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Post by dpca10 on Nov 10, 2015 14:06:52 GMT -5
To start I don't believe Sanofi is so short sighted as to exit a partnership with Mannkknd., however a lot is being made of this possibility.
Considering Sanofi has a 65% royalty sharing split I'm not sure how this exit possibility is viewed in such a negative light.
Consider that Sanofi has given mannkind somewhere around $300 million at this point, (please correct me, I didn't look up the milestone total is up to at this point). They have spent countless paid man hours marketing and training to raise physician awareness. Paid their portion of the minimal marketing at this point. Leaned on the FDA for label revisions and funded post market studies. Not to mention the loan facility which doesn't need to be repaid for ten years.
All this is upfront cash burn to garner that extremely favorable profit split.
So if they exited wouldn't this be a profitable vacation vacation for mannkind to the tune of $300+ million and now full boat profitability on their product.
Since they are in full control of their manufacturing facility no inturuption of their distribution would occur. Yes they would need to dilute if they were to go alone with pharma reps and advertising or find a new partner. But there is no question that Sanofi would have foot a huge bill for building a foundation that someone else would reap the profits from.
The question I am trying to ask is: Is the Sanofi exit fear mongering really the negative it is portrayed as?
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Post by patryn on Nov 10, 2015 14:32:27 GMT -5
The only reason the exit would be viewed as a negative is because the exit can only happen if SNY decides that Afrezza is not commercially viable. Given that decision, no other partner might step up with MNKD to market and sell the drug and it's clear that MNKD does not have the resources to do it on its own. If SNY exits and MNKD finds a new partner, I would be rejoicing in the streets as SNY basically gave MNKD $200 million and a long term loan of $45 million plus some free publicity for a year or so of time. However, I do believe that SNY set up the deal in such a way that they greatly benefit if AFrezza is a flop because most of the milestones will never be paid and if it turns out to be a blockbuster then they get 65% of the overall profits. So they have no reason to exit right now nor ever and if they don't step up their marketing and sales, then dire times are ahead for MNKD. SNY probably can't afford another hit to the their credibility by doing nothing because of the lawsuit against them already from Genzyme so I anticipate a much more stepped up effort going forward that we will definitely see the ultimate result of within this next year.
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Post by stevil on Nov 10, 2015 15:23:46 GMT -5
patryn, Dude, I like your posts. You're respectful, knowledgeable, and you communicate well. Thanks for being a balanced long that doesn't get their jimmies rustled by pointed questions or assertions.
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Post by jpg on Nov 10, 2015 15:42:32 GMT -5
Basically it all rests one reading the intentions of Sanofi.
The 8000 patient safety study which should be finalized April 30th with the FDA could be an interesting financial 'spending opportunity' to look at. I don't know how much it will cost or how they will structure it but if the FDA insists on a truly randomized 5 year trial that is big $. Maybe they just mean case controlled (which is much much cheaper).
Agreed Sanofi can't afford to have a 2nd public sandbagging fiasco on their hands though.
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Post by patryn on Nov 10, 2015 15:47:06 GMT -5
patryn, Dude, I like your posts. You're respectful, knowledgeable, and you communicate well. Thanks for being a balanced long that doesn't get their jimmies rustled by pointed questions or assertions. Thanks stevil, I'm auditioning for the part of CEO of MNKD since I hear they have an opening soon, and my history both on Wall St. and in the C Suite makes me ideally suited for the position! (This is a joke for those who are unable to salvage a bit of levity in our situation
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Post by stevil on Nov 10, 2015 15:51:39 GMT -5
If you had the credentials for it, you'd have my vote. You tend to think like a CEO from what I can see. You stay very balanced and seem to be objective, thoughtful and thorough. Wish more posters were like you!
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Post by mssciguy on Nov 10, 2015 15:53:19 GMT -5
With MNKD's current dual citizenship with Israel, an amicable divorce from Sanofi does not look nearly as bad as it did before.
Why not entertain the possibility of partnering with Teva, for example?
We are now approaching the first birthday of Afrezza on the retail US market, with no adverse events as far as I know. That is HUGE.
In fact, why not initiate some conversation with Teva concerning other Technosphere applications to leverage their generics portfolio?
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Post by dreamboatcruise on Nov 10, 2015 15:55:39 GMT -5
patryn... I agree that there would be little reason for SNY to actually cancel the deal, even assuming they have some doubts (not saying they do). The burn rate is rather modest for a drug rollout and my suspicion is that this will remain the case until they get some formulary movement. The pessimist in me fears that SNY may not even have a good grip on when that will happen. I'm sure they are working it as best they can because I think 65% share is a compelling motivator for them. As you point out, they structured the deal to not have a huge amount on the line in payments to MNKD and now also limiting burn... those are the indicators to me that this formulary issue was likely a known Achilles heal all along. I think the first sign of improvement in the formulary space will do wonders for share price.
