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Post by Clement on Oct 12, 2022 10:47:17 GMT -5
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Post by Clement on Oct 12, 2022 10:52:22 GMT -5
Estimate for Q3 2022 ($ in millions): a) Afrezza 12.9 b) VGO 5.6 c) T-DPI royalties 2.3 d) Collaboration and services -- T-DPI manufacturing 7.4 e) Collaborations and services -- other, not manufacturing 1.0 f) Recognition of deferred revenue 2.7 Total net revenue 31.9 Explanations: a) $10.6 million in Q2 2022. Look at Earl Grey’s chart for cumulative delta, add the weeks since the chart, and find that Q3 beats Q2 by at least 7.8 - 4 = 3.8 million dollars . That’s gross revenue so multiply by 60%* to get net revenue, ie, 3.8 times 60% = 2.3 million more in Q3. Then 10.6 + 2.3 = 12.9. b) If you sum the 13 weeks ending 9/30/2022 of VGO Symphony sales (from kippyt posts), you get $11.3 mm for gross revenue in Q3. Use 50%* to calculate net revenue from gross revenue. Net revenue VGO in Q3 2022 will be $5.6 million. c) Total Tyvaso net revs (for UT) in Q1 2022 = $172 million. Q2 = $201 million. Project linearly to Q3 and you get $235 million for Q3. Assume DPI is 1/3 of that so $78 million. Royalties would be 10% of that so $7.8 million. However, royalties do not apply to free samples. Let's say that free samples will be 70%. Then 30% of $7.8 million is $2.3 million. d) T-DPI manufacturing charges to UT are on a cost plus basis. From slide 15 in the Q1 Earnings Call, “Tyvaso DPI Manufacturing Costs: -Recognized as Expense … $7.4M in 1Q” investors.mannkindcorp.com/static-files/54fb543b-0b61-4b20-9c99-9e52fe8d2e0aMy guess is that T-DPI manufacturing-cost-plus revenue for Q3 is greater than or equal to this number from Q1. This is not exactly apples to apples since in Q3 what is sold to UT is now counted as revenue (not deferred revenue). e) That's near the minimum compared to the last 8 quarters. f) As of June 30, 2022, there's $29.8 million of deferred revenue on the balance sheet which someday will be recognized. From the Q2 Earnings Call**, half of 4.1 million (deferred in Q2) will be recognized in Q3 and the rest over almost 10 years. Half of 4.1 = 2.0. (29.8 – 2.0)/40quarters = 0.7 per quarter. 2.0 + 0.7 = 2.7. *From the Q2 earnings call slide deck, go to slide 13 to find GTN% for Afrezza and VGO. Then 100% - GTN% = ~60% for Afrezza and ~50% for VGO. investors.mannkindcorp.com/static-files/86895e3e-5ce8-4199-812a-6577f2a35934**From the Q2 earnings call: "And we deferred $4.1 million of revenue to the balance sheet in the second quarter, of which approximately half is associated with inventory that sits on our balance sheet and is expected to be sold to UT in the third quarter when we will recognize the associated deferred revenue to income. Beginning in the second quarter, we have started to recognize prior period deferred revenue for manufacturing services and expect to do so throughout the life of the manufacturing contract with UT, which runs 2031. There was a total of $29.8 million of deferred revenue associated with UT on our balance sheet as of June 30, 2022." www.fool.com/earnings/call-transcripts/2022/08/10/mannkind-corporation-mnkd-q2-2022-earnings-call-tr/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article |
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Post by Clement on Oct 12, 2022 15:47:50 GMT -5
+68% QoQ
(estimate Q3 2022) over (actual Q2 2022) = 31.9 / 18.9 = 1.68
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Post by bthomas55ep on Oct 12, 2022 19:29:07 GMT -5
+68% QoQ (estimate Q3 2022) over (actual Q2 2022) = 31.9 / 18.9 = 1.68 If quarterly Earnings comes in near those estimates, MNKD goes from an $80M dollar company to more the at $120 Million run rate. Surely that can put the market cap back towards $1B again if it can demonstrate it's growth rate... |
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Post by Clement on Oct 12, 2022 19:59:40 GMT -5
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Post by ronw77077 on Oct 16, 2022 14:30:08 GMT -5
Clement, this is a well thought out analysis, with which I mostly agree. Two points of difference are:
1) I guess (and just a guess) that the royalty rate will be slightly higher - I think 12% rather than 10%. My shaky basis is that in my experience when financial types use the term "low double digits" they often were talking about 11-13%, but we will know soon enough.
