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Post by jonny80s on Apr 24, 2019 16:05:28 GMT -5
Came across this while reading the proxy statement. I know this topic has come up from time to time....
As of December 31, 2018, we had 225 full-time employees, of which 79 were engaged in manufacturing, 19
in research and development, 39 in general and administrative and 88 in selling and marketing. Seventeen of
these employees had a Ph.D. degree and/or M.D. degree and were engaged in activities relating to research and
development, manufacturing, quality assurance or business development.
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Post by ktim on Apr 24, 2019 18:51:29 GMT -5
I guess I never bothered reading that section. Wow, 79 in manufacturing. No wonder COGS so high now. I'd be willing to bet that would creep up only very slowly with even much higher volume, which could drive unit COGS down significantly if revenue takes off.
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Post by mike0475 on Apr 24, 2019 21:16:13 GMT -5
Finally someone sees tomorrow
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Post by ktim on Apr 25, 2019 2:58:06 GMT -5
Finally someone sees tomorrow Hoping for tomorrow. Good lord, lots of things could go right if we get out of this financial black hole. I do think those claiming Afrezza manufacturing costs are a problem are blowing smoke... you know who you are. "Biologics" aren't labor intensive, they are oversight intensive. The 79 people making sure 500 boxes are perfect each week probably could make sure 5000 boxes are perfect, or maybe more. Manufacturing cost is not our problem, IMO. Though I'm always interested in those that want to present arguments otherwise. |
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Post by matt on Apr 25, 2019 7:29:55 GMT -5
"Biologics" aren't labor intensive, they are oversight intensive. That sort of depends which biologic you are talking about, but I would agree that much of the labor intensity of the MNKD production process likely has more to do with the design of the process itself. If a company thinks a new product is going to be a big hit in the market, it is logical to design a manufacturing process that is highly automated with a relatively higher fixed cost component. If the product sells well, that fixed cost is absorbed across many millions of units and almost becomes a rounding error in the cost equation. However, if sales do not take off that same fixed cost is allocated to many fewer units so the cost of production (per unit) is much higher than planned. The challenge with biologics is that the precise production process is part of the FDA approval. Traditional drugs are different, there is more than one way to synthesize a chemical molecule and analytical techniques exist to verify that two different production lines using different methods produce the identical chemical entity. That is why there is a thriving generic drug business but very few biosimilars; lots of small companies with good chemists can figure out a way around production patents for small molecules while biologics require much more to prove equivalency. The rub is that once a company like MNKD has a biologics product approval, it cannot easily change the way it does things without going back to the FDA for further approvals while a small molecule drug producer can adjust its production process to the best scale as sales expand or contract. In the biologics world, even apparently minor manufacturing tweaks can result in an entirely different product being produced which is why FDA ties the product approval to the production process. The good news is that if Al Mann had guessed right on the market acceptance of Afrezza, MNKD would be sitting on a highly productive and efficient manufacturing facility. The bad news is that since Afrezza volumes have lagged expectations, there are a lot of under-absorbed fixed costs that cannot easily be eliminated in the absence of growing volume. Whether you characterize the underutilization of the plant as a "sales problem" or a "manufacturing cost problem" is largely a matter of your perspective. |
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