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Post by Deleted on May 11, 2015 15:18:51 GMT -5
If SNY is dragging their feet, would not surprise me if Al or a hired hand would reach out to other big pharma mfgs. At this point, Afrezza, while only being used by a small # of people is showing excellent results. Al could kill the SNY deal on Friday and announce a new one with GSK or another biggie on Monday. Unlikely but stranger things have happened. ok.. so lets say that SNY dragging their feet on purpose.. Mid August is the timeframe where MNKD can say hasta.......... will they? are there any other suitors? If so it really doesn't matter how much SNY was dragging their feet.. MNKD will say hasta SNY especially if there are other BP ready to chime in. This is why I don't think SNY was dragging their feet but if they were I"m sure they are changing their tune with social media results.. MNKD should get a 20% additional premium above and expected buyout price for "bad faith"
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Post by dreamboatcruise on May 11, 2015 15:54:00 GMT -5
Obviously Sanofi giving up is the big deal that scares everyone. Then again why would they? It's not as if Afrezza is that expensive to keep around and nothing would hurt their competition more then this while giving them a really interesting tool. I don't recall many pharmas giving up on highly effective drugs. These things take time and Sanofi knows this. In the drug business we are still very very early in the game. JPG & EoD- I'm not saying Sanofi is giving up/lost interest as I don't think that is the case but after dialog with a few Sanofi reps I'm getting the vibe they are prioritizing T over A for some period of time. I recommend you find a rep responsible for diabetes sales and ask them first hand - this is our real blind spot. This is also a blindspot to Mannkind and as Matt P. actually returned a call a few weeks ago after my wife left him a vmail. He was kind enough to call back and was very nice but he shared their surprise at the slow uptake, said we're working to fix the "problems" and mentioned there was never any language about a "dedicated" sales force. He asked my wife to forward one of the emails we had from a Sanofi rep. That whole conversation blew my mind and showed me MannKind has zero control or leverage right now. We're on Sanofi time now. My most recent interaction is a party line of "access to physicians is tougher now, spirometry requirements have delayed uptake, etc..". These are all things both teams knew as we waited for the past year. Sanofi has some window (not sure exact timing) before the Lantus generics and Toujeo competitors hit the market New CEO has to seize the opp to keep the $7B annual revenue stream intact. Many thought the new CEO was great for Afrezza as he had experience with this at Pfizer. If he did it was experience based in reality that at best this is a hard change to make that will take time. As for the reps, I was off, my mistake 1200 to 800 - thanks Spiro. Still bad performance as those numbers look like the early docs are just writing more scripts and not many new docs writing scripts. That's just my perception as we're stuck in the 200s which doesn't make sense with all the real-life evidence on social media and support from the online diabetic community. I'm back to waiting this out again. If these contacts are credible as SNY reps, your wife or someone should tell Matt that this really needs to be addressed at shareholder meeting. Have these reps given any specific SNY actions that back up a general claim that SNY is not fully supporting Afrezza... e.g. that their commission structure is far better for Toujeo, that they are restricted on amount of time that they can spend on Afrezza, etc.
