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Post by dreamboatcruise on Aug 17, 2014 13:16:21 GMT -5
"Assume about 1.5 B of this related to product development. If MNKD were reimbursed at 35%, well that would be more than one-half of a Billion dollars. And they are not disclosing this? Talk about the mother of all lawsuits! But if that half a billion dollars is offset to some degree by "the substantial investment and involvement [Sanofi] has made building a market-leading commercial infrastructure," then the amount could easily be in the $100 million range, and subject to some wrangling about the final number. I wonder if there are enough people hoping for this that the stock will go down further when someone gets a clarification from Matt stating that the deal is what he announced and shown in the slides without an extra $100(s) million. |
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Post by trenddiver on Aug 17, 2014 15:22:27 GMT -5
Matt purposely left vague the discussion of what is to be included in COG (which would be the mechanism for which MNKD would be reimbursed for previously expensed Afrezza development costs). Although I agree with those who view this as unlikely, it is a possibility that cannot be ruled out until Matt does so. If he does confirm the reimbursement, it could almost be viewed as a binary event since the amount is so large.
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Post by dreamboatcruise on Aug 17, 2014 15:43:33 GMT -5
Matt purposely left vague the discussion of what is to be included in COG (which would be the mechanism for which MNKD would be reimbursed for previously expensed Afrezza development costs). Although I agree with those who view this as unlikely, it is a possibility that cannot be ruled out until Matt does so. If he does confirm the reimbursement, it could almost be viewed as a binary event since the amount is so large. Trend I can't rule out finding a winning mega millions lottery ticket on the sidewalk. I just don't believe considering that slim possibility is part of a sound investment strategy. I think there would ordinarily not be a need to give a discourse on COGS because it is a fairly well defined accounting concept. What you, or others, are proposing is a radical departure from standard accounting. So what you are suggesting by saying that Matt left it purposely vague is that he did so to hide a material aspect of the agreement, involving hundreds of millions of dollars, which would be a huge departure from ordinary accounting. |
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Post by trenddiver on Aug 17, 2014 16:05:05 GMT -5
I posted this earlier but I will post again:
This is Matt's quote fro the CC:
"We haven’t given a lot of disclosure there, except to say that I mean, under the supply agreement, which will eventually become public as well, I mean, we are obliged to. So, the product to Sanofi at our cost and that’s our intention. The ultimate profit from such sales will flow through when they actually make some sales and it come -- drops down to the bottom-line and into collaboration. So other than to say we're going to sell at cost, we've not said what our cost structure is at this point."
"We've not said what our cost structure is at this point" , if not vague what is it? It certainly leaves open he possibility that the cost structure structure includes previous expensed development costs which could have been agreed upon by the parties. Although I view this unlikely, it cannot be ruled out, until Matt says so.
The accounting term COGS is not a fixed descriptive term. If Mannkind sells the product to the JV at an agreed upon price (which includes such development costs) then that is the COGS to the JV.
