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Post by tarheelblue004 on Oct 29, 2015 11:51:39 GMT -5
"Sanofi now projects global diabetes sales over the period of 2015-2018 to decline at an average annualized rate of between 4% and 8% at CER. Approximately half of this revision is linked to insulin glargine and the other half is related to reduced expectations for Afrezza®, Lyxumia® and BGM (Blood Glucose Monitoring)." I found this in Sanofi's 2014 form 20-F (annual report), filed in February 2015: However, in November 2014 we announced that we expect our global Diabetes sales to be flat to slightly growing at constant exchange rates between 2015 and 2018, (assuming no entry of a substitutable insulin glargine biosimilar on the U.S. market before 2019). Nevertheless our actual sales may differ from these expectations given the underlying assumptions such as the dynamics of the basal insulin market in the U.S., the conversion of patients from Lantus to Toujeo, the continued growth of our diabetes products in Emerging Markets, or the U.S. launches of Afrezza, Lyxumia, and LixiLan.We could use the revision and some assumptions to learn some interesting things about Sanofi's mid-term Afrezza projections. Prior Forecast = ~0% annual diabetes growth Revised Forecast = -6% (avg.) annual diabetes growth Delta = -6% Afrezzza / Lyxumia / BGM contributed to 1/2 of revision Assumption: Afrezza = 1/6 of revision (1/3 of the non-Toujeo half) Here's where it gets fun: 2014 diabetes sales = $7.206 B (from the form 20-F) In the prior forecast, 2018 diabetes sales would have been $7.206 B due to 0% growth rate In the current forecast, 2018 diabetes sales would be $7.206 B * (.94)^4 = $5.626 B Diabetes 2018 Revision: - $1.58 B Afrezza 2018 Revision = - $1.58 B * (1/6) = -$263 M Maybe we add some error bars due to the assumptions, say that Afrezza could be anywhere from 10 - 20% of the overall revision (instead of 1/6 = 16.7%) in which case the part of the revision due to Afrezza is $158M - $316 M. Am I weird in thinking this isn't that bad news? Either mnholden is right and they're just trying to deflect poor Lantus to Toujeo conversion, in which case Afrezza isn't really 1/6 of the revision. If that is the case, this is all somewhat meaningless  But if it's true that they see a revision to the sales of Afrezza / Lyxumia / BGM impacting their revenue by $100s of millions of dollars in 2018, then their expectations for sales of these drugs must be in the $100s of millions by then, if not the billions. Oh and BTW, that would translate into a sweet share price for MNKD if 20% falls to our bottom line (think of the P/E that kind of growth deserves). It's not fun to see downward sales revisions, and there's still plenty of time for Sanofi to improve their sales of all these drugs by 2018. But taking today's news at face-value, Sanofi sees Afrezza as a significant revenue driver in 2018. And that is ok with me. |
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Post by seanismorris on Oct 29, 2015 12:10:43 GMT -5
If Sanofi thought Afrezza would be a significant revenue driver in 2018 then they should have been doing something today to ramp up sales into 2018 and we're not seeing them doing much.
They are doing the pediatric study for which I'm hopeful. But, what about improving the Label or improving insurance coverage?
Sanofi has been a poor partner.
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Post by jimo on Oct 29, 2015 13:02:20 GMT -5
He can't. As far as I heard, nothing explicit was said. I'll go back and read the transcript, but I didn't hear any "throwing under the bus" unless it's the line from the PR about how it's contributed. Nothing new. Thank you. He read aloud word for word the comments on Afrezza that were in print prior to the call. Not sure how you can characterize that any other way. |
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Post by mnholdem on Oct 29, 2015 13:24:34 GMT -5
If Sanofi thought Afrezza would be a significant revenue driver in 2018 then they should have been doing something today to ramp up sales into 2018 and we're not seeing them doing much. They are doing the pediatric study for which I'm hopeful. But, what about improving the Label or improving insurance coverage? Sanofi has been a poor partner.
Perhaps a Project Manager's motto applies here:
"A poorly planned project will take 3-5 times longer to complete than you expect. A thoroughly prepared project will only take twice as long."
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taco
Newbie
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Post by taco on Oct 29, 2015 13:28:04 GMT -5
I listened to the replay of Sanofi's 3Q conference call. Afrezza was mentioned a number of times but not in a positive way. I am under the impression than Afrezza and LixiLan is going to be the 1 - 2 punch for type 2 diabetes next year.
