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Post by mrhaigs on Aug 16, 2014 10:29:55 GMT -5
Apples and oranges. You're roping an acid reflux drug on as a comparison to insulin. I have severe acid reflux. I am prescribed Prilosec to take daily. I often go days without taking it as I forget or just don't feel the need. If I was prescribed insulin, and acted the same way as described above, I would be dead. Big difference in the drug usages. Back to your point, yes I agree first year sales figures above 1 billion may be too high or even at or slightly below 1 billion may be too high too. The market will look at sales growth over the quarters. If we do 1 bill or even slightly under throughout year 1, and the numbers ramp up every quarter you can bet the market will be taking that into account.
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Post by liane on Aug 16, 2014 10:42:26 GMT -5
Keep in mind that Solvaldi has a 94% cure rate and is used for just 12 weeks. There is not the recurring prescription of this drug as is the case with drugs such as Celebrex, Prilosec, and Januvia. Not only must Gilead recoup a rather high manufacturing and development cost, but their market is non-recurring and will eventually shrink.
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Post by ezrasfund on Aug 16, 2014 10:47:28 GMT -5
Would Januvia be another kind of apple or an orange? Note that the annual cost per patient for Prilosec is about $2,000/year/patient which is about what they are modeling for Afrezza, I believe. Also I believe Afrezza will at first be marketed to Type 2 insulin naive patients who will not be dead if they don't follow the regimen as prescribed. Of course, one of the main selling points of Afrezza is that it may improve patient compliance.
Which is all to say that we may agree that Afrezza will be a blockbuster that changes the diabetes standard of care, but exceeding modest expectations is better than falling short of unrealistic ones.
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Post by ezrasfund on Aug 16, 2014 10:52:11 GMT -5
Keep in mind that Solvaldi has a 94% cure rate and is used for just 12 weeks. There is not the recurring prescription of this drug as is the case with drugs such as Celebrex, Prilosec, and Januvia. Not only must Gilead recoup a rather high manufacturing and development cost, but their market is non-recurring and will eventually shrink. Which is why Solvaldi is projected to reach $10 Billion in sales in its first year, which is 16 times more than Celebrex, Prilosec, or Januvia (or Afrezza).
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Post by mrhaigs on Aug 16, 2014 11:32:10 GMT -5
You're missing the point. You can't just take drugs across 3 categories and pull them together to guess afrezza sales figures, high or low. Juaniva is a banana. Didn't everyone think about sales for the competition before you invested? I would think that would be one of the first things you would do. Investing in a company without first knowing its market potential is a flawed approach. We have no clue what the margins will be, nor do we know many other parts of this deal. I do believe afrezza can pull in 1 billion or close to it within its first year, after first quarter sales, which will inherently be very low, based directly on the competition of humalog and novalog. This isn't taking into account pills or insulin naive. People calling for 3$ or more billion within a year or two are the same "to the moon on partnership" people, and the people saying 200$ million in sales are the same "this will never get approved" , "no big pharma is interested in this junk" people.
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Post by ezrasfund on Aug 16, 2014 12:09:12 GMT -5
Remember the question is about the ramp up during the first year which I think has very real limitations. The question is what will the growth rate be, and even more important how long will that rate continue until the growth curve flattens out. IMO Afrezza's first year sales will be significantly less than $1 billion, but strong sales growth will continue for a long time, eventually resulting in a very big number.
When you model first year sales do you consider when the 12 production lines in Danbury will all be up and running? If all 12 lines are running 24/7/365 just how much Afrezza will be produced? Things like this take time.
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Post by mrhaigs on Aug 16, 2014 12:20:39 GMT -5
Remember the question is about the ramp up during the first year which I think has very real limitations. The question is what will the growth rate be, and even more important how long will that rate continue until the growth curve flattens out. IMO Afrezza's first year sales will be significantly less than $1 billion, but strong sales growth will continue for a long time, eventually resulting in a very big number. When you model first year sales do you consider when the 12 production lines in Danbury will all be up and running? If all 12 lines are running 24/7/365 just how much Afrezza will be produced? Things like this take time. Agreed its all about sales growth. I don't think the production lines question will matter. I think they will stay ahead of the curve in terms of production abilities, especially with Sanofi now involved. I'm modeling strictly on demand for the product. If we get into a situation where supple cannot meet the demand, that wouldn't be a terrible problem to have. I work in automation engineering software, and I'm pretty sure the Danbury facility uses our software as the hmi to run their plant. It's amazing how fast lines can be spun up when the demand is there for them. I see it all the time.
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Post by dreamboatcruise on Aug 16, 2014 13:59:47 GMT -5
Thanks Ezra for posting that article link. I tend to agree with you about sales expectations.
However, to indulge in a bit of devil's advocate on the upside.