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Post by dstevenson on May 11, 2015 17:01:34 GMT -5
JPG & EoD- I'm not saying Sanofi is giving up/lost interest as I don't think that is the case but after dialog with a few Sanofi reps I'm getting the vibe they are prioritizing T over A for some period of time. I recommend you find a rep responsible for diabetes sales and ask them first hand - this is our real blind spot. This is also a blindspot to Mannkind and as Matt P. actually returned a call a few weeks ago after my wife left him a vmail. He was kind enough to call back and was very nice but he shared their surprise at the slow uptake, said we're working to fix the "problems" and mentioned there was never any language about a "dedicated" sales force. He asked my wife to forward one of the emails we had from a Sanofi rep. That whole conversation blew my mind and showed me MannKind has zero control or leverage right now. We're on Sanofi time now. My most recent interaction is a party line of "access to physicians is tougher now, spirometry requirements have delayed uptake, etc..". These are all things both teams knew as we waited for the past year. Sanofi has some window (not sure exact timing) before the Lantus generics and Toujeo competitors hit the market New CEO has to seize the opp to keep the $7B annual revenue stream intact. Many thought the new CEO was great for Afrezza as he had experience with this at Pfizer. If he did it was experience based in reality that at best this is a hard change to make that will take time. As for the reps, I was off, my mistake 1200 to 800 - thanks Spiro. Still bad performance as those numbers look like the early docs are just writing more scripts and not many new docs writing scripts. That's just my perception as we're stuck in the 200s which doesn't make sense with all the real-life evidence on social media and support from the online diabetic community. I'm back to waiting this out again. If these contacts are credible as SNY reps, your wife or someone should tell Matt that this really needs to be addressed at shareholder meeting. Have these reps given any specific SNY actions that back up a general claim that SNY is not fully supporting Afrezza... e.g. that their commission structure is far better for Toujeo, that they are restricted on amount of time that they can spend on Afrezza, etc. Based off of haken needing to fly over to France to have a meeting with them shows me that mnkd is aware of the lack of attention Sanofi is giving A, and he said its "addressed" So Sanofi was moving slow with MNKD, but I can tell MNKD did not know the plan would be this slow and it has come to their attention. How things move from here will depend on how big of a fire he lit under their ass
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Post by james on May 12, 2015 22:04:40 GMT -5
I avoided posting on this until the noise turned down a bit. Here are some of my principle thoughts:
Al should step aside from speaking on the calls at this point. It would be great to hear from him from time to time, perhaps a few moments to express his confidence in the management team, but I just don't think he's able to set a good tone for the calls anymore. That didn't get things off on the right foot for this one.
I agree that Hakan's approach to describing the barriers to adoption was unfortunate. But, he was coherent in what was said and I found no fault in the remedies being outlined. I think the main issue is that folks are latching onto the idea that management has been caught unaware of the problems they are now facing. Keep in mind that this is entirely Sanofi's game in that respect; there's almost nothing MNKD can or should do at this point other than have discussions with the Sanofi team. It sure sounds like they are doing that. Moreover, much of what Sanofi is doing appears to be bearing fruit and the activity level looks to be ramping up. Recent revelations that the initial target set was for well controlled patients shows that there is more logic to the process then folks are giving credit for.
On the convertible debt issue - something unseen is brewing in the house on this. Matt was very direct in stating that no dilutive financing is planned. He was also clear in stating that the cash would be in hand to simply retire the debt if desired (though I really doubt it will happen that way). With cash burn at $21M per quarter, a Deerfield required minimum cash balance of $25M at end of quarter and $120M in cash on hand does not add up to paying off $100M. Is another milestone payment near - specifically one of the undisclosed regulatory or development milestones? I also think there would be some difficulty refinancing with a similar instrument unless there are elements to the liquidity picture that are not in view to us.
The discussion of sales revenue vs cost of goods sold was an interesting sidelight that I hadn't considered. If you work the math on the 7.1 vs 6.3, it gives an upper bound for the cost of the insulin in the product (as the insulin currently being used was expensed in prior periods). This was actually lower than I had expected and will create some positive cash flow for a while.
The comments about TS opportunities being 12-18 months away was probably the biggest disappointment of the call for me. I came away questioning that timeframe and believing that Afrezza sales are key to seeing interest pick up on that front.
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Post by james on May 12, 2015 22:16:03 GMT -5
JPG & EoD- I'm not saying Sanofi is giving up/lost interest as I don't think that is the case but after dialog with a few Sanofi reps I'm getting the vibe they are prioritizing T over A for some period of time. I recommend you find a rep responsible for diabetes sales and ask them first hand - this is our real blind spot. This is also a blindspot to Mannkind and as Matt P. actually returned a call a few weeks ago after my wife left him a vmail. He was kind enough to call back and was very nice but he shared their surprise at the slow uptake, said we're working to fix the "problems" and mentioned there was never any language about a "dedicated" sales force. He asked my wife to forward one of the emails we had from a Sanofi rep. That whole conversation blew my mind and showed me MannKind has zero control or leverage right now. We're on Sanofi time now. jimo - If you are telling the truth, don't take this the wrong way, but I've never met nor talked with a Sanofi rep. I'm pretty sure I've never known a drug rep. There seem to be a number of people claiming to have access to these folk. I honestly don't believe a word of it. I also don't believe Matt would ask for e-mails by Sanofi sales staff to be forwarded to him. If he did, he is on dangerous ground. That sounds like a great way to start a political issue with your partner.
