for, or represents the significant details of the social environment. The family, in its important details, must be continuous with the moral community at large. And, I submit, it does.

Not only this. In a peculiar way, this sheds some light upon the sternness, or harshness considered typical of both family life and teaching situations in Asia. One is being prepared for life, when one is brought up as an offspring and a pupil. Between them, the parents and the teachers must prepare the child to act morally when it goes out as an adult to meet the world at large. That can only be done if the child faces a wide variety of situations during its growing-up process, and sees the ways in which others are going to construe its actions. Parents and teachers must, in the full sense of the term, stand for and represent the rest of the community. To allow parental love and indulgence to interfere in this process is to fail in discharging the moral obligation that one has assumed towards ones off-spring, viz., that of socializing the child. Consequently, ones family is also ones sternest and harshest critic. If one passes this test, the belief is that one can pass any other test. Hence the descriptions of an ideal father or teacher: harder than the diamond, softer than a flower.

The contrast between family as a ��moral arena as Asian culture sees it, and family as a Haven in a heartless world, as Lasch titles his book on family, cannot be sharper. In Western families, one is to experience love, one learns to be oneself. One becomes ones true self, and learns to let the others be. The socializing or educative role of the family is secondary, it is derivative. Its primary task is to protect the child from the cruel world out there. If it prepares the child to face up to the cold and indifferent world, it does so by providing that love and understanding which gives the child the courage to go and get what it wants. It is taught to be itself in all circumstances. Family is ones only oasis in the desert of social life.

In one case, family is the moral community; in the other, it is different from and other than the social world. Mimetic learning sheds light on the how and why of the former, partial and incomplete though it is as an explanation.

7. One other aspect of moral authorities is worthy of mention. Learning by mimesis, as supported by our model of self��, involves that the moral action of others can shame you into performing a moral action yourself, i.e., the actions that others perform/have performed can guide and instruct you in the course of your life.

Contrast this with the attitude in the West. Not only are moral individuals inimitable, but they also ought not to be imitated for yet another reason. Because ones action expresses ones self (in whatever form), and to be ones self is the guiding value of a life, the actions of such moral individuals are seen as expressions of the moral selves of those individuals. In such a case, a specific moral action ceases to have an instructional or pedagogic significance: it is only a psychological curiosity, i.e., it can tell you something about the kind of person that someone is.

While in one culture, a moral action could be seen as raising the question how is that an instruction for my actions? In another culture, it raises the question what kind of a person must he be to do what I would not? To get a flavour of this difference between our two cultures, I would suggest to those of you who have seen the film Gandhi, and in a position to talk to someone from the West who has also seen the film to do so. You would be surprised at what you can learn from such a coffee-shop talk. Consider, in this regard, what Einstein said of Gandhi

8. By its very nature, Mimesis is a reproduction of existing actions, i.e., it essentially conserves. A culture dominated by mimetic learning must, perforce, exhibit a very strong pull towards conservatism. Our cultures are essentially conservative. Tradition, the past, etc., must weigh heavily on all those who are members of such cultures. And, I submit, it does so in our case.

9. The other side of the same phenomenon is what happens when our cultures meet with those of the West. There is a partial exchange of authorities, not their total disappearance. The tendency is towards an imitation of these, new, authorities. We could look at the Westernization of our youth or at the fact that the Japanese have earned the label, often used pejoratively, of being very good imitators. We imitate the West not because there is some iron law of capitalism which compels us, willy-nilly, to be like them but because that is our way of learning. This might shed some light upon why one Indian community survived by adapting itself to the West, whereas another got exterminated by failing to do so.

10. Despite a considerable technological development in Asia much, much earlier, scientific theorizing (as we know of it today) emerged within the Western culture. A hypothesis that can be generated to throw some light on this phenomenon is this: mimetic learning is restricted to performing actions that are perceived as being performed by others. Novel or new actions result primarily by performing a familiar action in novel circumstances and secondarily by transposing actions performed in one domain to another. While mimetic learning is transposable, it remains essentially limited in scope. It is a scheme of social learning, if you like. It is relatively inflexible in the sense that it cannot be transposed to learning about the Natural world, unless in the form of modelling natural events in human artefacts. But this does not suffice for scientific theorizing. Crudely put, there is a kind of rigidity or inflexibility to our learning which is, to some extent, due to the lack of reflexivity in our learning.