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Post by dreamboatcruise on Aug 17, 2014 17:25:45 GMT -5
I posted this earlier but I will post again: This is Matt's quote fro the CC: "We haven’t given a lot of disclosure there, except to say that I mean, under the supply agreement, which will eventually become public as well, I mean, we are obliged to. So, the product to Sanofi at our cost and that’s our intention. The ultimate profit from such sales will flow through when they actually make some sales and it come -- drops down to the bottom-line and into collaboration. So other than to say we're going to sell at cost, we've not said what our cost structure is at this point." "We've not said what our cost structure is at this point" , if not vague what is it? It certainly leaves open he possibility that the cost structure structure includes previous expensed development costs which could have been agreed upon by the parties. Although I view this unlikely, it cannot be ruled out, until Matt says so. The accounting term COGS is not a fixed descriptive term. If Mannkind sells the product to the JV at an agreed upon price (which includes such development costs) then that is the COGS to the JV. You think that "our cost" is vague in the sense that it may include hundreds of millions in expenses related to clinical trials that have nothing to do with manufacturing? The accountants I work with say COGS is a fixed descriptive term. There is some leeway and grey areas... but putting clinical trial costs into it would not be within the grey area at all... it would be redefining the term. You are correct that COGS sold for Sanofi is different than COGS for Mannkind. We are hear talking about Mannkind's costs... not Sanofi's. I'll have to admit I am tiring of the argument, however. It is apparent that those that wish to find something hidden in the agreement will continue to do so... probably after this issue is cleared up it will be some other wish for something unannounced. So I can see that there is little point... those who wish to believe, will believe. |
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Post by babaoriley on Aug 17, 2014 17:56:19 GMT -5
It could be anything, as I can't believe, notwithstanding GAAP, that the parties are allowed to defined COGS as anything they like as between the two of them, how it is handled on their respective returns is another matter. \ Trend, I'm surprised at you - a binary event?  Not at all, if they do clarify, market reaction will either be neutral if clarification is good or bad if bad. LOL,that's the MNKD/market way right now. And I can't see it any other way at this point. Things will change, I believe, but not for a while. |
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Post by trenddiver on Aug 17, 2014 18:35:01 GMT -5
Ok Baba. You got me on that one. It would be a lot of money and is think the response would be viewed very positive. But I agree, no binary event.
And Dream, I am a CPA (or was). The actual cost of manufacturing Afrezza would be Mnkds COGS. What iMnkd sells Afrezza to the JV would be the JV's COGS. The COGS to each could be different if a recoupment of development costs is permitted in the selling price to the JV.
We will have to see whether there is a profit on these sales to the JV.
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Post by alcc on Aug 17, 2014 20:49:44 GMT -5
Matt purposely left vague the discussion of what is to be included in COG (which would be the mechanism for which MNKD would be reimbursed for previously expensed Afrezza development costs). Although I agree with those who view this as unlikely, it is a possibility that cannot be ruled out until Matt does so. If he does confirm the reimbursement, it could almost be viewed as a binary event since the amount is so large. Trend I can't rule out finding a winning mega millions lottery ticket on the sidewalk. I just don't believe considering that slim possibility is part of a sound investment strategy. I think there would ordinarily not be a need to give a discourse on COGS because it is a fairly well defined accounting concept. What you, or others, are proposing is a radical departure from standard accounting. So what you are suggesting by saying that Matt left it purposely vague is that he did so to hide a material aspect of the agreement, involving hundreds of millions of dollars, which would be a huge departure from ordinary accounting. Couldn't agree more with Dreamboat. This thread keeps getting more ridiculous. All execs on both sides of this agreement should be summarily fired if they try to load past expenses, depreciation and amortization onto future COGS. On top of such convoluted nonsense, they then conspired for whatever reason to not fully disclose this!!?? Come on, let's bring some sanity and quality back to this board, shall we? |
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Post by ezrasfund on Aug 17, 2014 21:17:01 GMT -5
Let's look at Sanofi's side instead and ask if it is simpler or clearer. Their substantial investment and involvement [in] building a market-leading commercial infrastructure will be recognized? Just what does that mean as an "aspect" of the deal? And how is Sanofi going to charge the cost of marketing? Trials, regulatory submissions, or advertising might be clearly charged to the Afrezza JV. But what about when that crack sales force that has an established relationship with endocrinologists comes calling to sell Lantus and Afrezza and a lot of other products? Just how is that going to be apportioned to the JV? It's not really clear, and it's not just nickels and dimes.
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Post by ezrasfund on Aug 17, 2014 21:27:06 GMT -5
How will marketing by the sales force be charged to the Afrezza JV? What if it is strictly on a commission basis? That would mean the charges would ramp up slowly and not cost MNKD a lot of money in the early stages, unlike traditional marketing costs where the big upfront effort means big upfront costs. If it is not on a commission basis what other formulas could be applied that don't involve a lot of fuzzy math?
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Not at all, if they do clarify, market reaction will either be neutral if clarification is good or bad if bad. LOL,that's the MNKD/market way right now. And I can't see it any other way at this point. Things will change, I believe, but not for a while.