2) My larger difference is the percent for manufacturing cost reimbursement. To me, this is the hardest number to speculate about since info MNKD has put out is unclear.
Observations and analysis from the Q2 10-Q. Refer to the Notes to the Condensed Consolidated Financial Statements. See “Section 10. Collaboration, Licensing and Other Arrangements”.
Section 10 deals with the CSA, being the Commercial Supply Agreement with UT. The CSA continues until December 31, 2031 (i.e., for 9.5 years). For simplicity, in my math below I will assume the data is for a 10-year period.
Let me start with the easy part. See the third table, the first line of which says:
Total Anticipated cash flow (2) - $463.5 million.
Note (2) to the third table states:
“The total anticipated cash flow includes a transaction price of $64.3 million for the contractual obligations under the CSA for the Manufacturing Services and the Next-Gen R&D Services performance obligations and $399.2 million for future supply of Tyvaso DPI over the remaining term of the CSA. The Next-Gen R&D services is a small amount and I will ignore.
I read Note (2) to say that the 10-Q posits future revenue from supplying DPI to UT over 10 years at $399.2 million and that the “transaction price” of $64.3 million is the assumed cost markup. If that is correct, then the table is assuming a cost markup of 16% (64.3/399.2). Am I correct? As a point of reference, UT’s Q2 10-Q reveals that its cost of Tyvaso product sales, its largest revenue stream of $201 million, is 3.2%, but its cost on smaller product revenue streams is higher (e.g., Orenitram and Unituxin at 8% and for the much smaller Adcirca revenue its 45%). And of course, MNKD is a third-party manufacturer, so 16% seems to be a reasonable assumption.
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Post by Clement on Nov 4, 2022 14:44:13 GMT -5
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Post by ronw77077 on Nov 4, 2022 15:12:26 GMT -5
Excellent observation. If revenue was in fact 50% Tyvaso and 50% DPI, then we have 17K (or hopefully a large portion of that) related to 129K of revenue which would be 13%. Since we know the royalty is not less than 10%, I expect that the DPI revenue was less than 129K as I strongly doubt that markup on manufacturing costs could only be 3%. We'll know more in a few days.
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Post by Thundersnow on Nov 4, 2022 15:23:48 GMT -5
Estimate for Q3 2022 ($ in millions): a) Afrezza 12.9 b) VGO 5.6 c) T-DPI royalties 2.3 d) Collaboration and services -- T-DPI manufacturing 7.4 e) Collaborations and services -- other, not manufacturing 1.0 f) Recognition of deferred revenue 2.7 Total net revenue 31.9 Explanations: a) $10.6 million in Q2 2022. Look at Earl Grey’s chart for cumulative delta, add the weeks since the chart, and find that Q3 beats Q2 by at least 7.8 - 4 = 3.8 million dollars . That’s gross revenue so multiply by 60%* to get net revenue, ie, 3.8 times 60% = 2.3 million more in Q3. Then 10.6 + 2.3 = 12.9. b) If you sum the 13 weeks ending 9/30/2022 of VGO Symphony sales (from kippyt posts), you get $11.3 mm for gross revenue in Q3. Use 50%* to calculate net revenue from gross revenue. Net revenue VGO in Q3 2022 will be $5.6 million. c) Total Tyvaso net revs (for UT) in Q1 2022 = $172 million. Q2 = $201 million. Project linearly to Q3 and you get $235 million for Q3. Assume DPI is 1/3 of that so $78 million. Royalties would be 10% of that so $7.8 million. However, royalties do not apply to free samples. Let's say that free samples will be 70%. Then 30% of $7.8 million is $2.3 million. d) T-DPI manufacturing charges to UT are on a cost plus basis. From slide 15 in the Q1 Earnings Call, “Tyvaso DPI Manufacturing Costs: -Recognized as Expense … $7.4M in 1Q” investors.mannkindcorp.com/static-files/54fb543b-0b61-4b20-9c99-9e52fe8d2e0aMy guess is that T-DPI manufacturing-cost-plus revenue for Q3 is greater than or equal to this number from Q1. This is not exactly apples to apples since in Q3 what is sold to UT is now counted as revenue (not deferred revenue). e) That's near the minimum compared to the last 8 quarters. f) As of June 30, 2022, there's $29.8 million of deferred revenue on the balance sheet which someday will be recognized. From the Q2 Earnings Call**, half of 4.1 million (deferred in Q2) will be recognized in Q3 and the rest over almost 10 years. Half of 4.1 = 2.0. (29.8 – 2.0)/40quarters = 0.7 per quarter. 