There is something more that requires to he said in this regard. As I am not very clear about it myself, I will merely mention it in the passing. Consider this question: what notion of knowledge should we have, if we would want to consider mimesis as learning? Or, what notion of knowledge do we have, if we learn by mimesis?

It cannot be analogous to the interrogative, questioning, probing processes, which are seen as being characteristic to scientific theorizing. One cannot put constraints on Nature, and force it, as Kant put it, to answer our questions. There can be no mimesis in such circumstances. So, if this is not the notion of knowledge that we have, what else could it possibly be? My answer will be very vague, because that is all that comes to my mind. Mimetic learning involves being ready and alert to identify learning situations; such situations do not come with labels attached to their sleeves. Some situation, any situation, can be a learning situation; someone, anyone, can teach you; some action, any action, can be exemplary. Whether or not you learn from such situations, persons and actions depends upon you construing them thus. No person, for instance, performs an action with the sole intention of teaching you; he is performing the obligations he has assumed. Even where his obligation is to teach you, you can but learn if you construe it as a learning situation.

In a world, then, where fleeting actions and events can teach, and where teachers do not come with professorial chairs, there your readiness to learn is crucial, if you are to learn at all. It means that you have to be alert lest a teacher or an action passes you by, and open so that you may see what is being taught. Because, literally, anyone or any action may teach you, you will have to be fundamentally open to all situations and actions.

Cognitive attitude, thus, appears to involve these dimensions of readiness, alertness and openness to being taught. Though these dimensions and the construing activity are active, they are also peculiarly passive. For, consider: if learning is sub-intentional, what is taught depends on that which you construe as being taught, and your construal itself is a function of the dimensions involved in cognitive attitude, then the cognitive attitude itself can only be characterized, if we say that it involves readiness, open-ness and alertness to�� You cannot fill the blank with a constant, but can do so with a variable or with all events, all actions, and all persons at all times. Equally, you may as well leave it open. We do have a word, which captures such an open-ended attitude: receptivity.

Though this word does capture the passive dimension involved in such an open-ended cognitive attitude, it does so by stripping it of all its active dimensions. It must be clear from the foregoing that our cognitive attitude is not, cannot be, totally or even fundamentally passive. That is why I said that it is peculiarly passive. We could put it this way: cognitive attitude appears to involve openness and readiness to, God I hate this word, being revealed to. Consequently, knowledge seems to require some kind of an action, which happens to you as you go about in the world.

If it sounds mystical, that is because it has something to do with mysticism. But, not quite the way it may appear at first sight. It could be the case, I will come back to this point last, that mimetic learning involves the using of the right-hemisphere of the brain (for right-handed people), which is also the seat of mystical experience.

Be it as this may, one will have to return to explicate the conception of knowledge implicit in our cultures. Though vital and crucial, it will have to wait, perhaps, for that time when there is greater clarity all around.

11. What does it mean to grow up an Asian then? Application of mimetic learning scheme, if it can be called that at all, requires that one develops the ability to discriminate finely. One has to sort out, so to speak, situations and actions in such a way that one is able to distinguish between emulable-in-this-situation from the emulable-in-that-situation. Not all aspects of an event and action is, can or should be emulated. In other words, we grow up to be members of our culture by acquiring finely tuned set of discriminating criteria.

How do we acquire these criteria? Again, the answer cannot be other than to say, by mimesis. It is, if I may nest operations, mimetic schemes within mimetic schemes. Some of the patterns are preserved in our cultures by the multiplicity of cultural institutions: son, friend, pupil, father, wifeetc. As we slowly grow into maturity, we become some of these, and we learn to become these by taking as models those who went before us, those who are our contemporaries and so on. As these institutions overlap, so do our schemes, meshing and intermeshing with each other, generating and sustaining a culture, which none understand but all admit to being a gestalt of unformalizable and refined codes of conduct, rituals, ceremonies, etc.