If we take the drug with the fastest patient adoption... celebrex with 442 thousand in first year... and adjust for the fact that the yearly cost is half what Afrezza will likely be, one might project that IF Afrezza was taken up as quickly, it would double the $600M first year of celebrex.
HOWEVER... I don't believe getting patients already using rapid acting pens to switch will occur as fast as switch from other painkillers to celebrex... where a doctor likely had a bunch of free samples and threw some at the patient saying "give this new stuff a try".
If we want to really get into projections we'd likely need to project patient numbers and then assume the pricing we know of "comparable to insulin pens".
- How many new patients go on prandial each year? - What percentage of that might choose Afrezza? Hopefully reasonably high. - Are there other drugs that might be a better benchmark than celebrex where the barrier of switching treatments is more comparable to Afrezza, as a means of estimating how quickly rapid acting insulin pen users might be switched?
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Post by 4Balance on Aug 16, 2014 14:20:01 GMT -5
Cautious approach--I have seen this in several places...will try to find good sources. Perhaps "marketing" is not the best term...I'm talking about their strategy for rolling out the drug in such a way as to breed successful experiences. Does that make more sense..?? Hi 4balance, I think you are referring to the way Sanofi briefly and vaguely described who they would target and why? Yes Sanofi, for obvious reasons was purposefully vague and the marketing strategy will be one of the most closely guarded secrets of the whole deal till marketing actually starts. Then we will get a drip by drip view of what they are doing. Every smart BP with a significant diabetic presence is now drawing up different scenarios and thinking of counter measures to deal with this potentially disruptive new drug. Hopefully Sanofi and Mannkind will not tip their hand to please computer driven algos, day traders and option holders (sorry but option holders are obviously not shareholders...). Long term shareholders deserve a management that can do things without looking at the stock price before every decision. Yes...first priority should be company success. Management obsession with share price probably kills more companies then shorts ever will... However, to the extent they are able, they should communicate with their stakeholders (including us longs) to minimize angst and retain our support. Else, over time, support will naturally erode and we will dump our shares...share price will fall...market cap will fall...then??I certainly agree with you that there are a lot of financial articles (to a carpenter every fix involves a nail and hammer). The way I see it most of the sales/ profit modeling done so far is radically at odds with what Sanofi briefly hinted at during the CC. From my maybe flawed, partial and subjective analysis of how they will market this to MDs and patients the vast majority of models are using the wrong inputs and looking at diabetic patients/ prescribing MDs in a way that makes little clinical sense to me. The models are looking at the wrong parts of the iceberg. Could you please elaborate...to the extent you feel it would be "safe" to do so? Seems possible that Sanofi competitors are lurking in this forum...but, of course, all we can do is speculate on Sanofi's approach. Garbage in... My interpretation of what Sanofi said about marketing during the CC is one of the things which, even after this share price blood bath keeps me smiling and happy to be a Mannkind shareholder and hope the price drops a bit more so I can pick up a few more shares. Again if I was a holder of time sensitive synthetic instruments and using leverage I would be very nervous. I say this because my interpretation of who Sanofi will target (and why) seems to me to demonstrate that Sanofi is very 'MD and patient wise'. That seems to be a common point of agreement. At the same time I think I understand why markets and analysts have so much difficulty dealing with the lack of clarity and certainty and don't know how long it will take for the market to get it. As some other MD posters have politely written (an MD from 360 and/or Dr. Tran I think?) or posted in comment sections: non MDs don't get it (I am paraphrasing less politely...) because they don't see these patients day in day out and they don't have to prescribe pills we honestly think don't work well and potentially do more harm then good. Till now there were no other options. How do you put that in a model? You can't... That is a paradigm shift. I realize this as well. Implicit with paradigm shifts is the inapplicability of "standard" models. For example, basal titration could very well need to be adjusted upward and RAA adjusted downward...which will take time and patience to work out.
Furthermore, there will be an "adoption curve" that sees some "early adopters" and a measured rising of acceptance over time. See this link for a sample adoption curve: tinyurl.com/kvppe3k One definition of "technology" is "the application of scientific knowledge for practical purposes." (It's not all about IT!) How might this curve be adjusted to reflect the use of Afrezza?Sanofi gets it. The market obviously doesn't yet. Yes...but when..??JPG Comments and questions are embedded in context.
I thank you for your thoughtful observations, JPG, and hope you can take the time to elaborate a bit.
Others are also welcome to add their thoughts to the mix.
