Why Sanofi's Marketing Strategy is Brilliant.
Sept 29, 2015 18:57:01 GMT -5
liane, BD, and 58 more like this
Post by cfield23 on Sept 29, 2015 18:57:01 GMT -5
This is meant to be long-winded and comprehensive.
Let me start this off with a few disclosures:
• I am long MNKD for about a year and have done countless hours of due diligence before I decided to invest.
• I am a long-term focused investor. I make few trades, so it takes a long time for me to pick a company. I like to set & forget and to buy the dip.
• I have no idea what's going to happen from day to day, and quite frankly, I don't care. I'm confident in the long-term prospects
• My career is in marketing -- specifically, lead generation/advertising.
• Yes, I am a newbie poster here, but I've lurked for a while. You can find me on stocktwits and twitter under the same username.
Coming from a marketing/advertising standpoint, this roll-out is great thus far (for Afrezza's success -- not short term stock traders). I believe Sanofi's strategy for rolling out Afrezza follows a simple, structured plan.
I believe the 5 steps are:
1. Completion of the CLAMP Study (https://clinicaltrials.gov/ct2/show/NCT02470637)
2. Apply for a new, better label (allows them to make bold advertising claims)
3. Use the new label/clamp study results to gain Tier 2 insurance coverage
4. Gain approval in other countries
5. Once insurance mostly covers Afrezza, Sanofi will hire more sales reps and begin a "full-on" DTC campaign.
Sanofi’s Current (9/29/15) Advertising
Advertising is meant to spread awareness about one’s product. Its eventual goal is to convert the user from an impression (showing of the ad) into a sale (or prescription, in this case).
Based on what I have seen so far, Sanofi is definitely ramping up their advertising efforts. They are choosing the channels that are cheapest first, and that provide a level of awareness. It started out with paid search ads on branded terms like “insulin human” or “Afrezza”. These are cheapest because they own these terms, making it harder for others to “outbid” for the top ad spot. Since then, we’ve seen them start to bid on other diabetes terms as well as begin their display advertising though banners on several sites. Finally, they have appeared in Time Magazine multiple times, as well as Good Housekeeping and others!
The purpose of this is to pique the interest of the viewer, but NOT to make them jump up and call their doctor. It is solely to make them more generally aware of the product. As time goes on and they see it more and more places, the viewer will then say “hmm… I’ve seen it here, here, and here… maybe I should check it out?”
This is where timing is everything…
Imagine you’ve seen a TV ad for Afrezza and you visit your doctor (before the above step 3 is complete). Consider the following scenarios and how they would present barriers to prescriptions/renewals.
• What if your doctor hasn’t heard of Afrezza yet? There are many drugs and it takes time to learn.
• What if your doctor does some research and isn’t impressed by the FDA trial results? Will he/she prescribe?
• Suppose your doctor has heard of Afrezza. Suppose he prescribes! What happens if your insurance doesn’t cover it?
• What happens when the samples run out and it’s too expensive to continue
All of these scenarios can negatively affect your opinion on whether to continue/get started. If Sanofi is able to complete the 3rd step (above) before your first real impression (with the doctor) happens, the chances of success are much higher.
I believe Sanofi currently spending minimal $'s on advertising right now because the patient's experience isn't greatest yet (high cost, insurance claims, pre-authorizations, tests, etc.), and the claims they’re legally allowed to make aren’t that impressive yet.
Advertising Failure Case Study: Exubera
One of the reasons Exubera failed was due to it's huge ($370M in ads) overhead cost. It literally put a time limit to the success because scripts HAD to increase in order to justify continual spending. Because scripts didn't increase quickly, they had to make a rather quick/abrupt decision about keeping the drug.
Now it’s not quite fair to compare Afrezza and Exubera and attribute advertising as the sole reason for failure. The actual Exubera insulin was average to inferior as compared with the RAA’s available at the time. The delivery device was also the size of a new 3 pack of tennis balls! These most certainly didn’t help the success.
It failed because while it was better to inhale than to inject, it was much harder to get the insulin and it was less effective. The hassles outweighed the benefits by a wide margin. Plus, Pfizer spent so much up front that they lost all possible response agility. They weren’t able to listen to the problems and fix them. They were bleeding money.
Quote Source: www.wsj.com/articles/SB119284606824265824
Quote Source: www.pmlive.com/pharma_news/pfizer_scraps_exubera_9168?SQ_DESIGN_NAME=2&
Afrezza: Monomer vs. Hexamer & a1c’s.
