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Post by otherottawaguy on Aug 18, 2014 9:55:17 GMT -5
Populations: T1/T2 (and growing) US/CAN: 3M/ 27M Euro: 4M / 36M ROW: 21M / 190M (but lets say only 20% can afford the treatment) = 4M / 36M Potential Market: 11M / 99M Need to remove thoseT1s on pumps and those with COPD:10%  Lowered Potential Market: 10M / 99M Need to remove T2 currently managing via methodsother than Insulin: 75% (as you state treatment may need over haul when Afrezza is incorporated) Lower Potential Market 2:10M / 25M Net Market: 35M --------------------------------------------------------- Annual Cost (will be close to Pens): $2600 --------------------------------------------------------- Sobuilding the formula based on 1M patients (will allow us then to extrapolate for varying market share: 1M (patients) * (2600- (29%* (2600) [COGS])) * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.5)( [discount to end of 2015] = 1,000,000 * 1846 * 0.35 / 450,000,000 * 0.8848 = 646M / 450M * 0.8848 =1.27 EBITD Using a P/E of 18 = $22.86 PPS per million served Using Current Danbury Max Production of 375 = 22.86 / 1000k * 375K = 6.09 pps today. Looking to potential market shares in the future (no discounting: = 1M * 1846 * 0.35 / 450M) * 18 [PE] = 25.83 pps 2.0M = 5.7% of Potential Market = $51.68 pps (max capacity at Danbury) 3.5M = 10% of Potential Market = $90.45 pps 8.7M = 25% of Potential Market = $224.84 pps Just for laughs 17.5M = 50% of potential market = 452.27 pps These numbers do not include any other potential revenues from additional licensing or applications of Technosphere. Any additional feedback on numbers (ie population sizes and revenue calculation)would be appreciated. Enjoy the ride, OOG |
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Post by hammer on Aug 18, 2014 15:24:06 GMT -5
OOG, I was going to post a similar article today. Ironically, the results are very close. I based mine of the deal being equal to a 25% royalty deal. I have come to the conclusion based on what has been said at the JV CC and qrtly CC that MNKD will receive approx. $450.00 per patient per annum based on a 70% profit margin of the product. I know that seems high but with raw material delivered at cost, the inhaler at pennies, it comes down to manufacturing and packaging. 450 x 1,000,000 patients= 450,000,000 of a pps of 23 with a 20x multiple. Good Work! |
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Post by dreamboatcruise on Aug 18, 2014 17:11:51 GMT -5
Populations: T1/T2 (and growing) US/CAN: 3M/ 27M Euro: 4M / 36M ROW: 21M / 190M (but lets say only 20% can afford the treatment) = 4M / 36M Potential Market: 11M / 99M Need to remove thoseT1s on pumps and those with COPD:10% Lowered Potential Market: 10M / 99M ... These numbers do not include any other potential revenues from additional licensing or applications of Technosphere. Any additional feedback on numbers (ie population sizes and revenue calculation)would be appreciated. Enjoy the ride, OOG No COPD in Type 2? What about smokers? |
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Post by alcc on Aug 18, 2014 17:41:55 GMT -5
Corrections:
29% = totality of COGS plus allocatable expenses?? I seriously doubt it.
NVO is probably the best pure play analog re COGS, which is ~18-22% over the past 3 years.
SNY is likely to allocate something close to its SG&A ratio to Afrezza-related expenses, which is ~20-23%
So COGS + expenses should be closer to 38-45%, not the 29% you used.
Question: Is your $2600/yr for pens retail price or revenue to company?