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Post by james on May 12, 2015 22:23:53 GMT -5
Based off of haken needing to fly over to France to have a meeting with them shows me that mnkd is aware of the lack of attention Sanofi is giving A, and he said its "addressed" So Sanofi was moving slow with MNKD, but I can tell MNKD did not know the plan would be this slow and it has come to their attention. How things move from here will depend on how big of a fire he lit under their ass I guess I think Hakan should be flying over to France every so often as part of the regular course of business at this point. I expect that management knows (and has known) exactly how things would progress on the specific marketing steps being taken. Whether these were sufficient steps is a different thing. Also, flying over and 'lighting a fire under their ***' would not work out well a handful of weeks into the execution of a partnership. I'm sure that Hakan is a much wiser person than that.
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Post by Deleted on May 12, 2015 22:31:53 GMT -5
I avoided posting on this until the noise turned down a bit. Here are some of my principle thoughts: Al should step aside from speaking on the calls at this point. It would be great to hear from him from time to time, perhaps a few moments to express his confidence in the management team, but I just don't think he's able to set a good tone for the calls anymore. That didn't get things off on the right foot for this one. I agree that Hakan's approach to describing the barriers to adoption was unfortunate. But, he was coherent in what was said and I found no fault in the remedies being outlined. I think the main issue is that folks are latching onto the idea that management has been caught unaware of the problems they are now facing. Keep in mind that this is entirely Sanofi's game in that respect; there's almost nothing MNKD can or should do at this point other than have discussions with the Sanofi team. It sure sounds like they are doing that. Moreover, much of what Sanofi is doing appears to be bearing fruit and the activity level looks to be ramping up. Recent revelations that the initial target set was for well controlled patients shows that there is more logic to the process then folks are giving credit for. On the convertible debt issue - something unseen is brewing in the house on this. Matt was very direct in stating that no dilutive financing is planned. He was also clear in stating that the cash would be in hand to simply retire the debt if desired (though I really doubt it will happen that way). With cash burn at $21M per quarter, a Deerfield required minimum cash balance of $25M at end of quarter and $120M in cash on hand does not add up to paying off $100M. Is another milestone payment near - specifically one of the undisclosed regulatory or development milestones? I also think there would be some difficulty refinancing with a similar instrument unless there are elements to the liquidity picture that are not in view to us. The discussion of sales revenue vs cost of goods sold was an interesting sidelight that I hadn't considered. If you work the math on the 7.1 vs 6.3, it gives an upper bound for the cost of the insulin in the product (as the insulin currently being used was expensed in prior periods). This was actually lower than I had expected and will create some positive cash flow for a while. The comments about TS opportunities being 12-18 months away was probably the biggest disappointment of the call for me. I came away questioning that timeframe and believing that Afrezza sales are key to seeing interest pick up on that front. It's more than that. If next quarter SNY drew $35 million in cogs worth of product, MNKD would pocket the $35 mil and 35% of it would charge back to the LOC. in essence, their cash position would improve by 35 million. That's a key point in all of this and one reason MNKD could have enough cash with current burn. Factor in there's another 25mil milestone, another 30 mil from Mann avail and the 50 mil ATM (which is dilutive, but not secondary dilutive which what Matt referred to)
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Post by james on May 12, 2015 22:32:39 GMT -5
>>>I am troubled by managements comments that prior authorization and spirometry have been significant impediments to Rx growth. While challenges, they seem no greater than the multitude of other issues that all Rx manufacturers face when launching a new product. In the case of Afrezza, I would think time to create physician awareness and educate them how Afrezza works and why it is different would be the greatest challenge at this point.<<< I am also disturbed by this. Especially troubling because the Spirometry hurdle has been a known entity since day one. It should have been trouble shot months ago. Why didn't Sanofi plan for this before launch? I am encouraged by the fact that after only a handful of weeks, they are already identifying key issues and laying out a plan to address them well before physicians and the second generation of patients becomes frustrated by them.
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Post by james on May 12, 2015 22:39:45 GMT -5
It's more than that. If next quarter SNY drew $35 million in cogs worth of product, MNKD would pocket the $35 mil and 35% of it would charge back to the LOC. in essence, their cash position would improve by 35 million. That's a key point in all of this and one reason MNKD could have enough cash with current burn. Factor in there's another 25mil milestone, another 30 mil from Mann avail and the 50 mil ATM (which is dilutive, but not secondary dilutive which what Matt referred to) I haven't had a chance to look at the cash flow statement with a critical eye (for some reason it wasn't in the press release). The revenue went to deferred liabilities (accounting is so odd), but did they actually report $7.1M in cash received for the product in Q1 or did it get washed in the partnership? Definitely an important difference there.
