Afrezza Consignment Model
Jan 7, 2022 15:49:34 GMT -5
sportsrancho, sweedee79, and 11 more like this
Post by sr71 on Jan 7, 2022 15:49:34 GMT -5
Detailed below are 3 sources in which Mannkind CEO Michael Castagna has made reference to the new Afrezza “Consignment Model”.
#1 - From the November 9, 2021 Mannkind 3Q 2021 Earnings Call transcript from Seeking Alpha (with typo's):
seekingalpha.com/article/4467643-mannkind-corporation-mnkd-ceo-michael-castagna-on-q3-2021-results-earnings-call-transcript
“The third focus is launching a consignment model of top 3 pharmacy chain. And what this means is instead of having middleman involved in our inventory chain of command, we will now have inventory stockpiled with a third-party chain, which will improve patient access ultimately decreased costs along the value chain.”
#2 - From the same Earnings Call, the associated Slide #7 titled “Afrezza Q4 Focus”:
static.seekingalpha.com/uploads/sa_presentations/472/76472/original.pdf
“Creating consignment model with a top 3 pharmacy chain to improve patient access”
“Launching pilot to help improve patient retention during first 12 weeks of treatment “
#3 - From the December 13, 2021 Lytham Partners Winter 2021 Investor Conference Presentation by Michael Castagna (transcribed by sr-71 from the archived link available from Mannkind's website) - Beginning at 17:16 in the video:
investors.mannkindcorp.com/events/event-details/lytham-partners-winter-2021-investor-conference
“ … so on the consignment model, we moved a chunk of our business from the wholesalers to the consignment model with one of the retail chains; we're not saying who it is. It's a couple of weeks in and I have only heard of minor disruption so far, we will see when we get the data in. But that will be a Q4 event that we'll know once we wrap up the year, but so far it seems like it's going fine and it's critical to our permanent care pilot because one of the things we are doing is lowering the price of Afrezza to $35. So anyone on Medicare can't complain, they are going to have access to Afrezza for $35. That's huge. Medicare is about 40% of the insulin market and we think it is an opportunity to help a lot of patients. So let's see how it goes, but that's one thing the consignment model enables us to do at a lower cost, to bring the cost down to people living with diabetes … “
Several key conclusions can be drawn from these references:
I look forward to hearing other MNKD ProBoards members' thoughts on the consignment model.
#1 - From the November 9, 2021 Mannkind 3Q 2021 Earnings Call transcript from Seeking Alpha (with typo's):
seekingalpha.com/article/4467643-mannkind-corporation-mnkd-ceo-michael-castagna-on-q3-2021-results-earnings-call-transcript
“The third focus is launching a consignment model of top 3 pharmacy chain. And what this means is instead of having middleman involved in our inventory chain of command, we will now have inventory stockpiled with a third-party chain, which will improve patient access ultimately decreased costs along the value chain.”
#2 - From the same Earnings Call, the associated Slide #7 titled “Afrezza Q4 Focus”:
static.seekingalpha.com/uploads/sa_presentations/472/76472/original.pdf
“Creating consignment model with a top 3 pharmacy chain to improve patient access”
“Launching pilot to help improve patient retention during first 12 weeks of treatment “
#3 - From the December 13, 2021 Lytham Partners Winter 2021 Investor Conference Presentation by Michael Castagna (transcribed by sr-71 from the archived link available from Mannkind's website) - Beginning at 17:16 in the video:
investors.mannkindcorp.com/events/event-details/lytham-partners-winter-2021-investor-conference
“ … so on the consignment model, we moved a chunk of our business from the wholesalers to the consignment model with one of the retail chains; we're not saying who it is. It's a couple of weeks in and I have only heard of minor disruption so far, we will see when we get the data in. But that will be a Q4 event that we'll know once we wrap up the year, but so far it seems like it's going fine and it's critical to our permanent care pilot because one of the things we are doing is lowering the price of Afrezza to $35. So anyone on Medicare can't complain, they are going to have access to Afrezza for $35. That's huge. Medicare is about 40% of the insulin market and we think it is an opportunity to help a lot of patients. So let's see how it goes, but that's one thing the consignment model enables us to do at a lower cost, to bring the cost down to people living with diabetes … “
Several key conclusions can be drawn from these references:
- This is a partnership with a Top 3 pharmacy chain.
- Afrezza inventory is to be stockpiled with this 3rd party chain, which will lower costs by reducing dependence upon pharmaceutical wholesalers.
- This model is closely linked to Mannkind's new Permanent Care Pilot program, which will lower the price of Afrezza to $35 for, in MC's exact words, “anyone on Medicare”. He also states “That's huge. Medicare is about 40% of the insulin market”.
- There are many unknowns. For instance, it's currently unclear how this much lower sales revenue per prescription will eventually become profitable. Perhaps the strategy is to go for hockey stick growth in market share, while looking for opportunities to become more efficient while perhaps attempting to raise prices later?
- The consignment model does not appear to have any association with Medicare's “Part D Senior Savings Model”, which, as nylefty has graciously pointed out many times, requires voluntary participation by Part D Medicare Plan Providers, and we are unaware of any who have opted in for Afrezza. However, it's interesting is that the $35 insulin price point to Medicare patients is common to both programs.
I look forward to hearing other MNKD ProBoards members' thoughts on the consignment model.
