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Post by hammer on Aug 2, 2014 8:05:43 GMT -5
A closer look at the numbers:
So I have come to the conclusion a simple share of market by percentage is an impractical way to value the potential of Afrezza. So today I sat down and ran the numbers with personal expectations of the submarkets. Once again using numbers provided by MNKD derived from the Roper analysis.
Before I present them, I want to throw out a few ideas. The pediatric study is paramount for MNKD. I don’t believe even Exubera was approved for pediatric use. Once approved for the pediatric patient market share will dramatically rise for the type 1 diabetic subset. It will be the first prandial insulin introduced to new diabetics hence it will capture market share going forward. Otherwise, Afrezza is dependent on therapy switches which are a little difficult (old dogs new tricks).
I believe Al Mann suggested the US market sales were a 4-5 billion opportunity alone. Folks Europe’s diabetes market is larger but let’s just say its equal to the US. That places Al’s assumption that this is a 8-10 billion dollar drug. I believe we would all be happy with a fraction of that, but it is possible Al’s expectations were tempered as well.
The target market and personal expectations-
4.2 Million patients T1 & T2 using RAA or premix – This is the market everyone associates insulin use with. Its also the market that, mistakenly, many people base their valuation for Afrezza solely on. For a few reasons I will decrease market penetration in this group down to 25%. My reasoning is that until pediatric studies are done, MNKD is dependent on therapy switches. Endocrinologist may have no problems doing this but primary care physician may be slightly uncomfortable. Premix patients may also be a little reluctant to switch. Once pediatric approval comes, all bets are off, as Afrezza could capture well above my initial thesis of 35% market. Anyway, a 25% market capture equates to 1.05 Million patients.
There are 1.7 Million T2 patients currently on basal, but would benefit from Afrezza. Educating these patients is patients as well as their physicians is paramount. Al himself believes that starting on basal then prandial is wrong and that prandial control should be implemented first. In the past this was done probably because it was 1 injection rather than 3 for the patient and it was convenient and somewhat effective. Even with the advent of the most recent oral basal treatment by Lilly, Jardiance, lacks sufficient prandial control to T2 patients and may actually compliment the use of Afrezza. Imaging telling T2 patients who currently inject for basal they no longer have to take injectable basal at all. My expectatiosn for this market stay at 35% penetration, yielding, .6 million patients.
The next patient subset is the most interesting. 15.2 million patients are insulin naïve. Out of this group 8.4 million are doing well on current therapy, 6.8 million are in need of control and are failing treatment. For those patients who do not control diet and exercise, they all will eventually fail treatment and progress to more intense therapy. Lets face it, the truth is most T2 diabetics do not change lifestyle. They submit to oral therapy only because they are not willing to treat their disorder with injectables. Some patients 12-15% of the 8.4 million will be willing to treat their diabetes with insulin as long as its not injected. I would predict 40% of the 6.8 million patients who are not in control would be willing to use Afrezza. With those expectations Afrezza users would be 1.13 and 2.72 million respectively.
My justification of the last subset is not based on current algorithms of T2 care since I do believe these will be re-written. I truly believe a paradigm shift will occur in the treatment of diabetes most notably in the T2 patient. I also believe Afrezza will be used off label as well.
As I add up the total market of potential Afrezza subsets, I come to 5.5 million potential Afrezza users in the United States. Assuming a wholesale yearly cost structure of Afrezza to be $1500, this works out to be 8.2 billion sales in the US, and an ever increasing dilemma.
I won’t get into pps predictions other than to say that with US sales alone and with a partner that PPS would be in the low 3 digits. If I am only half right then these figures become worldwide figures. All the rhetoric, even by longs that this is a 12-15 stock in my mind have not listened to Al. Even at fractions of market share this company is worth much more. When you negotiate a deal, whether its buy a car, a house, etc. you end up meeting somewhere in the middle of both parties expectations. Good Luck!
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Post by Chris-C on Aug 2, 2014 9:59:14 GMT -5
Hammer:
Thanks for another great, thoughtful post! A key unknown, it seems to me, is the speed of adoption by physicians and how quickly and how many people are willing to change their use of prandial injectables. Understanding social and behavioral factors that get in the way of compliance and responsible self care is a key marketing point. Convenience, safety and discrete social administration for medications are all very important compliance factors that will influence adoption. It is not an overstatement to say those features could make this a potential game changer. Consider that some participants in the trials have been very vocal in their support for this drug. If they are authentic, and I think they are, there is a message there that strongly supports your thesis.
You also make some useful and perhaps heretofore overlooked observations about the pediatric market. Overall, if your predictions are even half correct, I'll be a very happy investor. I think there is a reason why a prominent and widely followed investment newsletter opined that Mannkind has to the potential to be a Celgene like investment and was recommended to subscribers as a long term hold.