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Post by patryn on Nov 10, 2015 16:00:32 GMT -5
I have a very long investing horizon ahead of me and my stocks are all in cash so I don't have any margin calls or expiring options to keep me up at night. As for CEO of MNKD, no thank you - I have my own company to run and my own employees to worry about without the additional need to placate disgruntled share holders and disinterested analysts. I exited Wall St. because as lucrative as it was living in NYC, it was not the sort of life I wanted to live long term. I do admire Hakan and Matt's ability to weather the hail of criticism from all corners. If I were in that role, I am sure I would have told the analysts that their baseless speculation was not worthy of a reply.
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Post by pengiep on Nov 10, 2015 16:05:15 GMT -5
I hope you get the job. For starters, you could hardly be worse than the crew we have in place.
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Post by stevil on Nov 10, 2015 16:05:54 GMT -5
I have a very long investing horizon ahead of me and my stocks are all in cash so I don't have any margin calls or expiring options to keep me up at night. As for CEO of MNKD, no thank you - I have my own company to run and my own employees to worry about without the additional need to placate disgruntled share holders and disinterested analysts. I exited Wall St. because as lucrative as it was living in NYC, it was not the sort of life I wanted to live long term. I do admire Hakan and Matt's ability to weather the hail of criticism from all corners. If I were in that role, I am sure I would have told the analysts that their baseless speculation was not worthy of a reply. Just out of curiosity, it sounds like you think Matt/Hakan are doing a good job managing? I'm not a CEO, and it's really easy to be critical like an armchair quarterback, but if they were better public speakers, you'd find them fully competent and qualified? Can you provide examples for why you think favorably of them? It'd be helpful for all of us "bashers".
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Post by patryn on Nov 10, 2015 16:07:59 GMT -5
patryn... I agree that there would be little reason for SNY to actually cancel the deal, even assuming they have some doubts (not saying they do). The burn rate is rather modest for a drug rollout and my suspicion is that this will remain the case until they get some formulary movement. The pessimist in me fears that SNY may not even have a good grip on when that will happen. I'm sure they are working it as best they can because I think 65% share is a compelling motivator for them. As you point out, they structured the deal to not have a huge amount on the line in payments to MNKD and now also limiting burn... those are the indicators to me that this formulary issue was likely a known Achilles heal all along. I think the first sign of improvement in the formulary space will do wonders for share price. dreamboatcruiseI fully believe that insurance is the main gating factor for Afrezza adoption now. As I posted earlier, the difference between not covered/prior authorization and unrestricted at Tier 3 is over $3000 annually (and more if patients are taking the customized doses that most seem to be doing to really dial it in i.e. using more than the normal 30 day supply). SNY set up that loan facility for $175 million knowing that it could take that long before the corner is turned. Of course I think they got distracted during the leadership turnover and didn't keep their eyes on rolling out Afrezza or even Toujeo as much as they should have been doing, but it looks like they are remedying the situation. They are also realistically changing their outlook based on the lack of formulary movement, but I do think that will change this next year. Okay signing off for a while, stupid redeye flight cross country made me post here way more than I am normally prone to do but not much else to do while stuck waiting in the Atlanta airport.
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Post by patryn on Nov 10, 2015 16:14:31 GMT -5
I have a very long investing horizon ahead of me and my stocks are all in cash so I don't have any margin calls or expiring options to keep me up at night. As for CEO of MNKD, no thank you - I have my own company to run and my own employees to worry about without the additional need to placate disgruntled share holders and disinterested analysts. I exited Wall St. because as lucrative as it was living in NYC, it was not the sort of life I wanted to live long term. I do admire Hakan and Matt's ability to weather the hail of criticism from all corners. If I were in that role, I am sure I would have told the analysts that their baseless speculation was not worthy of a reply. Just out of curiosity, it sounds like you think Matt/Hakan are doing a good job managing? I'm not a CEO, and it's really easy to be critical like an armchair quarterback, but if they were better public speakers, you'd find them fully competent and qualified? Can you provide examples for why you think favorably of them? It'd be helpful for all of us "bashers". I think that their strengths do not lie in public speaking and evangelism. It would be a stretch to say they are fully competent and qualified without being privy to the deals that are happening in the background. I do think that Matt did a good job with getting the financing given that it is my belief that they had a TS deal lined up that either fell through or got delayed. All signs pointed to that in "hope" and "anticipation" talk and their refusal to lower the floor price of the convertible debt when it came due. I do know that they have virtually nothing they can do with regards to sales and marketing so that one lands squarely on SNY and getting SNY to do what it is not only contractually obligated but also should be gleefully doing. If they were truly doing a terrible job, they would have been replaced by the board of directors already so on a 1-10 scale I'd give them a 5 or 6 for now, with the possibility of getting to a 7 if this next Technosphere deal gets announced by Q1 2016.
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Post by yossarian on Nov 10, 2015 16:15:04 GMT -5
Sanofi isn't gonna excite the partnership, it's gonna buy Mannkind at a bargain price and save all the benchmark payments still outstanding.
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Post by stevil on Nov 10, 2015 16:17:42 GMT -5
That's assuming Al will agree to sell at their price though. I'm not sure Al is going to let go of this company while he's still alive. Unless he has another 5+ years.
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