Post by sla55 on Jun 17, 2015 17:53:01 GMT -5
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MannKind Corp. (NASDAQ: MNKD) recently updated Wall Street investors of its progress at Goldman Sachs' annual global healthcare conference, and while the presentation didn't include quarter-to-date sales numbers for MannKind's inhalable insulin Afrezza, comments from its chief financial officer Mark Pfeffer suggest it's going to be a while before Afrezza delivers on pre-launch hopes.
Here are three quotes from MannKind's presentation that investors ought to read.
No. 1: Ramping up the marketing
There is an awful lot of doctors who still don't know about it. But that's the focus now, to change that. I think direct-to-consumer advertising will be a big factor.
-- Mark Pfeffer, CFO
In a bid to jump-start prescriptions, MannKind and marketing partner Sanofi are working on a direct marketing program that could begin soon. Initially, this program will target online and print advertising, but over time, it could expand to include television. If that marketing approach results in more patients asking their doctors about Afrezza, then prescription volume could climb. The marketing program should also help Sanofi and MannKind strategically identify doctors to target other than endocrinologists, who are currently the focus of Sanofi's salesforce.
No. 2: Overcoming authorization headaches
I mean, this prior authorization with Tier 3 is something that's become much, much more prevalent in recent months [...] and it [is causing a] delay for prescribing [...] But to a great extent, that will naturally disappear as the insurance companies do their reviews.
-- Pfeffer
Most healthcare payers have put Afrezza in tier 3 of their drug formularies, which is creating a headwind for prescription volume. In some cases, the headwind is the result of requiring pre-authorization for Afrezza, and in other cases, the headwind is due to higher co-pays associated with tier 3 drugs.
Sanofi and MannKind hope that when healthcare payers review Afrezza -- as they typically do six to nine months post-launch -- they'll ease restrictions tied to the formulary. If that happens, Sanofi and MannKind can focus less on helping doctors and patients navigate pre-authorization paperwork. It could also allow them to offer fewer discount programs, which are designed to bring co-pays down to levels patients can afford.
No. 3: The risk of divorce
If they decided they wanted to discontinue, their first opportunity wouldn't be until the beginning of next year, at which point they will have to trigger a notice period.
-- Pfeffer
As part of the agreement inked between Sanofi and MannKind, Sanofi has the potential to exit its license of Afrezza. If Sanofi were to decide to walk away from Afrezza, it could be a big blow. That's because Sanofi has a world-class marketing and sales team that's already deeply ingrained with doctors who treat diabetes thanks to Lantus, the planet's top-selling long-lasting insulin. If Sanofi can't successfully market Afrezza, then who can?
For now, Sanofi and MannKind's relationship appears to be on solid footing, but the fact that Sanofi could end this relationship as early as next year ought to make investors a bit nervous, especially if the company's direct-to-consumer initiative fails to ignite script volume.
Tying it together
It's hard to argue that patients wouldn't prefer Afrezza, which is taken via a small inhaler, to daily injections; however, a lot of Afrezza's success or failure rests in overcoming resistance from doctors and patients who have successfully used traditional insulin injections for years.
Overcoming objections will require convincing doctors of Afrezza's safety, but it will also mean increasing access by getting on lower tiers of payer formularies. Sanofi and MannKind need to eliminate headaches associated with pre and post-Afrezza lung testing requirements, too.
Overall, I'm uncertain MannKind could do this alone, but fortunately, it doesn't have to -- at least not yet. Sanofi's deep-pocketed experience gives me some confidence that hurdles can be overcome. Until then, most investors would probably be best served taking a "wait and see" approach to this stock.
MannKind Corp. (NASDAQ: MNKD) recently updated Wall Street investors of its progress at Goldman Sachs' annual global healthcare conference, and while the presentation didn't include quarter-to-date sales numbers for MannKind's inhalable insulin Afrezza, comments from its chief financial officer Mark Pfeffer suggest it's going to be a while before Afrezza delivers on pre-launch hopes.
Here are three quotes from MannKind's presentation that investors ought to read.
No. 1: Ramping up the marketing
There is an awful lot of doctors who still don't know about it. But that's the focus now, to change that. I think direct-to-consumer advertising will be a big factor.
-- Mark Pfeffer, CFO
In a bid to jump-start prescriptions, MannKind and marketing partner Sanofi are working on a direct marketing program that could begin soon. Initially, this program will target online and print advertising, but over time, it could expand to include television. If that marketing approach results in more patients asking their doctors about Afrezza, then prescription volume could climb. The marketing program should also help Sanofi and MannKind strategically identify doctors to target other than endocrinologists, who are currently the focus of Sanofi's salesforce.
No. 2: Overcoming authorization headaches
I mean, this prior authorization with Tier 3 is something that's become much, much more prevalent in recent months [...] and it [is causing a] delay for prescribing [...] But to a great extent, that will naturally disappear as the insurance companies do their reviews.
-- Pfeffer
Most healthcare payers have put Afrezza in tier 3 of their drug formularies, which is creating a headwind for prescription volume. In some cases, the headwind is the result of requiring pre-authorization for Afrezza, and in other cases, the headwind is due to higher co-pays associated with tier 3 drugs.
Sanofi and MannKind hope that when healthcare payers review Afrezza -- as they typically do six to nine months post-launch -- they'll ease restrictions tied to the formulary. If that happens, Sanofi and MannKind can focus less on helping doctors and patients navigate pre-authorization paperwork. It could also allow them to offer fewer discount programs, which are designed to bring co-pays down to levels patients can afford.
No. 3: The risk of divorce
If they decided they wanted to discontinue, their first opportunity wouldn't be until the beginning of next year, at which point they will have to trigger a notice period.
-- Pfeffer
As part of the agreement inked between Sanofi and MannKind, Sanofi has the potential to exit its license of Afrezza. If Sanofi were to decide to walk away from Afrezza, it could be a big blow. That's because Sanofi has a world-class marketing and sales team that's already deeply ingrained with doctors who treat diabetes thanks to Lantus, the planet's top-selling long-lasting insulin. If Sanofi can't successfully market Afrezza, then who can?
For now, Sanofi and MannKind's relationship appears to be on solid footing, but the fact that Sanofi could end this relationship as early as next year ought to make investors a bit nervous, especially if the company's direct-to-consumer initiative fails to ignite script volume.
Tying it together
It's hard to argue that patients wouldn't prefer Afrezza, which is taken via a small inhaler, to daily injections; however, a lot of Afrezza's success or failure rests in overcoming resistance from doctors and patients who have successfully used traditional insulin injections for years.
Overcoming objections will require convincing doctors of Afrezza's safety, but it will also mean increasing access by getting on lower tiers of payer formularies. Sanofi and MannKind need to eliminate headaches associated with pre and post-Afrezza lung testing requirements, too.
Overall, I'm uncertain MannKind could do this alone, but fortunately, it doesn't have to -- at least not yet. Sanofi's deep-pocketed experience gives me some confidence that hurdles can be overcome. Until then, most investors would probably be best served taking a "wait and see" approach to this stock.