Events and actions must loose their clarity and simplicity, when multiple and often incompatible models are said to model the same situation. They must become complex and essentially ambiguous. Indeed, I claim, they do. One expression of this situation is the extra-ordinary productivity of our culture with respect to religions.

12. Speaking of religions brings me to the last observation that I want to make. Again, it is a hypothesis generated by the preceding points. One of the characteristics of Western culture is the kind of importance it attaches to language. It is believed that everything is knowable, and what is knowable is also sayable, even though various thinkers like Kant, Hayek, etc., have warned against such a presumption. We need not choose sides on this debate for now. But to the extent this is believed, the education of people involves placing a very heavy emphasis on expressing things in language.

We know that human brain consists of two symmetrical hemispheres. Each of these appears to specialize in some kinds of tasks: the left-hemisphere of the right-handed people (or the right-hemisphere for the left-handed), for example, contains the speech area. Linguistic, logical and mathematical abilities or, in short, linguistic and analytical skills are more or less localized in one of the two hemispheres (I shall speak only of the right-handed people from now on and, hence, of the left-hemisphere alone, when I talk of the seat for linguistic, etc., skills.). Because intelligence refers basically to the development of linguistic and analytical skills, a culture which places great importance on developing intelligence has to emphasize such activities as its educational focus. It is also the case that one of the supreme ideals of Western culture is that of rationality (Of course we are all for rationality; who would want to be irrational in this day and age, except the irrational?) An action or a decision is rational insofar as it instances some or another rational principle. To be rational, to be moral, etc., is to act and judge according to some or other principle.

In such a culture, the left-hemisphere must be called into play more often than the right-hemisphere of the brain. The right-hemisphere, for its part, is the seat of emotions and passions, intuition and creativity, etc. In a culture where the ideal is the subordination of passion to reason (people like Hume notwithstanding), there the ideal is the subordination of the right to left hemisphere of the brain. The left hemisphere is, of course, not stupid, i.e., it is not just a boiling sea of animal passions. It simply does not have the linguistic ability, speaking figuratively, to express itself.

It appears reasonable to hypothesize that education in our cultures trains us to call the right-hemisphere into play more often than is the case in the West. Consider, for example, the realm of moral education. If stories and not the principles are the how of our moral actions, understanding such stories cannot take place without calling in the right-hemisphere of the brain. It must be said at once that understanding is not being used here in the sense of being able to answer questions about the stories, after being told one. Many people in the field of Artificial Intelligence are busy writing programs, which, it is claimed, display such ability. Rather, it is being used in the sense of taking it as an instruction for action. (It could be said that this is not an insurmountable problem, but I will come to it soon.) The stories, as I said, depict events and situations from life-situations, or consequences of actions performed by identifiable figures. As stories, they have to be appealing, and possess a definite order and structure. The order cannot be felt, and the appeal would be lost in the absence of the right-hemisphere, even if the left-hemisphere has to be called in to say exactly what the order or even the appeal consists of.

Perhaps it is the case that in the early years of childhood, the infant primarily uses the right-hemisphere of the brain to learn even while its left-hemisphere is being stimulated. That could be the reason why they are open to all situations, while displaying precisely the kind of cognitive attitude that I spoke of earlier. As any number of studies have shown us, the openness and creativity the children normally display fall very sharply within two years of beginning to attend school. The estimates go so high, psychologists speak of a drop of over 98% in the creative capacity of children within the first two years of their schooling, that it seems reasonable to assume that the dominance of the left-hemisphere of the brain over the right leads not merely to development of some skills (in this case, the development of linguistic and analytical skills), but, more importantly, to a different way of learning altogether.

An extreme example might help us appreciate the point better: it is not impossible to think of a computer making moral decisions. That is, it is not impossible to write a computer program which embodies some ethical theory or another, and contains instructions about how actions and events should be analyzed. It would be a mammoth job, and it is also true that one does not know today how such a program would look. But should it be possible to do so, the decision arrived at by the running of such a program on a computer would represent the pinnacle of what would be considered a moral decision. That is so, because moral decisions are the results of possessing an adequate moral theory.

