As a reminder, DKI owned scPharma because we were positive on its product Furoscix as well as the likely approval of its autoinjector. We thought the company would be acquired. It was purchased last year by MannKind for cash and a contingent value right (CVR). For more details on the CVR, check out the post scPharmaceuticals – Tender Date and Details. DKI recommended tendering into the MannKind offer and owning the CVR which has a potential payout of up to
$1.00 each.
The first part of the tender payout has been triggered. On July 24th, MannKind announced FDA approval of the autoinjector which came before the September 30, 2026 deadline. That ensures we receive a payment of $.75 for each CVR. MannKind has already arranged financing for that payout. The most likely timing for us to receive that payment is late August / early September. It is possible for us to receive the payment sooner, but MannKind is not obligated to pay us earlier.
The second part of the tender payout would be triggered with L12M Furoscix revenue above $110MM. At $110MM, we’d receive an additional $.10. If that figure reaches or exceeds $120MM, we’d receive an additional $.25. There are three more quarters of revenue announcements to reach that level by the end of this year. MannKind is publicly estimating Furoscix revenue of $110MM – $120MM meaning they believe they will pay us the last $.10 – $.25 of value for the CVR. This is consistent with the view of $SCPH management at the time of the acquisition.
Based on the above, tendering into the offer and holding the CVR was the right move. Please note that the CVR is NOT tradeable meaning there is nothing you should or can do at this point. We just sit and wait to get paid somewhere between $.75 and $1.00 per unit.
As always, we credit DKI Board Member, Dr. Paul Thompson, for suggesting DKI positions in both $SCPH and $SWAV. Both were acquired for nice premiums over our purchase price. There’s an old stereotype that doctors are terrible investors. That’s clearly not true here at DKI. Thanks Doc!
IR@DeepKnowledgeInvesting.com if you have questions.
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