Here’s a simplistic explanation of the why Afrezza’s PK profile is important:
Afrezza is a monomer. That means there’s only one molecule for the body to break down. Since that molecule is insulin and absorbable in the blood stream, it happens immediately, peaking in 12-15 minutes.
A hexamer (traditional RAA structure) means that there are six insulin molecules bonded together by zinc. Your body has to break down the zinc before it’s able to access the insulin. And repeat, repeat, repeat, repeat, repeat. This is why diabetics take their mealtime (prandial) insulin about 40 minutes before they begin to eat. They must plan ahead as to when the insulin will be absorbing in their system (based on when the body will have broken down the zinc). It is also why sometimes after a meal, they have a hypoglycemic event (the body hasn’t finished breaking down the zinc to get to the insulin). It’s a difficult process and very hard to control.
Here’s a graph to help explain: 1.bp.blogspot.com/_7SznemQYk7M/TOvPyBmkGHI/AAAAAAAAAC0/eVD8nkJATdc/s1600/Afrezza+Insulin+Resonse.JPG
Notice that if you take Afrezza too early, you miss out on the peak.
What does this mean for a1c values?
Your HbA1C value is the most important value if you’re a diabetic. Simply put, it is the average of glucose in your blood over a period of time. Usually it’s taken every 90 days at a doctor’s checkup. If the value is high over the long term, you run into unfortunate effects like loss of limbs and blindness later on. If your value is normal over the long term, your body functions normally.
Just as with anything else, an average of a1c takes outliers into account. These mealtime spikes raise the average over the long period of time. The more you can do to limit the number of spikes, or the height of each spike, the lower your average and the less likely you are to have later complications.
Because Afrezza peaks in 12-15 minutes, it’s able to handle the spikes in glucose during a meal. It’s able to significantly lower the height IF TAKEN PROPERLY right as you start to eat. Lower “highs” means a lower average and a reduction of a1c – and less later in life complications.
Because the trials had participants take Afrezza at the time they would’ve taken hexameric RAA’s, the results showed only modest effectiveness. This is why the CLAMP study is needed. I am confident that if taken correctly, Afrezza’s results will be astounding.
What would a TV ad say? Today vs. Tomorrow.
Today, because of the label restrictions, a TV ad would only be able to tout the same thing Exubera touted: Inhaled vs. Injected. Do we really want to go down the same path?
If this is the only benefit to Afrezza (remember, think in a vacuum, as we can only advertise what’s allowed), then it’s easy to see why people think its niche. I, too, believe that if Afrezza’s only benefit were that it’s inhaled, then it wouldn’t be likely to gain significant market traction. If I believed that, though, I wouldn’t have invested.
However, after the CLAMP study is completed, if the results show what we’re expecting (much fewer hypo events, large reductions in HbA1C values, etc), then the label will most certainly change for the better – allowing Sanofi to make bold, gripping claims.
A TV commercial that can make claims as bold as “significant a1c reduction” & “much less risk of going hypoglycemic” will most certainly send the patients to the doctors, as well as force doctors to do their own due diligence.
Conclusion
During the FDA trials, Afrezza patients didn’t take Afrezza at the start of the meal, but rather around when they would’ve taken their RAA. As we know, a monomer is absorbed quicker (reference the chart above if needed, again) and thus begins exiting the body quicker, too. This led to rather average results and a tough label.
Once the label is improved, insurance coverage will be easier to gain. Less complications from diabetes (because of lower a1c’s) means less insurance claims and more profit, so insurance companies will undoubtedly cover it.
Once insurance coverage and the label is improved, TV ads will start (and not a second sooner). This will ensure that the dollars spent on advertising is used as efficiently as possible.
I truly believe that the “inhaled” benefit is, and should be marketed as, secondary. People need to learn that the Afrezza insulin is the best at controlling sugars. It is the only insulin that mimics the human pancreas’s insulin. Once people see it that way (by legal label claims), they’ll be even more thrilled that they don’t have to inject it either.
While the short term share price can be frustrating, you can most assuredly take solace in the fact that Sanofi isn’t spending too much to NEED results NOW. They can afford to wait until everything is aligned. In fact, that’s exactly what they’re doing, and what they should be doing.
Thank you for reading!
