Mannkind

Corporate tax rates in the US are from 15% to 35% depending in income.Large profitable companies are probably in the highest bracket.Let's assume that the tax credit from the $2 billion NOL is worth 25% or $500 million.

2) Enough insulin for $10 billion in sales.I really don't know how to value this.

So even without Afrezza, the company has some value as an acquisition.Assuming that 500 million shares are issued and the company fails, but is able to monetize their remaining assets, there might be some relief for share holders.However I wouldn't count on too much after creditors are paid.

The valuation in this case is probably a few cents per share.

The remaining valuations assume FDA approval in 2014.

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Method II

Assuming that Afrezza is state of the art for 10 years and further assumptions on sales and profit margins, we can discount income to arrive at a valuation.This valuation does not include any residual value after 10 years.It is likely that the residual value is substantial.

2014 Potential Sales	2,000	The same amount as Humalog sales in 2011
Diabetes growth rate	10%
Discount Rate	10%
Profit Margin	30%

Present Value of Income	3,600
Value per share	7.20	assumes 500 million shares

Year	Ramp up percentage	Potential Sales	Projected Sales	Projected Income	Discounted Income
2014	5%	2,000	100	30	27.27
2015	15%	2,200	330	99	81.82
2016	25%	2,420	605	182	136.36
2017	50%	2,662	1,331	399	272.73
2018	75%	2,928	2,196	659	409.09
2019	90%	3,221	2,899	870	490.91
2020	100%	3,543	3,543	1,063	545.45
2021	100%	3,897	3,897	1,169	545.45
2022	100%	4,287	4,287	1,286	545.45
2023	100%	4,716	4,716	1,415	545.45

All sales and income figures in $millions

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Method III

This method is based on a post that I made earlier in the year.Amylin (AMLN) developed the drug called Bydureon, an injected (just once a week) slow release GLP-1 drug. This drug, in the presence of high blood glucose, signals the pancreas to release insulin.I am not a doctor, so my understanding of the drug is not perfect, but I believe that this drug addresses the control of diabetes for a subset of the population that could use Afrezza. I have read good things about this drug in controlling A1C's. It can only be used by type 2 patients, and I don't think it is appropriate for all of them.

I believe that it could be a strong competitor to Mannkind’s MKC253: GLP-1/Technosphere.http://www.mannkindcorp.com/product-pipeline-mkc253.htm.

My point about valuation is that Amylin was recently acquired by Bristol-Meyers Squibb.

http://finance.yahoo.com/news/bristol-myers-squibb-completes-acquisition-113000269.html;_ylt=A2KLOzIhmTFQFDYAvCyTmYlQ

There were 164.28 million shares outstanding, and shares were acquired at $31. This is a valuation of over $5 billion.So, maybe $5 billion is a floor on the valuation that Mannkind might have after approval and production commences.

Assuming with further dilution that there are a total of 500 million shares, this equates to a price of $10 per share.

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Method IV

We can make a valuation based on Humalog if we assume that Afrezza is worth about the same amount.Keep in mind that Humalog is currently state of the art, so even if Afrezza is better, in the current market Humalog still shares the top spot with Novalog .

Revenue for Eli Lilly’s Humalog is about two billion, so using revenue of $2 billion with two times revenue (the same price to revenue ratio for Eli Lilly) equates to $4 billion.Divide that by 500 million shares and it is $8 per share.

It is easy to be more optimistic in valuing Mannkind.The point here is to be somewhat conservative to see if it is still a good investment.If the estimates are too conservative, then the only harm is that the share price will be higher.

Additional notes on the balance sheet.

Convertible Debt
Maturity Date	Principal	Coupon	Conversion Price	Total Shares if Converted
12/15/2013	115,000,000	3.75%	22.47	5,117,523	Up to 1,484,064 shares issuable make-whole premium
8/15/2015	100,000,000	5.75%	6.80	14,708,590	Up to 2,041820 shares issuable make-whole premium
Total	215,000,000			19,826,113

Mann Group LOC
Maturity Date	Principal Owed	Unused Principal	Total Credit Line	As of Date
7/1/2013	?????	120,000,000	?????	9/30/2012


Warrants
Expiration Date	Quantity	Strike Price	Shares Per Warrant	Total Shares if Exercised	Total Proceeds if Exercised
2/8/2016	35,937,500	2.40	0.60	21,562,500	51,750,000
10/23/2012	46,000,000	2.60	0.75	34,500,000	89,700,000
10/23/2012	40,000,000	2.60	0.75	30,000,000	78,000,000
Total	121,937,500

Shares Outstanding
Date	Shares	Issue Price	Proceeds
As of 9/30/2012	199,767,463
10/23/2012	46,000,000	2.00	92,000,000
10/23/2012	40,000,000	2.69	107,400,000
Total	285,767,463


Stock Options
	Weighted Average Strike Price	Total Shares if Exercised	Total Proceeds if Exercised
As of Oct 2012	3.47	18,662,846	64,760,076


Restricted Stock Units
	Total Shares upon settlement
As of Oct 2012	3,782,122


Other Stock
Date	Shares
As of Oct 2012	9,338,040	shares available for future grant under 2004 equity incentive paln and option plan
As of Oct 2012	3,002,778	shares issuable in connection with 7/23/12 securities action settlement
As of Oct 2012	1,000,000	shares issuable in connection with 7/23/12 securities action settlement if share pr <1.00 at settlement
Total	13,340,818


Summary
From	Shares	Running Total
Outstanding	285,767,463	285,767,463
Warrants	121,937,500	407,704,963
Options	18,662,846	426,367,809
Restricted Stock	3,782,122	430,149,931
Other	13,340,818	443,490,749
Convertible Debt	19,826,113	463,316,862