A sale of the Afrezza franchise over $25 (highly possible) may run some hedge funds out of business. In my opinion, that would be another socially beneficial result of this medication.
Time will tell. It always does!
GLTAL
Chris
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Post by joeypotsandpans on Aug 2, 2014 10:36:16 GMT -5
Hammer: Thanks for another great, thoughtful post! A key unknown, it seems to me, is the speed of adoption by physicians and how quickly and how many people are willing to change their use of prandial injectables. Understanding social and behavioral factors that get in the way of compliance and responsible self care is a key marketing point. Convenience, safety and discrete social administration for medications are all very important compliance factors that will influence adoption. It is not an overstatement to say those features could make this a potential game changer. Consider that some participants in the trials have been very vocal in their support for this drug. If they are authentic, and I think they are, there is a message there that strongly supports your thesis. You also make some useful and perhaps heretofore overlooked observations about the pediatric market. Overall, if your predictions are even half correct, I'll be a very happy investor. I think there is a reason why a prominent and widely followed investment newsletter opined that Mannkind has to the potential to be a Celgene like investment and was recommended to subscribers as a long term hold. A sale of the Afrezza franchise over $25 (highly possible) may run some hedge funds out of business. In my opinion, that would be another socially beneficial result of this medication.Time will tell. It always does! GLTAL Chris Amen to that brother Chris! |
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Post by daduke38 on Aug 2, 2014 11:42:03 GMT -5
I guess I am getting repetitious on this, but the more things develop (Medalion now) I would be surprised if "A' wasn't sold off to fund the other endeavors. And I guess the "short Kill" would be an added benefit.  Either way, Al will not settle for a mediocre deal, and it has to be very close! They want "A" on the market ASAP. A deal in the next week or so, I see it on the market prior to 2015. |
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Post by daduke38 on Aug 2, 2014 11:42:47 GMT -5
Yeahhhhh! I made Lab Rat!!!!!!
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Post by joeypotsandpans on Aug 2, 2014 12:11:15 GMT -5
Yeahhhhh! I made Lab Rat!!!!!! LOL....now all you need to do is put together an avatar to go along with it  |
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Post by zieg on Aug 2, 2014 13:20:32 GMT -5
As many have mentioned, I too post little but follow often. Came from Yahoo (and before that Agoracom) and occasionally post there: dzieg18. I learned about MNKD from a College Fraternity brother who is close to one of Al's grown kids. Anyone who knows Al's philosophy or has studied him has heard him say that he's not going to leave the money to his kids but instead give it to science. At the time, without going into specifics, his daughter was in acquisition mode buying on the open market when it was below $2. That's when I jumped in and have been buying every month until now. Bought yesterday at $8.09. Al (at the time a couple years ago) said to family that he strongly believes this will be a $60 stock in a few years. I think he has now raised his expectations. I'm not a pumper nor do I speak to family members of Al. I have 90% on my investments in MNKD because I believe in Al Mann. My friends, accountants and family think I'm crazy for my investment strategy, but in life, you have to take a chance. I believe this is a good call. Good luck to all! Good luck to Al Mann. (Btw, Luck is when preparation meets opportunity)!! |
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Post by goyocafe on Aug 2, 2014 13:24:37 GMT -5
"A sale of the Afrezza franchise over $25 (highly possible) may run some hedge funds out of business. In my opinion, that would be another socially beneficial result of this medication."
They need to be held more accountable than that. If they make a bunch of money along the way and then declare bankruptcy when the tides change, there needs to be a remedy to those who lost out on account of their actions other then them going away.
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Post by daduke38 on Aug 2, 2014 13:55:19 GMT -5
Test
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Post by daduke38 on Aug 2, 2014 13:58:31 GMT -5
Test! Needed more gray, though! And a beard not as long! lol
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Post by babaoriley on Aug 2, 2014 15:39:07 GMT -5
"My friends, accountants and family think I'm crazy for my investment strategy, but in life, you have to take a chance. I believe this is a good call. Good luck to all!"
Zieg, wow, especially good luck to you! Add me to your friends, accountants and family, that's a ballsy investment strategy to say the least! I sure hope you hit it out of the park with MannKind, though!! The risk/reward certainly looks better now that it did at $10, I've been telling friends that they really should consider getting in now, and then get more if it drops more.