2.0 + 0.7 = 2.7. *From the Q2 earnings call slide deck, go to slide 13 to find GTN% for Afrezza and VGO. Then 100% - GTN% = ~60% for Afrezza and ~50% for VGO. investors.mannkindcorp.com/static-files/86895e3e-5ce8-4199-812a-6577f2a35934**From the Q2 earnings call: "And we deferred $4.1 million of revenue to the balance sheet in the second quarter, of which approximately half is associated with inventory that sits on our balance sheet and is expected to be sold to UT in the third quarter when we will recognize the associated deferred revenue to income. Beginning in the second quarter, we have started to recognize prior period deferred revenue for manufacturing services and expect to do so throughout the life of the manufacturing contract with UT, which runs 2031. There was a total of $29.8 million of deferred revenue associated with UT on our balance sheet as of June 30, 2022." www.fool.com/earnings/call-transcripts/2022/08/10/mannkind-corporation-mnkd-q2-2022-earnings-call-tr/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=articleThanks for the analysis but I have a question on #3 - If Q2 Sales of Tyvaso sales were $201M how do you get $304K to MNKD in Royalties? The linear numbers don't add up for Q3. You could assume the DPI ratio was probably 95/5 since they only had 1 month on the market. I would pull back on the ratio in this Qtr. to maybe 85/15? |
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Post by Clement on Nov 4, 2022 15:37:52 GMT -5
Estimate for Q3 2022 ($ in millions): a) Afrezza 12.9 b) VGO 5.6 c) T-DPI royalties 2.3 d) Collaboration and services -- T-DPI manufacturing 7.4 e) Collaborations and services -- other, not manufacturing 1.0 f) Recognition of deferred revenue 2.7 Total net revenue 31.9 Explanations: . . . Thanks for the analysis but I have a question on #3 - If Q2 Sales of Tyvaso sales were $201M how do you get $304K to MNKD in Royalties? The linear numbers don't add up for Q3. You could assume the DPI ratio was probably 95/5 since they only had 1 month on the market. I would pull back on the ratio in this Qtr. to maybe 85/15? "Q2 Sales of Tyvaso sales were $201M" refers to sales of both Tyvaso-nebulizer and Tyvaso-DPI. UTHR does not give us a breakout on those two. 0.3 mm in royalties in Q2 was reported by Mannkind. We know that launch of T-DPI happened in the 3rd month of that quarter (June), and MC told us it takes weeks for paperwork to be done to complete an actual sale to a patient. That's why royalties were small in Q2 but will be much larger in Q3. Definitely non-linear, as you said. |
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Post by robbmo on Nov 4, 2022 15:58:24 GMT -5
I believe most of the items listed in "Cost of Product Sales" goes to Mannkind. Except, possibly some of overhead, and who know what "and more" entails. So, my guess is, MNKD gets the bulk of it. |
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Post by Clement on Nov 4, 2022 16:10:09 GMT -5
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Post by JEvans on Nov 4, 2022 16:47:50 GMT -5
UTHR posted 3Q Tyvaso sales over 250m. I thought MNKD royalties were somewhwere between 10%-19% which at a minimum whould be 25m
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Post by neil36 on Nov 4, 2022 16:55:33 GMT -5
UTHR posted 3Q Tyvaso sales over 250m. I thought MNKD royalties were somewhwere between 10%-19% which at a minimum whould be 25m Martine spoke in general terms that “about 50”%” was Tyvaso DPI. That most likely represents the tail end of the quarter. Royalties are in the low double digits. I’ve always assumed that is 10%. But theoretically could be as high as 14%. Last quarter royalties were $300,000. I’m expecting at least $3 million, but that could be wildly high or low. This will take a couple quarters to establish clear trends on conversion rates to (DPI) and the resulting royalty stream. |
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Post by celo on Nov 4, 2022 19:14:40 GMT -5
I think any analyst can figure approx. what MNKD's revenue will be from Tyvaso DPI. I believe in the management to create revenue streams from different products. They have done well, so far.
Future potential share purchasers will be looking if mannkind can turn all the revenue into profitability or close to profitability. If all the revenue is flowing into overhead and they continue to show losses than the share price won't move.
IMO
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