Let me start this off with a few disclosures:
• I am long MNKD for about a year and have done countless hours of due diligence before I decided to invest.
• I am a long-term focused investor. I make few trades, so it takes a long time for me to pick a company. I like to set & forget and to buy the dip.
• I have no idea what's going to happen from day to day, and quite frankly, I don't care. I'm confident in the long-term prospects
• My career is in marketing -- specifically, lead generation/advertising.
• Yes, I am a newbie poster here, but I've lurked for a while. You can find me on stocktwits and twitter under the same username.
Coming from a marketing/advertising standpoint, this roll-out is great thus far (for Afrezza's success -- not short term stock traders). I believe Sanofi's strategy for rolling out Afrezza follows a simple, structured plan.
I believe the 5 steps are:
1. Completion of the CLAMP Study (https://clinicaltrials.gov/ct2/show/NCT02470637)
2. Apply for a new, better label (allows them to make bold advertising claims)
3. Use the new label/clamp study results to gain Tier 2 insurance coverage
4. Gain approval in other countries
5. Once insurance mostly covers Afrezza, Sanofi will hire more sales reps and begin a "full-on" DTC campaign.
Sanofi’s Current (9/29/15) Advertising
Advertising is meant to spread awareness about one’s product. Its eventual goal is to convert the user from an impression (showing of the ad) into a sale (or prescription, in this case).
Based on what I have seen so far, Sanofi is definitely ramping up their advertising efforts. They are choosing the channels that are cheapest first, and that provide a level of awareness. It started out with paid search ads on branded terms like “insulin human” or “Afrezza”. These are cheapest because they own these terms, making it harder for others to “outbid” for the top ad spot. Since then, we’ve seen them start to bid on other diabetes terms as well as begin their display advertising though banners on several sites. Finally, they have appeared in Time Magazine multiple times, as well as Good Housekeeping and others!
The purpose of this is to pique the interest of the viewer, but NOT to make them jump up and call their doctor. It is solely to make them more generally aware of the product. As time goes on and they see it more and more places, the viewer will then say “hmm… I’ve seen it here, here, and here… maybe I should check it out?”
This is where timing is everything…
Imagine you’ve seen a TV ad for Afrezza and you visit your doctor (before the above step 3 is complete). Consider the following scenarios and how they would present barriers to prescriptions/renewals.
• What if your doctor hasn’t heard of Afrezza yet? There are many drugs and it takes time to learn.
• What if your doctor does some research and isn’t impressed by the FDA trial results? Will he/she prescribe?
• Suppose your doctor has heard of Afrezza. Suppose he prescribes! What happens if your insurance doesn’t cover it?
• What happens when the samples run out and it’s too expensive to continue
All of these scenarios can negatively affect your opinion on whether to continue/get started. If Sanofi is able to complete the 3rd step (above) before your first real impression (with the doctor) happens, the chances of success are much higher.
I believe Sanofi currently spending minimal $'s on advertising right now because the patient's experience isn't greatest yet (high cost, insurance claims, pre-authorizations, tests, etc.), and the claims they’re legally allowed to make aren’t that impressive yet.
Advertising Failure Case Study: Exubera
One of the reasons Exubera failed was due to it's huge ($370M in ads) overhead cost. It literally put a time limit to the success because scripts HAD to increase in order to justify continual spending. Because scripts didn't increase quickly, they had to make a rather quick/abrupt decision about keeping the drug.
Now it’s not quite fair to compare Afrezza and Exubera and attribute advertising as the sole reason for failure. The actual Exubera insulin was average to inferior as compared with the RAA’s available at the time. The delivery device was also the size of a new 3 pack of tennis balls! These most certainly didn’t help the success.
It failed because while it was better to inhale than to inject, it was much harder to get the insulin and it was less effective. The hassles outweighed the benefits by a wide margin. Plus, Pfizer spent so much up front that they lost all possible response agility. They weren’t able to listen to the problems and fix them. They were bleeding money.
"Yet Exubera cost Pfizer $775 million to manufacture and promote this year, according to an estimate by a drug-industry analyst at Credit Suisse Group."
"Pfizer has spent in the region of USD 370m so far in 2007 to promote Exubera. Activities have included the sending of special diabetes educators to doctors to teach them how to use the new device, as well as DTC advertising investment. In comparison, say Credit Swiss analysts, the promotion of Pfizer's new cancer drug Sutent (imatinib), only cost Pfizer USD 200m."