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Post by dreamboatcruise on Aug 2, 2014 16:44:22 GMT -5
A sale of the Afrezza franchise over $25 (highly possible) may run some hedge funds out of business. In my opinion, that would be another socially beneficial result of this medication. Technosphere hedgecide... I like it. |
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Post by BD on Aug 2, 2014 17:02:58 GMT -5
Test! Needed more gray, though! And a beard not as long! lol I don't think you need to post in order to see your avatar...just look at any of your earlier posts, or go into your profile, then "Edit Profile", and there's a tab called "avatar". |
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Post by 4Balance on Aug 2, 2014 18:05:43 GMT -5
A closer look at the numbers:
So I have come to the conclusion a simple share of market by percentage is an impractical way to value the potential of Afrezza. So today I sat down and ran the numbers with personal expectations of the submarkets. Once again using numbers provided by MNKD derived from the Roper analysis.
Before I present them, I want to throw out a few ideas. The pediatric study is paramount for MNKD. I don’t believe even Exubera was approved for pediatric use. Once approved for the pediatric patient market share will dramatically rise for the type 1 diabetic subset. It will be the first prandial insulin introduced to new diabetics hence it will capture market share going forward. Otherwise, Afrezza is dependent on therapy switches which are a little difficult (old dogs new tricks).
I believe Al Mann suggested the US market sales were a 4-5 billion opportunity alone. Folks Europe’s diabetes market is larger but let’s just say its equal to the US. That places Al’s assumption that this is a 8-10 billion dollar drug. I believe we would all be happy with a fraction of that, but it is possible Al’s expectations were tempered as well.
The target market and personal expectations-
4.2 Million patients T1 & T2 using RAA or premix – This is the market everyone associates insulin use with. Its also the market that, mistakenly, many people base their valuation for Afrezza solely on. For a few reasons I will decrease market penetration in this group down to 25%. My reasoning is that until pediatric studies are done, MNKD is dependent on therapy switches. Endocrinologist may have no problems doing this but primary care physician may be slightly uncomfortable. Premix patients may also be a little reluctant to switch. Once pediatric approval comes, all bets are off, as Afrezza could capture well above my initial thesis of 35% market. Anyway, a 25% market capture equates to 1.05 Million patients.
There are 1.7 Million T2 patients currently on basal, but would benefit from Afrezza. Educating these patients is patients as well as their physicians is paramount. Al himself believes that starting on basal then prandial is wrong and that prandial control should be implemented first. In the past this was done probably because it was 1 injection rather than 3 for the patient and it was convenient and somewhat effective. Even with the advent of the most recent oral basal treatment by Lilly, Jardiance, lacks sufficient prandial control to T2 patients and may actually compliment the use of Afrezza. Imaging telling T2 patients who currently inject for basal they no longer have to take injectable basal at all. My expectatiosn for this market stay at 35% penetration, yielding, .6 million patients.
The next patient subset is the most interesting. 15.2 million patients are insulin naïve. Out of this group 8.4 million are doing well on current therapy, 6.8 million are in need of control and are failing treatment. For those patients who do not control diet and exercise, they all will eventually fail treatment and progress to more intense therapy. Lets face it, the truth is most T2 diabetics do not change lifestyle. They submit to oral therapy only because they are not willing to treat their disorder with injectables. Some patients 12-15% of the 8.4 million will be willing to treat their diabetes with insulin as long as its not injected. I would predict 40% of the 6.8 million patients who are not in control would be willing to use Afrezza. With those expectations Afrezza users would be 1.13 and 2.72 million respectively.
My justification of the last subset is not based on current algorithms of T2 care since I do believe these will be re-written. I truly believe a paradigm shift will occur in the treatment of diabetes most notably in the T2 patient. I also believe Afrezza will be used off label as well.
As I add up the total market of potential Afrezza subsets, I come to 5.5 million potential Afrezza users in the United States. Assuming a wholesale yearly cost structure of Afrezza to be $1500, this works out to be 8.2 billion sales in the US, and an ever increasing dilemma.
I won’t get into pps predictions other than to say that with US sales alone and with a partner that PPS would be in the low 3 digits. If I am only half right then these figures become worldwide figures. All the rhetoric, even by longs that this is a 12-15 stock in my mind have not listened to Al. Even at fractions of market share this company is worth much more. When you negotiate a deal, whether its buy a car, a house, etc. you end up meeting somewhere in the middle of both parties expectations. Good Luck!
I agree, it probably will be used off label. But don't insurance companies fail to cover off label uses...?? If so, won't that have a dampening effect? |
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Post by kc on Aug 2, 2014 19:52:47 GMT -5
Newbie thanks for your great posting. Glad to have you on the board. I have about given up on the Yahoo message board. And the investor hub board. This is about the only good place to trade information on the positive side of our investment in mannkind. StockTwits is okay. and the new Facebook board is good.
MNKD Shareholder (fb)
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Either way, Al will not settle for a mediocre deal, and it has to be very close! They want "A" on the market ASAP. A deal in the next week or so, I see it on the market prior to 2015.
