C'Mon TARS (just how many scripts were we expecting?)

[mbseeking]

We, I, have lately concluded that the script growth is no good.

But is that correct?

As I built my thesis on MNKD I figured that to be truly successful (financially) at a blockbuster level, we needed to achieve 2M users in about 2 years. AT this level Afrezza revenue is $8.8B , and I assume MNKD nets 25% of half of that i.e. NBT of $1.1B. At a discount rate (opp cost) of 5% this would value a MNKD perpetuity at $22B (in 2 years). You can argue the 5% number, but then when you factor other geographic markets, applications for Technosphere that argument becomes moot. Maybe not quite correct but to figure our what that $22B is worth I’d discount back to now at a much higher rate, say 40% and get $11.2B in today’s money.

If I assume the weekly TRX numbers are scripts covering 3 months worth (13 weeks) then that means we'd need to see a weekly TRX of about 153.8K. For some reason I always pivot off week 4 of the Symphony numbers (TRX = 113), so to get to 153.8k in 24 weeks the scripts would have to grow at 43.4% / mth.

I have to remind myself that I just plucked these growth numbers out of mid-air. Did I really expect a $2200 / yr drug to go viral? Probably. But I probably superimposed my own economic / health position on that conclusion.

It now seems unlikely to me that most people who need this drug can afford this, or would chose not to when they are already paying for insurance, and insurance should and probably will eventually cover it. The need for spirometry would also have affected Afrezza’s virality.

So how are we going?

Last week, week 34, the monthly growth rate has been just 24%. So well short of my original target.

But what does that mean?

Seems to be a disaster. But only if my original viral growth assumptions was correct.

Indeed, with virtually no top tier insurance cover yet , it seems quite likely that most current users are paying close to full price. That’s jarring. Once they love it, they are prepared to pay and we get 24% compound growth.

And, if we can hold 24%, we’d still get to my 2M users in 3 years, rather than 2. One year in the big scheme of things is nothing, and with a big change to underlying assumption - patients love it so much they are prepared to pay out of their own pockets! So now we have  $22B in 3 years . At 40% discount factor , that’s an $8B company today.

Yesterday MNKD closed at about 1.3B.

I dont believe MNKD will go bankrupt with the Al backstop.  The court is still out on Sanofi, but I believe they are still trying.. (that will be proven if then can maintain the 25% growth monthly) . If insurance frees up , then that rate can still increase significantly,

I’m reminded of that scene in Interstellar. Where TARS is docking the Lander with Endurance for the first time. The whole mission hinges on success. This is where we are right now.

C’mon TARS.. C’mon Sanofi.