There is no way we could represent our notion of morality in a computer program, unless it be in the form of some complex induction rules. But we are not inducing any rule whatsoever from the stories which depict moral actions or moral orders. We are not reasoning the way it requires to be represented, if written as a program: A did X in situation Z; my situation is analogous in some relevant details; therefore, provisionally, I ought to do X as well.. We could not be doing any such thing, if we learn through mimesis. You could, of course, represent our ways of being moral as thought it was an application of an inductive rule or even a set of them. This will tell you what your notion of the moral is, but not what we do when we act morally. (This is one of the reasons why, I believe, our notions of being moral differs both from situational ethics and from casuistry.).

This is not a pro or contra argument regarding whether computers feel or think. It is simply to say that the Western concept of the moral can be simulated on a computer whereas our ideas of the moral cannot, unless as a weaker version of its Western counterpart. It may turn out that I am wrong; until such time, I will believe that moral actions in our cultures cannot be divorced from the personal, experiential dimension whereas the Western notions can.

Whether this satisfies you or not, I believe that the point I want to make is clear: In the West, one is moral purely on conceptual grounds. On these grounds alone, can one not be moral in Asia, without the affective and the emotional being somehow involved.

There is a second, bolder, hypothesis to be made which I have already hinted at. Mimetic learning involves using the right hemisphere of the brain. There is some plausibility to this hypothesis as well. As I said before, to say or analyze what one is doing when one is miming is not to be able to mime at all. This saying or analyzing involves the left-hemisphere of the brain, which is where these skills are localized. Once such a process is initiated, the left-hemisphere assumes dominance. Consequently, the latter becomes more passive with the failure to imitate as a result. In this connection, think of the studies about the fall in the creativity of young children when they start attending school. It is in contact with an environment, which places such a premium on developing linguistic and analytical skills that children cease being creative. Creativity, we know, is the capacity of the right-hemisphere.

Now, whether one can localize mimetic learning in the right-hemisphere or whether using stories as models requires using both hemispheres, at least this minimal hypothesis can be reasonably accepted: learning processes in Asian culture involve calling the right hemisphere into play more often than is the case in the West. But, it requires to be said in order to prevent misunderstandings from arising, that does not imply that Asians are not logical or analytical or that Europeans do not feel. We have an extensive history of logical and linguistic analyses, and no one is suggesting that Europeans are born without right-hemispheres, much less that they do not use it. I hope this is clear!

Should this minimal hypothesis be true, it sheds light on another phenomenon characterized as typical of our culture, viz., the phenomenon of mysticism. The seat of mystical experience is the right-hemisphere of the brain. Our culture trains its members in the use of this hemisphere more often and more regularly than the West. Consider one of the unintended side-effects of this training: over a period of time, a statistically significant number of people will begin to report to having had the kind of experience we term as being mystical. This phenomenon will have to show some kind of regularity, i.e., it must happen regularly, over some significant period of time to some of the members of the group. While isolated reports, which come in now and then, can be discounted as being insignificant, it is not possible to do so when the same, or very similar report becomes something of a regular feature in a society. However it may get explained, the explanation cannot by-pass the phenomenon. It is experienced as something that always seems to occur, i.e., as something that seems to be a significant experience in its own right, a legitimate or even a very natural experience, which is culturally relevant to the community itself. I put to you that the acceptance of such experiences is preserved in our culture by making the mystical experience the very core of our religions.

By the same token, contrary must be the case in a culture like that of the West. And that is indeed so: mysticism has always been at logger-heads with the established religions. To be sure, this does not explain much. But, it does appear to shed some light on what requires to be explained.

This situation, if remotely true, would explicate the two differing notions of wisdom in our two cultures. In one, wisdom (sophia) is primarily theoretical in nature. In the other, wisdom is primarily practical in nature. In both, they are standards of excellence: someone who knows the truth is the wise one in one culture: in the other, it is someone who performs exactly the right action in the right circumstances. True, neither of these ideals is the exclusive property of either. But it does not take away, I trust, the point about the ideals of human existence as they differ between these two cultures.