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Post by longinvstr on Oct 29, 2015 15:35:53 GMT -5
Overreaction IMHO
SNY's diabetes division revised guidance down b/c incumbent's (Lantus) are getting shellaced
Statement of the obvious = Afrezza sales are disappointing
But this has been expected and projected
Afrezza guilty only by its association as one of SNY's diabetes offerings
If anything, the disappointment SNY forecasts for it dying cash cow(s) should stoke the fire and accelerate their effort to maximize Afrezza's potential
The only surprise today was in how urgently SNY needs to ramp the new kids
The SNY bad news is the MNKD good news
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Post by tayl5 on Oct 29, 2015 16:04:10 GMT -5
I agree that the reaction to the call is overdone. While we on this board endlessly dissect every scrap of information and parse any mention of Afrezza like Kremlinologists, we should recognize that Afrezza is likely to be small potatoes to SNY top management. They were told Afrezza sales would be good and they put that in the model. Now they're told sales are not so good so they change the model. Should they have said the drug works great but sales are bad? Both the label and common sense say no. One could argue they could have just not mentioned Afrezza, but I'd rather know that it's on their radar as something that needs work than have them ignore the situation.
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Post by lakemann on Oct 29, 2015 16:12:06 GMT -5
Looks to me like 2018 is good,, and sny plan to mitigate the affezza situation ..on nov 6 we will hear the plan to accomplish this.. Long the way to go now!!
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Post by falconquest on Oct 29, 2015 16:37:23 GMT -5
A couple of thoughts on this whole business of the Sanofi CC. First, They already have the answer for their (projected) decline in diabetes revenues. If they're too blind to see that then we are in BIG trouble! Second, one has to be concerned that if they view Afrezza as a disappointment then how much future marketing revenue do they allocate to its promotion? It could get the ax or it could get a boost depending on their viewpoint. Quite frankly, I would love to see a big Pharma take a swipe at a buyout offer for Mannkind. Sanofi would either perk up or put their tail between there legs and run. I still think Viebacher had much different plans for Afrezza than Brandicourt does but I guess we will only know that on November 6th. Not sure I want to watch because I really don't like to vomit!
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Post by peppy on Oct 29, 2015 20:13:21 GMT -5
Sanofi Earnings Call Transcript seekingalpha.com/article/3621816-sanofis-sny-ceo-olivier-brandicourt-on-q3-2015-results-earnings-call-transcript"First, sales were up 3.4% as we continued to deliver solid top line growth despite having a sales erosion in the U.S" "If we begin with the quarter, you will see that diabetes sales decreased by 6.6%, a faster rate than in the first six months reflecting greater sales erosion of Lantus in the U.S. than expected. As a consequence, diabetes sales represented less than 20% of group sales this quarter and U.S. diabetes sales to 11% of the group total." " Based on our detailed modeling, we now project global diabetes sales to decline at an average annualized rate of between 4% and 8% over the next three years." "In arriving at this new guidance, approximately half of the revision is linked to insulin glargine. We explicitly assumed that three non-substitutable biosimilars will be on the market by the end of the period. The other half of the revision is related to lower than expected penetration of both Afrezza and Lyxumia as well as the de-prioritization of blood glucose monitoring systems. As we said in the press release, we intend to mitigate the impact of this revised sales expectation of our business operating income by 2018 and we will provide midterm strategic and financial outlook for the group on November 6." |
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Post by Chris-C on Oct 29, 2015 21:49:03 GMT -5
Sanofi Earnings Call Transcript seekingalpha.com/article/3621816-sanofis-sny-ceo-olivier-brandicourt-on-q3-2015-results-earnings-call-transcript"First, sales were up 3.4% as we continued to deliver solid top line growth despite having a sales erosion in the U.S" "If we begin with the quarter, you will see that diabetes sales decreased by 6.6%, a faster rate than in the first six months reflecting greater sales erosion of Lantus in the U.S. than expected. As a consequence, diabetes sales represented less than 20% of group sales this quarter and U.S. diabetes sales to 11% of the group total." " Based on our detailed modeling, we now project global diabetes sales to decline at an average annualized rate of between 4% and 8% over the next three years." "In arriving at this new guidance, approximately half of the revision is linked to insulin glargine. We explicitly assumed that three non-substitutable biosimilars will be on the market by the end of the period. The other half of the revision is related to lower than expected penetration of both Afrezza and Lyxumia as well as the de-prioritization of blood glucose monitoring systems. As we said in the press release, we intend to mitigate the impact of this revised sales expectation of our business operating income by 2018 and we