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Post by Deleted on May 12, 2015 22:43:00 GMT -5
It's more than that. If next quarter SNY drew $35 million in cogs worth of product, MNKD would pocket the $35 mil and 35% of it would charge back to the LOC. in essence, their cash position would improve by 35 million. That's a key point in all of this and one reason MNKD could have enough cash with current burn. Factor in there's another 25mil milestone, another 30 mil from Mann avail and the 50 mil ATM (which is dilutive, but not secondary dilutive which what Matt referred to) I haven't had a chance to look at the cash flow statement with a critical eye (for some reason it wasn't in the press release). The revenue went to deferred liabilities (accounting is so odd), but did they actually report $7.1M in cash received for the product in Q1 or did it get washed in the partnership? Definitely an important difference there. They received 4 of the 7. Matt commented they are net 45 and won't always see it in the same quarter
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Post by james on May 12, 2015 22:59:48 GMT -5
Oh - that's right, I remember the net 45 part of the discussion and that the 7 hadn't been fully received.
On the 10-Q CF statement, I see cash in for deferred product sales of $7,050 and cash out for deferred product costs of $6,251. So while cash is coming in for the product, it is going out for production costs. There is also the $7.1M build in inventory (is this valued at future sales price to the partnership?) and only a $3M increase in accounts payable on MNKD's balance sheet, so there is yet more recapture of prior expensed items implied in there. However, I'm not seeing it as $1 for $1 opportunity on cash build vs cash from Sanofi.
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Post by Deleted on May 12, 2015 23:03:42 GMT -5
Oh - that's right, I remember the net 45 part of the discussion and that the 7 hadn't been fully received. On the 10-Q CF statement, I see cash in for deferred product sales of $7,050 and cash out for deferred product costs of $6,251. So while cash is coming in for the product, it is going out for production costs. There is also the $7.1M build in inventory (is this valued at future sales price to the partnership?) and only a $3M increase in accounts payable on MNKD's balance sheet, so there is yet more recapture of prior expensed items implied in there. However, I'm not seeing it as $1 for $1 opportunity on cash build vs cash from Sanofi. Read my post on the visual flow. I explain it there. 7.1 is what they charge SNY. 6.3 is what they charge the collab. 2.2 is their portion of the collab production costs (6.3 x 35%). They make margin on the 7.1 due to the insulin prepaid
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Post by od on May 17, 2015 18:32:10 GMT -5
On the call yesterday, MNKD leadership commented on the challenges of prior authorization. Any Rx manufacturer will tell you about the hassles of this especially if it is a new product, or a product that for whatever reason is not on formulary. Here is a link to a company that has a software solution they call ePA. Perhaps this technology will not make the PA process a breeze for every Afrezza prescription but it can help. www.covermymeds.com/main/I am troubled by managements comments that prior authorization and spirometry have been significant impediments to Rx growth. While challenges, they seem no greater than the multitude of other issues that all Rx manufacturers face when launching a new product. In the case of Afrezza, I would think time to create physician awareness and educate them how Afrezza works and why it is different would be the greatest challenge at this point. I agreed to remain quiet until my family was long AND I had something to contribute; I now qualify. If I understood Mr. Mann's comments on spriometry, he said they had identified a device that cost less than one reimbursement and SNY was hoping to introduce the product to providers. The low cost devices provide FEV1 only which does not qualify for reimbursement (unless rules have recently changed). Great, if the provider simply wants to clear the lung function hurdle; not so if they are looking for revenue. While I was excited by the Jefferies note last week, I was surprised (troubled?) that providers WITH a spiromter still found the testing a 2.5/5 burden. Really? The test takes less then a minute to administer and is reimburseable (with the correct device). Regardless, family will increase position this month.