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Post by otherottawaguy on Aug 19, 2014 13:59:48 GMT -5
alcc: addressing each of your points and adding few additional faults that I have observed with my valuation: P1 29% is the numbers that seem to have been provided by Matt during one of the CC's, if I am wrong then its an adjustment to be made. P2: Pen cost is based upon it being priced at 15% premium to old school inject regime which I have costed as $2300 * 1.15 = $2645 again if this incorrect, an adjustment can be made. Using the formula and my inputs I have noted some errors: 1M (patients) * (2600- (29%* (2600) [COGS])) * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.5)( [discount to end of 2015] = 1,000,000 * 1846 * 0.35 / 450,000,000 * 0.8848 Q1: Royalty Rate, is that based upon the Annual Cost to the user, or the supply cost to the pharmacy? What is the pharmacy markup, 20%? Market Size contributors Q2: As noted, I did not remove the COPD from the Type 2, nor did I remove the smokers from either population (don't think it will matter to smokers anyway, they don't listen to the Surgeon Generals advice  ). Assume a further reduction of the T2 to remove COPD, and what the hell, another for our smoking population as well. Neither of these affect the formula, just the numbers for calculating market size. Q3: How do we accommodate a change in the Pre-Diabetic treatment regiment. I have seen forecasts that this may double or even triple the size of the T2 population. I have decided to leave this out of the population calculations. Q4: Anyone care to discuss Type 3s (Alzheimer's)? best we leave that one for another thread. Q5: Not mentioning any other potential deals until they are announced and approved. Under current Dandbury max production of 3 lines using your COGS and not discounting for time we get: 375K (patients) * (2600- (45%* (2600) [COGS])) *.80[after pharma markup removed] * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.5)( [discount to end of 2015] =375k * 2600 * 0.55 * .80 * 0.35 / 450M * 18[P/E] =375k * $400 / 450M * 18 =375K * $0.000016 =$6 pps For max Dandbury (2M) 2M * $0.000016 =$32 If anyone can site anything else that should be considered, or provided differing numbers (with substantiation) I am all ears. OOG |
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Post by otherottawaguy on Sept 11, 2014 9:24:49 GMT -5
Wanted to correct my pricing, seems that I miss calculated the output capacity per line. Should have been 500k vs the 375k that I used. Under current Dandbury max production of 3 lines using your COGS and discounting for time: 500K (patients) * (2600- (45%* (2600) [COGS])) *.80[after pharma markup removed] * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.5)([discount to end of 2015] =500k * 2600 * 0.55 * .80 * 0.35 / 450M * 18[P/E] =500k * $400 / 450M * 18 =500K * $0.000016 =$8 pps (vs my previous estimate of $6) Read more: mnkd.proboards.com/thread/1213/share-current-value-believe-saying#ixzz3D16t6G4A |
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Post by otherottawaguy on Sept 11, 2014 13:37:26 GMT -5
Forgot to discount for time until end of 2015. In doing so should be closer to $7 today.
Under current Danbury max production of 3 lines using your COGS and discounting for time:
500K (patients) * (2600- (45%* (2600) [COGS])) *.80[after pharma markup removed] * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.5)([discount to end of 2015] * PE
=500k * 2600 * 0.55 * .80 * 0.35 / 450M * 0.885 * 18[P/E]
=500k * $400 / 450M * 15.92
=500K * $0.0000141
=$7.07 pps (vs my previous estimate of $6) |
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Post by Deleted on Sept 11, 2014 17:42:08 GMT -5
Couple things:
1) You're ignoring the nearly 1 billion in milestones (Which should show as pure profit and untaxed, right?)
2) There will be a two month head start on production, giving you roughly 583k patients in year 1
3) The 12 cartridge packs will increase production and should be ready in year 1.
And some others:
a) Isnt 18 P/E lowish?
b) Why not do your math assuming 25% royalty and eliminate the complexity of COGS/etc. PFeffer has all but equated these 2 on multiple occasions for "near term"
c) You are putting no value on them showing positive cash flow in 4Q14, although Ill admit Im not sure how large this will be.
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Post by dreamboatcruise on Sept 11, 2014 18:23:53 GMT -5
3) The 12 cartridge packs will increase production and should be ready in year 1. Just a small correction. It's "12 unit cartridge"... with the unit referring to amount of insulin in 1 cartridge. |
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Post by otherottawaguy on Nov 6, 2014 13:17:32 GMT -5
So we now have the equivalent of 3.2 (1 old + 2 at 110% old capacity) lines firing at 166000 annual dosages.
3.2 * 166K = 531K
And to drag out my old formulae with the updated inputs:
Under current Danbury max production of 3.2 lines using your COGS and discounting for time:
531K (patients) * (2600- (45%* (2600) [COGS])) *.80[after pharma markup removed] * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.16)([discount to end of 2015] * PE
=531k * 2600 * 0.55 * .80 * 0.35 / 450M * 0.910 * 18[P/E]
=531k * $400 / 450M * 16.38
=532K * $0.00001456
=$7.74 pps (vs my previous estimate of $7.07)
So we gained about 10% on the added capacity and a shorter timeframe to the end of 2015. This assumes that all three lines are avail at 1 Jan and negates the effects of the old line that may or may not be running at 100% / 24h capacity. Adding an additional amount for the realization of the Lump Sums should probably push this to estimate of the current pps to over $8 per share.