-- 4Balance
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Post by 4Balance on Aug 16, 2014 14:37:24 GMT -5
Remember the question is about the ramp up during the first year which I think has very real limitations. The question is what will the growth rate be, and even more important how long will that rate continue until the growth curve flattens out. IMO Afrezza's first year sales will be significantly less than $1 billion, but strong sales growth will continue for a long time, eventually resulting in a very big number. When you model first year sales do you consider when the 12 production lines in Danbury will all be up and running? If all 12 lines are running 24/7/365 just how much Afrezza will be produced? Things like this take time. Just how much Afrezza? Is it possible that Sanofi will be manufacturing Afrezza using the "new process?" How long will the rate continue until we see a flat growth curve? Great question. What would stop the increase? Market saturation...alone? More and more people are becoming diabetic. Over time--with all good news and no show-stoppers like lung cancer--we should see increasing adoption in the U.S., and markets open up in other countries. I believe Japan will require more study...so that will postpone adoption. What about the next disruptive technology--the next innovation in treating diabetes. If the growth rate or Afrezza usage begin to wane "naturally", I'm thinking that would be the main cause. But that requires a pristine launch...minimal errors...top notch strategy...flexible enough to adjust for the unexpected....sustained over a number of years.
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Post by dreamboatcruise on Aug 16, 2014 14:45:46 GMT -5
"the way Sanofi briefly and vaguely described who they would target and why? Yes"
I guess my take on that brief statement by Sanofi is that it is just stating the extent of the marketing approved by FDA and the fact that initial focus is on U.S. roll out.
It is a hugely complicated process to actually develop the marketing material, such as consumer ads. Companies get in trouble when they market drugs in ways that imply off-label use. Great pains are taken to not cross legal lines and yet entice patients and doctors.
So I think that tepid statement is from two sources...
1) Stick to basics because anything beyond that would be part of a finally honed message crafted through lengthy process involving marketing and regulatory legal team. 2) Stick to basics because of desire to not reveal strategy to competition.
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Post by jpg on Aug 17, 2014 2:12:27 GMT -5
Hi 4Balance,
I would suggest those who are remotely interested in my (possibly wrong) musings that professional and individual analysts are lookng at the wrong part of the 'iceberg' listen to the Mannkind- Sanofi CC.
Pierre Chancel At 2:45 to 2:55 Al Mann at 8 minutes to 8:30 Al Mann at 10:20 to 10:45 Response by Pierre Chancel to B of America analyst question at 16:03 to 16:38 and 17:19 to 17:54
To me this defines the essence of why I think anyone modeling near or long term sales of Afrezza using prandial insulin sales as a benchmark should be questioned or discounted. The model inputs are wrong. Those analysts are assuming 'spherical cows'.
I wrote a long and detailed analysis of my thinking on the iceberg thing in the Qucik Reply section but my stupid iPad (or Proboard?) crashed and wiped it out. Not nice... At least you are spared a lengthy comparative analysis of icebergs, diabetics and patterns of prescriptions by MDs...
I'll post this quickly before my iPad crashes again...
JPG
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Post by liane on Aug 17, 2014 5:53:28 GMT -5
To me this defines the essence of why I think anyone modeling near or long term sales of Afrezza using prandial insulin sales as a benchmark should be questioned or discounted. The model inputs are wrong. Those analysts are assuming 'spherical cows'. jpg, I assume you mean: I think anyone modeling near or long term sales of Afrezza using current prandial insulin sales as a benchmark should be questioned or discounted. I think you see it as I do - that prandial insulin will be an ever larger piece of the pie as the paradigm shifts and new treatment algorithms come into play - earlier use of prandial - prandial before basal, prandial instead of or before oral agents, and prandial use in prediabetics. Yes, I know this is not in the label - yet. But it will be done off-label, and sooner than many think.
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Post by ezrasfund on Aug 17, 2014 9:56:55 GMT -5
jpg,
I hate losing a long reply to a crash like that. My solution is to compose longer musing as a draft in g-mail where it is saved to the cloud automatically every few seconds if you are connected to wi-fi. Then just copy and paste...
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Post by dreamboatcruise on Aug 17, 2014 12:40:55 GMT -5
To me this defines the essence of why I think anyone modeling near or long term sales of Afrezza using prandial insulin sales as a benchmark should be questioned or discounted. The model inputs are wrong. Those analysts are assuming 'spherical cows'. Given that just above your post I was doing exactly what you say should be discounted, I would make the counter argument that modeling the current baseline is an important part of the near term analysis of this. The discussion of this thread was in the context of 1st year sales and whether $1B is possible/likely. Many investors, including myself, believe Afrezza can be a game changer and expand the market for prandial insulin. Not to mention that Technosphere will be used well beyond the diabetes segment. But, a paradigm shift in diabetes treatment isn't something most would probably assume will occur within the first year to any meaningful extent. There might be some doctors to start trying early prandial use, but most will likely wait for published results from the early adopters. I'm going to be curious to see whether Sanofi announces clinical trials to try to prove Afrezza as a superior first line intervention. Do you feel they will? Does that not threaten the Lantus franchise? I'm hoping that part of full agreement, which we see in 3 months, will show that this was part of the negotiation and Sanofi is committed to pushing for this game changing aspect of Afrezza. It seems hard to imagine it happening if Sanofi is not behind it... no?
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