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Post by vaijon on May 18, 2015 16:55:29 GMT -5
On the call yesterday, MNKD leadership commented on the challenges of prior authorization. Any Rx manufacturer will tell you about the hassles of this especially if it is a new product, or a product that for whatever reason is not on formulary. Here is a link to a company that has a software solution they call ePA. Perhaps this technology will not make the PA process a breeze for every Afrezza prescription but it can help. www.covermymeds.com/main/I am troubled by managements comments that prior authorization and spirometry have been significant impediments to Rx growth. While challenges, they seem no greater than the multitude of other issues that all Rx manufacturers face when launching a new product. In the case of Afrezza, I would think time to create physician awareness and educate them how Afrezza works and why it is different would be the greatest challenge at this point. I agreed to remain quiet until my family was long AND I had something to contribute; I now qualify. If I understood Mr. Mann's comments on spriometry, he said they had identified a device that cost less than one reimbursement and SNY was hoping to introduce the product to providers. The low cost devices provide FEV1 only which does not qualify for reimbursement (unless rules have recently changed). Great, if the provider simply wants to clear the lung function hurdle; not so if they are looking for revenue. While I was excited by the Jefferies note last week, I was surprised (troubled?) that providers WITH a spiromter still found the testing a 2.5/5 burden. Really? The test takes less then a minute to administer and is reimburseable (with the correct device). Regardless, family will increase position this month. Ok, here's something for you folks to think about on the purchase of equipment.
Based upon what I'm reading from folks here is that MannKind will purchase hospital equipment to be used specifically for prescribing Afrezza. I don't believe that you can use "quid pro quo" for prescriptions. I worked for a medical device company in the past and we couldn't give away product to doctors as it would constitute unfair competitive advantage. I understand that Pharma companies can give sample prescriptions under the rule that they are given with no strings attached (along with a whole host of rules). The purchase of a medical device for the clinics could be seen as an unfair competitive practice given that MNKD isn't in the Medical Device industry. Think about it, If I contributed to your purchase of other essential medical equipment, wouldn't that create a sense of obligation for the doctor or clinic? Believe it or not, these matters are watched quite closely.
For an example of items in a Code of Conduct see here:
www.djoglobal.com/sites/default/files/code_of_conduct.pdf
Here is a definition of the Anti-Kickback statute:
"The federal Anti-Kickback Statute (“Anti-Kickback Statute”) is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business. See 42 U.S.C. § 1320a-7b."
Notice the phrase "anything of value". It doesn't need to be money. Lastly, A great many patients are using Medicare and hence the Federal rules apply to reimbursements for amounts billed to Medicare providers.
Just something to think about!
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Post by jpg on May 18, 2015 18:37:30 GMT -5
I agreed to remain quiet until my family was long AND I had something to contribute; I now qualify. If I understood Mr. Mann's comments on spriometry, he said they had identified a device that cost less than one reimbursement and SNY was hoping to introduce the product to providers. The low cost devices provide FEV1 only which does not qualify for reimbursement (unless rules have recently changed). Great, if the provider simply wants to clear the lung function hurdle; not so if they are looking for revenue. While I was excited by the Jefferies note last week, I was surprised (troubled?) that providers WITH a spiromter still found the testing a 2.5/5 burden. Really? The test takes less then a minute to administer and is reimburseable (with the correct device). Regardless, family will increase position this month. Ok, here's something for you folks to think about on the purchase of equipment.
Based upon what I'm reading from folks here is that MannKind will purchase hospital equipment to be used specifically for prescribing Afrezza. I don't believe that you can use "quid pro quo" for prescriptions. I worked for a medical device company in the past and we couldn't give away product to doctors as it would constitute unfair competitive advantage. I understand that Pharma companies can give sample prescriptions under the rule that they are given with no strings attached (along with a whole host of rules). The purchase of a medical device for the clinics could be seen as an unfair competitive practice given that MNKD isn't in the Medical Device industry. Think about it, If I contributed to your purchase of other essential medical equipment, wouldn't that create a sense of obligation for the doctor or clinic? Believe it or not, these matters are watched quite closely.
For an example of items in a Code of Conduct see here:
www.djoglobal.com/sites/default/files/code_of_conduct.pdf
Here is a definition of the Anti-Kickback statute:
"The federal Anti-Kickback Statute (“Anti-Kickback Statute”) is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business. See 42 U.S.C. § 1320a-7b."
Notice the phrase "anything of value". It doesn't need to be money. Lastly, A great many patients are using Medicare and hence the Federal rules apply to reimbursements for amounts billed to Medicare providers.
Just something to think about!
This has been addressed by Mannkind in the CC.
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