The Billion Dollar Question (Market Cap)
Dec 18, 2022 9:48:42 GMT -5
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sportsrancho, sr71, and 6 more like this
Post by tarheelblue004 on Dec 18, 2022 9:48:42 GMT -5
What is a reasonable amount that MannKind can make on DPI royalties (and secondarily, manufacturing) in Q4? I find myself caught between a top-down estimate that shows DPI revenue maybe doubling vs. a bottoms-up view using Symphony revenue + UTHR statements + common sense that is telling me it could be 3-4X higher. Let me explain, and I would love your thoughts.
Top-down estimate: $250M in Q3 Tyvaso revenue for UTHR * 50% expected penetration for DPI vs. nebulizar * 12.5% royalty would put the total royalty MNKD could earn at $15.6M for last quarter (Q3). $6.8M royalty put us at 44% penetration of all expected Tyvaso patients - current and new ones - within the first three months of launch. I found this startlingly high, and providing us little room to grow to the max we should expect. If $15.6M grows 10% with new patients to $17.1M in Q4, doubling our royalty from $6.8M to $13.6M would put us at 80% of the penetration of the Tyvaso population we’d expect to achieve, all within the first 6 months of launch. 2.5X Q3 royalties, or $17.1M in Q4, would represent 100% penetration.
Bottoms-up estimate: Symphony showed meager sales in Q3 while we reported $6.8M in royalties. Symphony is now showing ~4X sales of Tyvaso DPI in Q4 than it did in Q3. Couple that with statements from UTHR in the last CC (“already at 50% of new referrals”, “warm embrace by patients + physicians + payers”, “star of the show”, “500 Tyvaso referrals making their way through insurance, excluding referrals to transition from nebulizar to DPI”, “average monthly Tyvaso referrals in each of the last three months ~75% greater than the average monthly referrals pre DPI launch”, and many more) and it would seem DPI is growing rapidly compared to the previous quarter, where they did not talk about DPI this way at all. I think 3-4X growth seems reasonable given all this, guided by the Symphony trends.
So…what gives? Is 12.5% actually too low for royalty %? Originally I’d thought it was 10%, but when we came out with $6.8M in Q3 I had to revise upwards to make any sense of the numbers. Should we assume we will actually capture more than 50% of Tyvaso patients, in which case the max values are too low? Could a dark horse be the year of inventory build up we have speculated about? Anything else obvious I am missing here?
Thoughts are much appreciated!
Top-down estimate: $250M in Q3 Tyvaso revenue for UTHR * 50% expected penetration for DPI vs. nebulizar * 12.5% royalty would put the total royalty MNKD could earn at $15.6M for last quarter (Q3). $6.8M royalty put us at 44% penetration of all expected Tyvaso patients - current and new ones - within the first three months of launch. I found this startlingly high, and providing us little room to grow to the max we should expect. If $15.6M grows 10% with new patients to $17.1M in Q4, doubling our royalty from $6.8M to $13.6M would put us at 80% of the penetration of the Tyvaso population we’d expect to achieve, all within the first 6 months of launch. 2.5X Q3 royalties, or $17.1M in Q4, would represent 100% penetration.
Bottoms-up estimate: Symphony showed meager sales in Q3 while we reported $6.8M in royalties. Symphony is now showing ~4X sales of Tyvaso DPI in Q4 than it did in Q3. Couple that with statements from UTHR in the last CC (“already at 50% of new referrals”, “warm embrace by patients + physicians + payers”, “star of the show”, “500 Tyvaso referrals making their way through insurance, excluding referrals to transition from nebulizar to DPI”, “average monthly Tyvaso referrals in each of the last three months ~75% greater than the average monthly referrals pre DPI launch”, and many more) and it would seem DPI is growing rapidly compared to the previous quarter, where they did not talk about DPI this way at all. I think 3-4X growth seems reasonable given all this, guided by the Symphony trends.
So…what gives? Is 12.5% actually too low for royalty %? Originally I’d thought it was 10%, but when we came out with $6.8M in Q3 I had to revise upwards to make any sense of the numbers. Should we assume we will actually capture more than 50% of Tyvaso patients, in which case the max values are too low? Could a dark horse be the year of inventory build up we have speculated about? Anything else obvious I am missing here?
Thoughts are much appreciated!