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Post by alcc on Aug 11, 2014 12:57:55 GMT -5
Great partner in terms of market emphasis, market knowledge, market presence, complementary portfolio etc. However, underwhelming terms. I have no clue how Sanofi is going to segregate out the expenses related to Afrezza to come up with the profit. If a sales rep makes a sales call in which he details a number of drugs in addition to Afrezza, how to account for the expense? The conference call shed no light whatsoever on how this profit sharing would work. Absent this detail, I have to assume Sanofi would broadly allocate expenses to Afrezza based on straightforward percent of revenue. Regardless of how they arrive at the profit, the company is getting only 35% of the pot? That, after spending billions and 10 years of blood and sweat to get to this point? Of course, the flip side is that Sanofi is "only" getting 65%, as opposed to 100% of, say, Lantus. This is the problem with profit sharing arrangements: you have 2 companies splitting the profit, adverserly affecting each company's margins. That was why I had envisioned an agreement with an equity investment as first stop to eventual takeover. Didn't happen. I am sure Al sees this as the best deal on the table.
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Post by seanismorris on Aug 11, 2014 13:05:30 GMT -5
Alcc,
I wouldn't have minded some dilution, say Sanofi owning 20% of Mannkind in exchange for a 50/50 partnership and 1B upfront.
Would it have been a better deal? It all depends on if Mannkind can make Technosphere pay.
Hopeful Mannkinds starts talking up Technosphere very soon.
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Post by 4Balance on Aug 11, 2014 13:06:22 GMT -5
This is MNKD's first turn in the barrel. I, too, was disappointed with the terms, but at this point they look like a clear-eyed deal negotiated by a BP pro.
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Post by alcc on Aug 11, 2014 13:16:06 GMT -5
Alcc, I wouldn't have minded some dilution, say Sanofi owning 20% of Mannkind in exchange for a 50/50 partnership and 1B upfront. Would it have been a better deal? It all depends on if Mannkind can make Technosphere pay. Hopeful Mannkinds starts talking up Technosphere very soon. Sean, 20% for 1B would have been slightly accretive.
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Post by seanismorris on Aug 11, 2014 13:34:43 GMT -5
1B in addition to 50/50 rather than 65/35.
I think that didn't happen because Al wants to set up multiple Techsphere partnerships and another large stakeholder might have gotten in the way.
Al seems to be focusing on building the company Mannkind (brand) rather than looking at an exit strategy.
If the end game is Al building a 50B business, it's hard to have a problem with that.
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Post by alcc on Aug 11, 2014 13:44:57 GMT -5
No. It's easy to carve out Technosphere from any agreement re Afrezza.
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Post by mnholdem on Aug 11, 2014 14:14:06 GMT -5
There are a couple of things I didn't find mentioned in this thread that were confirmed in the morning conference.
1. Mannkind supplies Afrezza to Sanofi at cost. This means Mannkind manufactures for free - 100% reimbursed.
2. We don't know (and they'll never tell us) what the manufacturing margin is. Pierre refused to share what the competitive pricing will be "at this time", so we have no way to translate 35% of all Afrezza profits and what that means in terms of cash. I think it will be staggering, as I work for a medical devices group and have estimated the COGS to be less than $0.50 per unit. I don't know the current average US price for injected insulin, but Mannkind, my friends, is going to be making a LOT of money.
3. Finally, Sanofi has agreed to be responsible for ALL post-approval REMS, trials, and approvals in EU & Japan. That's HUGE.
We really need guidance at this afternoon's Q2 conference before analysts can upgrade. Hopefully we'll hear:
Planned launch date - this may happen sooner rather than later as Sanofi already has a sales force in place making their visits to clinics & physicians throughout the U.S. All they need is the educational/training materials to bring on their visits. If this has been in the planning for a while, they may already have the materials and have already started sales force training. The Danbury plant has been operational for some time as well.
Sales Forecast - Sanofi would provide the forecasts. Mannkind just repeats it in their future guidances, AND...
Forecasted Q3 / Q4 EPS - Mannkind is afforded some protection from shareholder lawsuits, since guidance would be based on sales forecasts made by Sanofi.
I hope this afternoon's Q2 conference provides this guidance. That would lead to analyst upgrades and MNKD share price would follow. Still lots of news forthcoming. Weak longs who sell today would be making a rash decision.
I good deal with the best choice of distributors for Afrezza.
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