I found this article posted on the following forum: http://www.india-forum.com/forums/index.php?/topic/49-indian-perception-of-history/

Wednesday, April 06, 2011

I ran across an interesting article...monotheism vs ultimate reality.  The author discusses Brahman vs the monolithic understanding of god in the abrahamic religions...

http://dharmasyavaani.blogspot.com/

Thursday, February 17, 2011

How to manually reset a user's password on mediawiki...

php (mediawiki home directory)/maintenance/changePassword.php --user "username" --password "new password"

Tuesday, February 01, 2011

Developing the Next Generation of Youth Leadership



And video of presentation (Keynote at Hindu Mandirs' Executives Conference, Houston, 2010)



Monday, January 31, 2011

What's next for Mannkind?

Path to FDA approval
The FDA, in the second CRL seems to have no objections to Afrezza, but have questions about the Gen2 inhaler (Dreamboat).  Thus, we should now have a clear path to approval assuming that the management team can align with the FDA on the requirements.

While it is unclear, how long the two clinical trials will take to complete...it is a safe bet that between the trails and the FDA review cycle,  it will be between 18-24 months until Afrezza can reach the marketplace.



Seaside 88 Transactions

DateVWAPSeaside PriceTotal $
9/20/106.726.184,326,000
12/15/107.426.834,781,000
12/29/108.217.555,285,000
1/12/118.407.725,404,000
1/26/117.126.554,585,000
(Thanks to Derek for the Seaside pricing info)

These transactions are approximations based on the daily closing price / daily volume and not the price per transaction / transaction size...based on data provided by the MannGroup.  Seaside does not disclose their purchases as their percent of ownership in Mannkind is very small.

Financial Position
Total amount raised through Seaside 88: $24,381,000.  At this point, they are unlikely to raise any additional funds through Seaside unless a partnership agreement is reached (and the stock once again crosses $6.5). 



Between the BoA deal and Seaside, Mannkind raised $139m through the end of January.  This should ensure funding till end of Q3. Considering that Mannkind was preparing for launch, they may have a round of lay-offs and reduce their operating expenses...which can making this funding last a bit longer.  
 
Al Mann's perspective
Al has a few options to keep the company afloat:
  1. Raise additional capital by issueing equity (either through the open market or through another private placement)
  2. Invest more of his own money
  3. Sell the company
  4. Partner with big pharama

I don't believe he will let the company go under since Mannkind is the only one of his companies that bears his name.  Mannkind is Al Mann's legacy.


I don't know what Al Mann's financial position is and thus don't know how much additional capital he can personally inject into the company.  I am also not certain whether the line-of-credit he has extended to Mannkind has been exhausted or not.  If it has not, than that provides some cussion to Mannkind, but not sufficient to finance the company through approval. 


Given that he does not want to get diluted (illustrated by the debt to equity swap aligned with the Seaside investments which prevents his dilution), and has limited additional funds to invest himself, it is likely that he will not go to another round of equity investment (either public or private placement). 


It is also unlikely that he will sell the company.  The market value of the company is sub-$1b.  He has invested almost $1b into the company.  The return he would get would be (at best) $5b which is sub what he wants for the company--between 10x-100x.


Thus, it is likely that he will partner and in the near future.  The longer he waits, the weaker his negiotiating position will become with big-pharma and the increasing likelihood that they will want to wait until the FDA announcement.  Right now, they will be more ameanable to do a deal--but Al will have to give them better terms than he originally wanted to.  But given that he doesn't have any other options that are more paletable to him, this is probably the likely outcome.


The partner will also have better connections at the FDA and will increase the likelihood of Mannkind getting approval during the 3rd round submission.

Friday, January 28, 2011

Why did the FDA give a CRL to Mannkind?

The FDA is responsible for approving drugs that can improve the health and quality of life of the American public (safety & efficacy).  When they approve drugs that go on to do exactly that, no one things about them at all.  On the other hand, if they approve a drug that ends up doing more harm than good, than they get beat up by the public & the media.

