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Post by peppy on Feb 19, 2019 9:29:39 GMT -5
"According to the plaintiffs, in order to secure positions on pharmacy benefit managers’ (PBMs’) formularies, the drug companies artificially inflated list prices in order to provide higher rebates to PBMs while forcing patients (especially those who are uninsured, have high deductibles, have high coinsurance rates or are in the Medicare Part D coverage gap) to pay more out-of-pocket." Be careful what you wish for. Certainly the PBMs and large insurers have been pushing for ever increasing rebates in exchange for maintaining formulary exclusivity, but if rebates are prohibited as some in the Trump administration have proposed, that would not be good for MNKD. Certainly it might improve formulary access, but at the same time the prices for other rapid acting insulins would fall to 2010 prices which are less than half of today's price. If you think it is hard to compete against Lilly and Novo at the current price point, imagine what it would be like if those providers cut prices by half or more. The big players can take huge price cuts and still be making money selling insulin while MNKD has not yet figured out how to make a product that sells for more than its manufacturing cost. Beating up on Lilly and Novo may be a feel good moment but it might make matters worse for MNKD, not better. Matt, none of this is our decision to make. investors.mannkindcorp.com/news-releases/news-release-details/mannkind-announces-direct-purchase-insulin-program-providing
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Post by boca1girl on Feb 19, 2019 9:35:45 GMT -5
Be careful what you wish for. Certainly the PBMs and large insurers have been pushing for ever increasing rebates in exchange for maintaining formulary exclusivity, but if rebates are prohibited as some in the Trump administration have proposed, that would not be good for MNKD. Certainly it might improve formulary access, but at the same time the prices for other rapid acting insulins would fall to 2010 prices which are less than half of today's price. If you think it is hard to compete against Lilly and Novo at the current price point, imagine what it would be like if those providers cut prices by half or more. The big players can take huge price cuts and still be making money selling insulin while MNKD has not yet figured out how to make a product that sells for more than its manufacturing cost. Beating up on Lilly and Novo may be a feel good moment but it might make matters worse for MNKD, not better. Matt, none of this is our decision to make. investors.mannkindcorp.com/news-releases/news-release-details/mannkind-announces-direct-purchase-insulin-program-providingMNKD pays the rebates too so our overall costs go down as well. I bet we would be better off if there was an open and competitive playing field. As Peppy points out, many patients are better off with the direct pay option even if they have insurance coverage.
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Post by mnkdfann on Feb 19, 2019 23:00:41 GMT -5
MNKD pays the rebates too so our overall costs go down as well. I bet we would be better off if there was an open and competitive playing field. As Peppy points out, many patients are better off with the direct pay option even if they have insurance coverage. Sure, but how long can Mannkind afford such deep discounts?
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Post by longliner on Feb 19, 2019 23:34:41 GMT -5
MNKD pays the rebates too so our overall costs go down as well. I bet we would be better off if there was an open and competitive playing field. As Peppy points out, many patients are better off with the direct pay option even if they have insurance coverage. Sure, but how long can Mannkind afford such deep discounts? I hope until they impact market share enough for an offer!
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Post by mytakeonit on Feb 20, 2019 1:11:11 GMT -5
Still profitable even at the discount rate. Go for it !!!
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Post by boca1girl on Feb 20, 2019 8:01:14 GMT -5
MNKD pays the rebates too so our overall costs go down as well. I bet we would be better off if there was an open and competitive playing field. As Peppy points out, many patients are better off with the direct pay option even if they have insurance coverage. Sure, but how long can Mannkind afford such deep discounts? None of us on this board knows. I believe Afrezza is not only promotionally sensitive but also PRICE sensitive.
