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Post by yossarian on Apr 22, 2015 14:07:56 GMT -5
Assuming AFREZZA works as well as early adopters are saying, we need to figure out how this translates to share earnings. Based on a 450 million share count (I know that is 50 million above issued shares but being conservative) and given the price of a script reported by Symphony of $470+, what will it take in scripts written given the Sanofi partnership for MNKD to make $1.00 a share, i.e, how many scripts have to be written for MANNKIND to gross $450 million. When I get more time, I'll try to come up with an estimate, but anybody able to provide some calculations and estimates. Guess do need some idea of what it costs to make the stuff. Can anybody be of help here?
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Post by Deleted on Apr 22, 2015 14:20:24 GMT -5
Use the search function. A bunch of us have already done this math before.
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Post by yossarian on Apr 22, 2015 15:08:51 GMT -5
I guess I didn't see the post for the number of scripts that were necessary.
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Post by otherottawaguy on Apr 22, 2015 15:24:18 GMT -5
Just doing the quick numbers:
MNKD is receiving 20% of $250 or approx. $50 per box.
450M / 50 = 9M boxes = 9M / (1.5 * 12) (most user are seeing 1.5 boxes per month) = 500,000 annual users
Not possible to meet this demand until lines 2 & 3 start production.
OOG
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Post by benh on Apr 22, 2015 15:34:04 GMT -5
As Oog says and here's a bit extra:
June 2016 at 15% wk/wk growth would hit that number and would need more than 3 lines to cope.
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Post by otherottawaguy on Apr 22, 2015 15:55:46 GMT -5
I have posted another calculation that shows Demand outstripping Capacity in November even with three lines firing from beginning of April if we see a week over week growth rate of 18%.
This 18% isn't looking like it is happening any longer but my model also assumed only 1 box per month and not the current viewed consensous of 1.5 boxes per month. Maybe a 12% is more applicable with 1.5 boxes. Will need to adjust the timelines for when lines 2 & 3 actually came on line, along with the 12u availability.
Might be time for me to go back and review it using the "new" numbers over the last 12 weeks.
OOG
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Post by yossarian on Apr 23, 2015 8:17:43 GMT -5
Here's a down and dirty back of the envelope calculation. AFREZZA according to Symphony data has an average selling price of $470 a script. Assuming a 100% markup (and it is probably much higher but lets be conservative), that gives a cost to Mannkind/Sanofi of $235 a script and a profit of $235 a script. (note this is very conservative as the markup is probably way higher). MNKD under the partnership agreement gets 35% of it or $82.25 a script. This assumes the $235 is all profit, wildly optimistic I know, but this is a back of the envelope calculation. So to gross $450,000,000 AFREZZA needs 5,471,124 scripts. According to Symphony data as of the week ending April 10, 2015, there were cumulative scripts of 1688. We are 0003.08% of the way there. Note: the markup is in all probability significantly higher so that would very significantly change the calculation.
Obviously to only make a penny a share the number of scripts is only 54,712 and we're 3.08% of the way there. So to be more optimistic, MANNKIND is 3% of the way to breaking even!!!
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Post by traderdennis on Apr 23, 2015 8:27:30 GMT -5
Note: the markup is in all probability significantly higher so that would very significantly change the calculation.
Obviously to only make a penny a share the number of scripts is only 54,712 and we're 3.08% of the way there. And we can not expect to see full retail price either as sales. Insurance company pre negotiated pricing will bring the net price per script down as sales scale up.
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Post by yossarian on Apr 23, 2015 8:40:29 GMT -5
A poster on the Investor Village Board suggests the cost of product is only 10% of the price. I have no basis to judge, but if the cost of product is only 10%, than of that $470 average cost, $423 is potential profit (yes I know a lot of costs get deducted from that) and MNKD's share is $148. But if so we're much closer to break even. We would only need 30406 scripts to break even and already have 1688 as of week ending April 10, 2015 according to Symphony data. If so, we are 5.56% of the way there.
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Post by Deleted on Apr 23, 2015 8:56:15 GMT -5
Ben and I have run through the numbers and the cost to produce based on our calcs is around $15/box.
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Post by ezrasfund on Apr 23, 2015 9:13:49 GMT -5
It should be simple to calculate a ballpark COGS from the information we have. If a 33% share of the profits represents the equivalent of a mid-20% (let's say 25% to keep it simple) royalty rate (per Matt) then the price paid to the Joint Venture is 75% profit (one third to MNKD) and 25% COGS. This makes sense to me as there does not seem to be anything very expensive about the process, the raw materials or the inhaler. What was expensive was drug development, FDA approval and tooling up for manufacturing.
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Post by Deleted on Apr 23, 2015 9:17:41 GMT -5
It should be simple to calculate a ballpark COGS from the information we have. If a 33% share of the profits represents the equivalent of a mid-20% (let's say 25% to keep it simple) royalty rate (per Matt) then the price paid to the Joint Venture is 75% profit (one third to MNKD) and 25% COGS. This makes sense to me as there does not seem to be anything very expensive about the process, the raw materials or the inhaler. What was expensive was drug development, FDA approval and tooling up for manufacturing. I hope that's true because if the cost to produce afrezza is truly that low then mnkd/sano have the ability to agressively price afrezza in the marketplace (which I wish there were doing up front now in a more direct manner instead of the rebate cards).
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Post by yossarian on Apr 23, 2015 9:30:05 GMT -5
So what is your calculation for how many scripts are necessary to breakeven and how do you arrive at the number?
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Post by Deleted on Apr 23, 2015 9:55:25 GMT -5
90,000 boxes to breakeven based on our work.
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Post by yossarian on Apr 23, 2015 10:57:08 GMT -5
90,000 boxes translates into how many scripts?
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