With this background, think about Mannkind's case.  They submitted one of the most detailed NDA applications in the history of the FDA to the FDA for a drug that targets one of the most prevalent diseases in the US (diabetes).  Drugs which target small groups of patients or patients for which other drugs do not work will receive less scrutiny simply because the possibility of harm in the sense of number of people harmed by the drug will be fewer and the likelihood of discovering this harm is also smaller since the sample size of patients is smaller.  In the case of diabetes, the patient sample size will be huge especially since Afrezza stands to revolutionize the treatment of this disease.  If something were to go wrong, it would be quicker in surfacing  and the number of people impacted would be large (due to the large patient population). 

Al Mann and the management team probably recognized this which is why they had such a large and detailed filing the first time around.  However, in the hopes of getting the new Gen2 inhaler to market quicker, they forgot this aspect when they submitted their response to the CRL to the FDA.

The FDA response during the meeting (for which no minutes were ever published) was probably that of outrage.  Mannkind had submitted responses using a different inhaler than the one used to generate all the data that they had studied for over a year. Mannkind executives probably tried to explain that the new inhaler was bio-equivalent (ie the same amount of drug went into the body with both inhalers), the risk-averse FDA officials didn't buy the story.  Hence, we got the CRL a few weeks ago asking for clinical trials of the new inhaler.

That being said, they did buy into the Afrezza story...there are no more doubts about that in the CRL...just the delivery device.

Thursday, December 16, 2010

Mannkind Stock Volatility: Yesterday's Crash, Today's Rise, and Tomorrow's Crash

Yesterday's 10% drop in Mannkind stock is symptomatic of the volatility we can expect to see up until the 29th when the FDA rules on Mannkind's application for Afrezza.

For those of us who are longs -- I would advise against placing any stop-loss orders and also advice putting in place limit buys for where ever you have placed your stop-loss. 

The stop-loss was designed to allow people to limit their loss when a share's value decreases.  This mechanism does not work in volatile stocks like Mannkind coming up to a binary event (the FDA decision).  Many of the sudden drops in price are a result of shorts, hedgefunds, "big money" who are selling only to trigger the stop-losses resulting in a further drop in the price...ie they are leveraging the people who have put in stop-losses to drop the price.  Than, they buy before anyone realizes what has happened (ie when they stop selling and start buying while the stop-losses continue to be exercised). 

A day later what happens:
"Big Money" - lowers the cost of the stock to themselves
Average shareholders - end up with lower holdings and early profit taking -- all of which is not intentional.
Stock price: back to where it was before the drop.

The only way to counter this strategy (and reduce your own heartburn) is to either
1. not put in any stop-losses
2. put in limit buys for where-ever you have stop-losses -- which will let you partake in the uptick that the "big money" is planning on taking advantage of.

Wednesday, December 15, 2010

Will Doctors educate patients on needles or give them an inhaler?

A Response to The Curious And Complicated Case Of MannKind on Investopedia


Not All Good News, ThoughUnfortunately, Afrezza is not the slam-dunk its supporters want it to be. None of the clinical trials done to date have shown any superiority in efficacy (as measured by HbA1c) for inhaled insulin. In fact, every trial I have seen has shown a slight underperformance for Afrezza - not enough to be statistically significant or technically inferior, but enough to suggest that Afrezza is not demonstrably better at maintaining long-term glucose control.
Moreover, I fear that some investors may overstate the benefits of an inhaled insulin delivery system. It is true that there is substantial needle-fear in patients who are starting insulin therapy, but that fear disappears. As part of my consulting work, I have seen several surveys of diabetics (covering thousands of respondents) and there is a remarkable and consistent curve - those who have never injected are very bothered by the idea, but that fear and anxiety declines rapidly once they begin therapy and become accustomed to it. Consequently, there may not be as much commercial demand for the product as people think - particularly if doctors spend time with patients to ease their anxieties about injections.

It almost doesn't matter whether diabetic patients are afraid of needles or not.  If they are afraid, the doctor has a choice--have a long conversation on needles and the fact that the patient need not fear or simply give them a prescription for an inhaler from Mannkind.  Everyone understands inhalers...everyone has seen asthmatics using them....no fear, no discussion (assuming all else is equal).