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Post by matt on Feb 20, 2019 12:01:02 GMT -5
Sure, but how long can Mannkind afford such deep discounts? None of us on this board knows. I believe Afrezza is not only promotionally sensitive but also PRICE sensitive. How much can shareholders know with certainty, maybe not much, but the financial statements are there for a reason. It is fairly simply to estimate from Symphony and IMS data the total volume of units sold, and from the cost of sales / inventory figures the actual cost of producing those units. If you are good at financial statement analysis, you can did into the footnotes and details about the various write-offs and reserves the company has booked in recent years and get an even better picture of what those costs will look like long-term. For those not so experienced at reading financials, it is enough to know that at present the cost of sales is higher than the net revenue per unit (i.e. for every dollar MNKD receives the company spends more than one dollar simply to produce the product). If rebates and discounts were totally eliminated, either by law or by a change in business practice, Lilly and Novo could cut list prices by 75% and still be making a healthy profit, while a 75% cut in list prices for Afrezza would dig the cash flow hole deeper. If Afrezza cannot cover its costs with its present pricing, it will do even worse if the market moves away from rebates and discounts simply because its actual costs are less variable than its competitors. That is a fact, and it makes for a difficult to compete absent a breakthrough in manufacturing cost reduction.
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Post by madog365 on Feb 20, 2019 12:09:25 GMT -5
None of us on this board knows. I believe Afrezza is not only promotionally sensitive but also PRICE sensitive. How much can shareholders know with certainty, maybe not much, but the financial statements are there for a reason. It is fairly simply to estimate from Symphony and IMS data the total volume of units sold, and from the cost of sales / inventory figures the actual cost of producing those units. If you are good at financial statement analysis, you can did into the footnotes and details about the various write-offs and reserves the company has booked in recent years and get an even better picture of what those costs will look like long-term. For those not so experienced at reading financials, it is enough to know that at present the cost of sales is higher than the net revenue per unit (i.e. for every dollar MNKD receives the company spends more than one dollar simply to produce the product). If rebates and discounts were totally eliminated, either by law or by a change in business practice, Lilly and Novo could cut list prices by 75% and still be making a healthy profit, while a 75% cut in list prices for Afrezza would dig the cash flow hole deeper. If Afrezza cannot cover its costs with its present pricing, it will do even worse if the market moves away from rebates and discounts simply because its actual costs are less variable than its competitors. That is a fact, and it makes for a difficult to compete absent a breakthrough in manufacturing cost reduction. To summarize what Matt is saying is that the company can never break even and bankruptcy is right around the corner!
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Post by nylefty on Feb 20, 2019 12:41:06 GMT -5
How much can shareholders know with certainty, maybe not much, but the financial statements are there for a reason. It is fairly simply to estimate from Symphony and IMS data the total volume of units sold, and from the cost of sales / inventory figures the actual cost of producing those units. If you are good at financial statement analysis, you can did into the footnotes and details about the various write-offs and reserves the company has booked in recent years and get an even better picture of what those costs will look like long-term. For those not so experienced at reading financials, it is enough to know that at present the cost of sales is higher than the net revenue per unit (i.e. for every dollar MNKD receives the company spends more than one dollar simply to produce the product). If rebates and discounts were totally eliminated, either by law or by a change in business practice, Lilly and Novo could cut list prices by 75% and still be making a healthy profit, while a 75% cut in list prices for Afrezza would dig the cash flow hole deeper. If Afrezza cannot cover its costs with its present pricing, it will do even worse if the market moves away from rebates and discounts simply because its actual costs are less variable than its competitors. That is a fact, and it makes for a difficult to compete absent a breakthrough in manufacturing cost reduction. To summarize what Matt is saying is that the company can never break even and bankruptcy is right around the corner! Matt has been crying wolf for years. Let's hope he continues to be wrong.
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Post by mnholdem on Feb 20, 2019 13:35:38 GMT -5
None of us on this board knows. I believe Afrezza is not only promotionally sensitive but also PRICE sensitive. How much can shareholders know with certainty, maybe not much, but the financial statements are there for a reason. It is fairly simply to estimate from Symphony and IMS data the total volume of units sold, and from the cost of sales / inventory figures the actual cost of producing those units. If you are good at financial statement analysis, you can did into the footnotes and details about the various write-offs and reserves the company has booked in recent years and get an even better picture of what those costs will look like long-term. For those not so experienced at reading financials, it is enough to know that at present the cost of sales is higher than the net revenue per unit (i.e. for every dollar MNKD receives the company spends more than one dollar simply to produce the product). If rebates and discounts were totally eliminated, either by law or by a change in business practice, Lilly and Novo could cut list prices by 75% and still be making a healthy profit, while a 75% cut in list prices for Afrezza would dig the cash flow hole deeper. If Afrezza cannot cover its costs with its present pricing, it will do even worse if the market moves away from rebates and discounts simply because its actual costs are less variable than its competitors. That is a fact, and it makes for a difficult to compete absent a breakthrough in manufacturing cost reduction. MannKind covering costs is currently severely affected by low volume. Three years ago, then-CEO Matt Pfeffer let slip a margin of around 85% but that depended upon 2 of the 3 lines operating at capacity. MannKind certainly has the ability to significant lower pricing and be profitable PROVIDED that Afrezza sells at a sufficient quantity to minimize (spread out) the impact of fixed costs to unit COGS. Increasing production for export of Afrezza to India and Brazil will have a positive impact on profitability here in the USA, but increasing domestic sales obviously is preferred.