Enjoy,
OOG
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Post by jpg on Nov 6, 2014 14:10:39 GMT -5
So we now have the equivalent of 3.2 (1 old + 2 at 110% old capacity) lines firing at 166000 annual dosages. 3.2 * 166K = 531K And to drag out my old formulae with the updated inputs: Under current Danbury max production of 3.2 lines using your COGS and discounting for time: 531K (patients) * (2600- (45%* (2600) [COGS])) *.80[after pharma markup removed] * 35% [Royalty Rate] / 450M [Share Count w Warrants] * (1/(1.085 ^ 1.16)([discount to end of 2015] * PE =531k * 2600 * 0.55 * .80 * 0.35 / 450M * 0.910 * 18[P/E] =531k * $400 / 450M * 16.38 =532K * $0.00001456 =$7.74 pps (vs my previous estimate of $7.07) So we gained about 10% on the added capacity and a shorter timeframe to the end of 2015. This assumes that all three lines are avail at 1 Jan and negates the effects of the old line that may or may not be running at 100% / 24h capacity. Adding an additional amount for the realization of the Lump Sums should probably push this to estimate of the current pps to over $8 per share. Enjoy, OOG Hi OOG, Where I disagree with your price calculation is that you assume an extraordinary launch (maximum capacity utilization and half a million patients using Afrezza quickly) but use a PE of 18. If we get this kind of launch and uptake (maximum production and 1/2 million users quickly) I think the PE will be completely irrelevant in any calculation or analysis. We would be talking of one of the quickest uptakes of any drug ever. Lipitor, Plavix, Lantus (2 of them are from Sanofi!) would be the comparisons being used. The PE would be 100 or 1000 or whatever: it would be irrelevant. JPG |
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Post by otherottawaguy on Nov 6, 2014 15:10:57 GMT -5
JPG:
I would agree with your observations. I am just trying to a conservative estimate based upon capacity and that is why I kept the P/E at 18. I have had others comment on this that using as much as a 50 P/E would be appropriate for an new up and comer. I have also over padded the share count by 20-30 million as well.
As to the launch, I am of the personal opinion, that if Sanofi make a concerted effort, we will see those machines firing on all cylinders (3? or more) by the end of 2015.
Taking these two facts into consideration, I am assuming that we are running at 30% capacity at launch and 100% (3 lines) by Dec 2015 giving us an annual average of 48%. Combining this with the lower PE estimate vs the 30-50 factor gives me the number that I am pretty much calculating.
Just for fun though, as I plan to hold this for another few years lets take the calculation that they will be built out to 12 lines at some point.
7.74 / 532 (current capacity) * 2184 (max cap) * 1/.91 (giving back time discount)
= 34.94 per share (at some future date).
When this happens (and not if), I would assume that on the way there we would see a much high PE as you suggest.
Best wishes,
OOG
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Post by Deleted on Nov 6, 2014 15:29:14 GMT -5
I'd offer a few comments:
* I still dont agree with a P/E of 18. Maybe for established pharm companies with predictable/established sales, but here I feel as if its 30-50 P/E
* All expenses (for lack of better clarity) will be covered by all milestones, plus enough cash left over, therefore for the first few quarters, I suspect profit will be 0.25-0.35 on every dollar of revenue.
Otherwise, I'm in the same ballpark as your numbers.
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ek
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Post by ek on Nov 16, 2014 8:35:11 GMT -5
All your estimates need to be reduced between 30-45%....not sure why you are using EBITD in your calculation instead of net profit (including taxes, depreciation & interest). Why would you use EBITD? Why not EBITDA? lol. Anyways, take those estimates down.....you still paint a rosey picture on the future.
If you look at SNY, they have a 11% NPM.....we're saying MNKD will have a 40% NPM? Seems unrealistic too. Just saying.
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Post by jpg on Nov 16, 2014 13:53:40 GMT -5
All your estimates need to be reduced between 30-45%....not sure why you are using EBITD in your calculation instead of net profit (including taxes, depreciation & interest). Why would you use EBITD? Why not EBITDA? lol. Anyways, take those estimates down.....you still paint a rosey picture on the future. If you look at SNY, they have a 11% NPM.....we're saying MNKD will have a 40% NPM? Seems unrealistic too. Just saying. Hi EK, You seem to think OOG is being to generous as far as Mannkind valuation? Why? What is NPM? And why ate you comparing Sanofi with Mannkind? Aside from the fact they have a partnership they are extremely different companies. Kind of like comparing Microsoft to a small promising startup software company. Thank you, JPG |
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). Assume a further reduction of the T2 to remove COPD, and what the hell, another for our smoking population as well. Neither of these affect the formula, just the numbers for calculating market size.