For current needle using diabetics, life has gotten much easier with the pens that are available on the market.  They can carry them in a pocket and go to the bathroom to give themselves a shot.  With the inhaler form-factor, they no longer need to go to the bathroom to give themselves a shot...and if they do it in public, than, the form-factor itself provides no big advantages.

However, all else is not equal.  Afrezza has a faster response time compared to any inject-able insulin which reduces all kinds of risk for patients.  Thus, I would imagine doctors, once exposed to Afrezza would consider having a conversation with existing needle users (who are comfortable with needles) about Afrezza especially if those patients have trouble controlling their insulin levels...

Disclaimer: I am long on Mannkind.

Wednesday, October 20, 2010

How to add a new user in linux:

useradd -G {group-name} username
passwd username

Tuesday, September 14, 2010

Mannkind gets closer to partnership

Here are some quotes of Al Mann from the Transcript of Morgan Stanley Global Healthcare Conference – Sep 13th 2010 (the questions are mine).

Why didn't the deal happen last time?

Well, we were very close to a partnership last year in October. There was a question that affected the economics that we couldn't really answer without getting some more inputs from the FDA, since we're only a couple months from approval; it was decided to defer any further discussions. So last year we got the -- what we thought what was going to be an imminent approval. We had every signal that was going to be. But it turned out not to happen and then of course ended up with a complete response letter. But one of the interesting and important conclusions of the complete response letter is that the FDA raised not a single safety concern. And what's happened since then we have a fairly clear pathway to approval. And so that's attracted a lot of people.

Partnership talks ongoing now
So we've had a lot of people talking to us on the partnership. We had frankly more than we could handle we narrowed it down or it's just the narrow down I should take to about six, who are still talking to us, and we want to let them to reduce that to maybe three or four that's probably all we can handle as we move into negotiations, so to try to compete the partnership. Now that said the companies that we had been negotiating with last year probably could complete a deal with this in a matter of few weeks the others had been gone as far, so we take several months probably. PDUFA is only 3.5 months away so which comes first I can’t tell you.

Type of Partner
Well, we are not really very interested in companies who are in the insulin business.  The reason of course is because why would they want to cannibalize some of their key products.  I mean Novalog is the most important product for Novartis [Novo Nordisk] for example.  So they wouldn't be interested in promoting our products.  So they are not really good candidates.

But Sanofi-Aventis could use a rapid acting insulin, but on the other hand we think that AFREZZA will compete effectively against Lantus in earlier stage type-II diabetes.  So we have some reservations about those, but we feel that we should deal with someone who is in the diabetes market or at least in the metabolic and endocrine markets so that they have sales forces that are dealing with the physicians in the same areas as we -- in which we're interested.

Tuesday, August 17, 2010

MannKind announced two funding deals over the past week.  Below is my analysis of the situation.  My net recommendation is for current shareholders to stay invested in Mannkind and those who are considering it to wait a few weeks before investing.  This recent round of financing will allow Mannkind to stay solvent for a few quarters in 2011 and thus negotiate harder with a partner...it also probably means we won't hear about a partnership before the approval.


What does Mannkind Get 
  • $115 million cash from Bank of America / Merill Lynch in the form of convertible debt
  • 8% discounted shares to Seaside 88 (discount to previous two week average share price if & only if average share price > $6.50)
  • variable cash infusion from Seaside every two weeks equivalent to 700,000 shares at 8% discount on 2 weeks starting end of September
  • moving average iff price > $6.50. (at $6.50, that is $4.55M every two weeks or $9.1M every month for first 3 months until FDA announcement, or $27.3M/quarter until FDA announcement)
  • loan forgiveness for loans from Al Mann (at each share distribution every two weeks, same terms as Seaside but without discount)
  • Option to cancel deal with Seaside any time they would like...it is not very likely that this option will get exercised...the only time it would is if Mannkind receives a large up-front payment from a partner and the partner would not like to get diluted after partnership and thus forces Mannkind to exercise this option as part of the deal
  • Net: $142M by end of 2010, and an additional $81.9 in 2011 (this last part is not so relevant since if there is no approval and hence no partnership, it is unlikely that the share price will remain above $6.50 and hence that Seaside will invest any additional money).  This $142m will fund 3.5 quarters of operations assuming status quo on burn rate...or ensure the company has funds into Q1 2012. In the event that approval occurs as well as partnership, than they won't have as many cash issues and the additional funding will be a part of a larger funding pool (and this analysis won't be so relevant...)