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Post by mytakeonit on Feb 20, 2019 13:43:21 GMT -5
I prefer to sell Afrezza everywhere and anywhere and any day and any night.
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Post by boca1girl on Feb 20, 2019 15:09:16 GMT -5
None of us on this board knows. I believe Afrezza is not only promotionally sensitive but also PRICE sensitive. How much can shareholders know with certainty, maybe not much, but the financial statements are there for a reason. It is fairly simply to estimate from Symphony and IMS data the total volume of units sold, and from the cost of sales / inventory figures the actual cost of producing those units. If you are good at financial statement analysis, you can did into the footnotes and details about the various write-offs and reserves the company has booked in recent years and get an even better picture of what those costs will look like long-term. For those not so experienced at reading financials, it is enough to know that at present the cost of sales is higher than the net revenue per unit (i.e. for every dollar MNKD receives the company spends more than one dollar simply to produce the product). If rebates and discounts were totally eliminated, either by law or by a change in business practice, Lilly and Novo could cut list prices by 75% and still be making a healthy profit, while a 75% cut in list prices for Afrezza would dig the cash flow hole deeper. If Afrezza cannot cover its costs with its present pricing, it will do even worse if the market moves away from rebates and discounts simply because its actual costs are less variable than its competitors. That is a fact, and it makes for a difficult to compete absent a breakthrough in manufacturing cost reduction. It’s been a long while since my last finance class but I think you are confusing the variable cost to produce Afrezza vs the total mfg cost which contains an allocation of fixed manufacturing cost for every unit produced. The manufacturing lines were paid for years ago but the cost is apportioned in COGS. You use “cost of sales” above so I don’t know if you’re also including SG&A. If we are worried about cash flow break even, then we should only focus on cash outlays to conduct business, not the depreiable assets.
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Post by agedhippie on Feb 20, 2019 16:49:09 GMT -5
It’s been a long while since my last finance class but I think you are confusing the variable cost to produce Afrezza vs the total mfg cost which contains an allocation of fixed manufacturing cost for every unit produced. The manufacturing lines were paid for years ago but the cost is apportioned in COGS. You use “cost of sales” above so I don’t know if you’re also including SG&A. If we are worried about cash flow break even, then we should only focus on cash outlays to conduct business, not the depreiable assets. The COGS line the Q3 filing for that quarter was $5.3M against a revenue of $4.4M. The SG&A line was a further $19.4M expense beyond that. Mannkind is not covering the cost of production never mind SG&A.
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Post by sayhey24 on Feb 20, 2019 18:27:26 GMT -5
It’s been a long while since my last finance class but I think you are confusing the variable cost to produce Afrezza vs the total mfg cost which contains an allocation of fixed manufacturing cost for every unit produced. The manufacturing lines were paid for years ago but the cost is apportioned in COGS. You use “cost of sales” above so I don’t know if you’re also including SG&A. If we are worried about cash flow break even, then we should only focus on cash outlays to conduct business, not the depreiable assets. The COGS line the Q3 filing for that quarter was $5.3M against a revenue of $4.4M. The SG&A line was a further $19.4M expense beyond that. Mannkind is not covering the cost of production never mind SG&A. With today's press release they will. We have reached the tipping point for product demand.
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Post by agedhippie on Feb 20, 2019 18:30:18 GMT -5
The COGS line the Q3 filing for that quarter was $5.3M against a revenue of $4.4M. The SG&A line was a further $19.4M expense beyond that. Mannkind is not covering the cost of production never mind SG&A. With today's press release they will. We have reached the tipping point for product demand. Are the Q4 financial results released?
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