Afrezza: Monomer vs. Hexamer & a1c’s.
Here’s a simplistic explanation of the why Afrezza’s PK profile is important:
Afrezza is a monomer. That means there’s only one molecule for the body to break down. Since that molecule is insulin and absorbable in the blood stream, it happens immediately, peaking in 12-15 minutes.
A hexamer (traditional RAA structure) means that there are six insulin molecules bonded together by zinc. Your body has to break down the zinc before it’s able to access the insulin. And repeat, repeat, repeat, repeat, repeat. This is why diabetics take their mealtime (prandial) insulin about 40 minutes before they begin to eat. They must plan ahead as to when the insulin will be absorbing in their system (based on when the body will have broken down the zinc). It is also why sometimes after a meal, they have a hypoglycemic event (the body hasn’t finished breaking down the zinc to get to the insulin). It’s a difficult process and very hard to control.
Here’s a graph to help explain: 1.bp.blogspot.com/_7SznemQYk7M/TOvPyBmkGHI/AAAAAAAAAC0/eVD8nkJATdc/s1600/Afrezza+Insulin+Resonse.JPG
Notice that if you take Afrezza too early, you miss out on the peak.
What does this mean for a1c values?
Your HbA1C value is the most important value if you’re a diabetic. Simply put, it is the average of glucose in your blood over a period of time. Usually it’s taken every 90 days at a doctor’s checkup. If the value is high over the long term, you run into unfortunate effects like loss of limbs and blindness later on. If your value is normal over the long term, your body functions normally.
Just as with anything else, an average of a1c takes outliers into account. These mealtime spikes raise the average over the long period of time. The more you can do to limit the number of spikes, or the height of each spike, the lower your average and the less likely you are to have later complications.
Because Afrezza peaks in 12-15 minutes, it’s able to handle the spikes in glucose during a meal. It’s able to significantly lower the height IF TAKEN PROPERLY right as you start to eat. Lower “highs” means a lower average and a reduction of a1c – and less later in life complications.
Because the trials had participants take Afrezza at the time they would’ve taken hexameric RAA’s, the results showed only modest effectiveness. This is why the CLAMP study is needed. I am confident that if taken correctly, Afrezza’s results will be astounding.
What would a TV ad say? Today vs. Tomorrow.
Today, because of the label restrictions, a TV ad would only be able to tout the same thing Exubera touted: Inhaled vs. Injected. Do we really want to go down the same path?
If this is the only benefit to Afrezza (remember, think in a vacuum, as we can only advertise what’s allowed), then it’s easy to see why people think its niche. I, too, believe that if Afrezza’s only benefit were that it’s inhaled, then it wouldn’t be likely to gain significant market traction. If I believed that, though, I wouldn’t have invested.
However, after the CLAMP study is completed, if the results show what we’re expecting (much fewer hypo events, large reductions in HbA1C values, etc), then the label will most certainly change for the better – allowing Sanofi to make bold, gripping claims.
A TV commercial that can make claims as bold as “significant a1c reduction” & “much less risk of going hypoglycemic” will most certainly send the patients to the doctors, as well as force doctors to do their own due diligence.
Conclusion
During the FDA trials, Afrezza patients didn’t take Afrezza at the start of the meal, but rather around when they would’ve taken their RAA. As we know, a monomer is absorbed quicker (reference the chart above if needed, again) and thus begins exiting the body quicker, too. This led to rather average results and a tough label.
Once the label is improved, insurance coverage will be easier to gain. Less complications from diabetes (because of lower a1c’s) means less insurance claims and more profit, so insurance companies will undoubtedly cover it.
Once insurance coverage and the label is improved, TV ads will start (and not a second sooner). This will ensure that the dollars spent on advertising is used as efficiently as possible.
I truly believe that the “inhaled” benefit is, and should be marketed as, secondary. People need to learn that the Afrezza insulin is the best at controlling sugars. It is the only insulin that mimics the human pancreas’s insulin. Once people see it that way (by legal label claims), they’ll be even more thrilled that they don’t have to inject it either.
While the short term share price can be frustrating, you can most assuredly take solace in the fact that Sanofi isn’t spending too much to NEED results NOW. They can afford to wait until everything is aligned. In fact, that’s exactly what they’re doing, and what they should be doing.
Thank you for reading!