What does Mannkind Give?
  • Convertible Notes (unpublicized convertion price)
  • 8,000,000 stocks also loaned to BoA for the purpose of shorting (allows them to Hedge their risk)
  • 18,200,000 shares to Al Mann in 700,000 share chucks every two weeks, min price $6.50 (I am assuming that Al Mann has the same lower limit option for the purchase as Seaside)
  • 18,200,000 shares to Seaside in 700,000 share chucks every two weeks, min price $6.50 

Other Notable Info:
  • Mannkind's burn rate is between $30M-$40M a quarter
  • Mannkind has cash until end of Q1 2011
  • Dec 29 is the FDA announcment date regarding the NDA for Afressa

Net Outcomes:
Bank of America / Merill Lynch

risk

nada ... shorted shares will probably cover their loan amount 

benefit

interest payments at a minimum from MannKind, upside - they succeed, and get a big payout when they convert (probably around 2015)
Al Mann

risk
  • nada...he already gave the loan to MannKind...he is not giving any more cash. there is less uncertainty now than there was when he made the loan. in any case, if the company goes belly up, its unlikely, he will recover any significant amount of money from the loan

benefit
  • great upside if the stock goes up
  • prevents Al Mann from getting diluted without spending money for the additional shares

Seaside

risk

a significant portion of their investment if MannKind does not succeed.

benefit

great if the FDA approves and they get to continue to buy at a discount for 8 months after the announcement.  If the announcement is positive, they get one week of a bigger than 8% discount on the price (because it is a 2 week moving average...and won't have moved much when the stock jumps on positive news).

Other investors

risk
  • 10% decline in stock price on day of second announcement if stock price doesn't recover. 
  • potential additional decline in stock price due to additional short positions (50% increase in shares shorted from 16M to 24M)
  • ~20% dilution (~70M shares outstanding...upto ~80M by end of year)...I am not counting 8 months of share purchases in 2011...as I hope that the FDA will approve the drug and stock price will jump...hence, the remaining 20M of additional shares will not result in reducing the size of the pie for other share holders

benefit
  • company stays afloat...Seaside cash infusion pays for most of Mannkind's cash burn
  • company has better negotiating position with potential partners...hence, better deal terms, and greater upside
My guess as to the future
We know that Al Mann wants to make 10x (or more) on his investment in Mannkind...so he is driving a really hard line with partners...considering that he didn't raise this money when the share price was at $10 means that he mis-calculated the amount of time it would take for partnership.  The seaside deal is designed so that he is not diluted...which is a sign that he remains confident in Mannkind.   It also means that he is going to continue to drive a hard line with partners...and in order to get to where he wants to get to...it may mean that Mannkind won't get a huge upfront cash payment but will get to keep a larger percentage of sales than would typically happen.
Investing in Mannkind is a gamble...but given Al Mann's record and the fact that he does not want to be diluted and the previous FDA announcement which pretty much means that he will get approval at the end of 2010 I would recommend that you stay invested and if you are not invested wait a bit and then invest.  We may see some additional price drop in the stock in the short term as additional shares are shorted.

References

http://finance.yahoo.com/q/ks?s=MNKD+Key+Statistics

http://finance.yahoo.com/news/MannKind-shares-fall-with-new-apf-1884617978.html?x=0&.v=1


http://www.fool.com/investing/value/2010/08/17/make-a-financing-deal-and-lose-10-nice.aspx


http://blogs.barrons.com/stockstowatchtoday/2010/08/17/mannkind-drops-on-convert-deal-financing-efforts-fail-to-please/?mod=yahoobarrons


http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_M/threadview?m=tm&bn=25210&tid=128271&mid=128271&tof=12&frt=2