will provide midterm strategic and financial outlook for the group on November 6." I agree Peppy. I listened to the call very carefully. I thought the discussion about revisions to projections of reduced US diabetes sales over the next 3 years was forthright. They acknowledged that their projections for Afrezza and other products were lower than expected, and it seems appropriate, to me at least, that they would then make corresponding adjustments in their forecasts over the next three years. Nothing surprising there. One of the most interesting discussions to me was a response to a question near the very end of the conference call. This is where SNY observed that despite low numbers for Praluent scripts, they were confident that this did NOT reflect underlying demand for a number of reasons. They also pointed out deficiencies in projecting actual sales from IMS script data. I had the feeling that they could just as easily have been talking about Afrezza in the same manner, in the sense that they communicated a pretty calm and disciplined expectation for a gradual ramp up in sales, and a very keen understanding of the challenges in the US for launches of specialized products. The call confirmed that their biggest concern is the basal market for insulin glargine, where erosions from sales in this area from biosimilars, and a competitive environment in the US, have required more aggressive discounts, and the obvious need to mitigate their loss of market share through increased sales of Toujeo. As I recall, they feel they have at least stabilized their market share, which had been steadily dropping. I think Sanofi knows that when the Afrezza label gets changed and insurance coverage improves, scripts will follow. It will be interesting to hear about their mid range plans on November 6. It is important to be mindful that the MNKD/SNY partnership agreement dictates the need for some coordination of forward looking statements involving Afrezza. It is likely that anything that is said has been previously agreed between the parties. I imagine that the SNY strategic planning team has been re-examining the launch strategy for Afrezza and reconsidering what they can do additionally to improve script growth. Perhaps some general details will be shared on November 6. Clearly, since SNY needs to maintain its share of the diabetes market in the US, a revised Afrezza strategy may be one option on the table. I can't imagine how any thinking individual could conclude that the way for Sanofi to improve their diabetes position in the US would be to abandon a partnership involving a novel product where they get 65% of the profit. Regards to all, Chris C |
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Post by boomboom on Oct 29, 2015 22:34:22 GMT -5
It sounds odd to say it but I am relieved to hear Sanofi setting expectations for Afrezza low. This is actually not bad from a long-term standpoint. Too many times unrealistic expectations have been set and taken advantage of when they are not met. Hopefully their models for Afrezza sales over the next 3 years predict much lower than expected sales, so when Afrezza does start to take a foothold it will be seen as a triumph and not be downplayed.
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Post by rrtzmd on Oct 30, 2015 0:00:07 GMT -5
It sounds odd to say it but I am relieved to hear Sanofi setting expectations for Afrezza low. This is actually not bad from a long-term standpoint. Too many times unrealistic expectations have been set and taken advantage of when they are not met. Hopefully their models for Afrezza sales over the next 3 years predict much lower than expected sales, so when Afrezza does start to take a foothold it will be seen as a triumph and not be downplayed. The problem is how long MNKD, given its financial condition, can tolerate SNY's low "expectations." |
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Post by babaoriley on Oct 30, 2015 0:26:00 GMT -5
If I ever get a pig, and want to enter it in a beauty contest, there is no doubt in my mind as to the people to whom I would bring it in preparation !! Good luck, everyone, today was not a very good day for MNKD longs, but that doesn't mean there won't be good days ahead. By the way, just in case there is any confusion, the "pig" is the contents of today's SNY cc, not MNKD nor Afrezza. |
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Post by Chris-C on Oct 30, 2015 10:27:21 GMT -5
If I ever get a pig, and want to enter it in a beauty contest, there is no doubt in my mind as to the people to whom I would bring it in preparation !! Good luck, everyone, today was not a very good day for MNKD longs, but that doesn't mean there won't be good days ahead. By the way, just in case there is any confusion, the "pig" is the contents of today's SNY cc, not MNKD nor Afrezza. Baba Duly noted. Perhaps quarterly conference calls are like figure ground discrimination tests. What stands out to observers depends on what they happen to be looking for. These days, to use a pig analogy, one has to "root" far and wide for good news and morsels of reassurance when it comes to Mannkind and Afrezza. The beat down has been relentless, and only the hardy can persist. It's great that so many of the committed (stubborn?) seek shelter on this board. I'm proud to be a card carrying member of pig stylists international. Chris C |
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