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Post by Deleted on Jan 8, 2016 21:14:31 GMT -5
My original post was an estimate of breakeven point. I invited others on this Board to chime in and add knowledge. You contributed by pointing out that my estimate for MNKD losses under the SNY agreement was more like $175 mln rather than my $50 mln estimate. Let's work the simple math. If Afrezza's FY losses are $175 mln, and the corporate burn rate is $90 mln/yr in addition, it means breakeven is $265 mln. It is reasonable to estimate $500 mln as the sales needed to generate this type of cash flow. This is only breakeven on cash burn. It dos not mean MNKD shows a profit. On the other hand, you view $265 mln and say that sales need to be only $200 mln to show cash flow positive on Afrezza. And let the rest of MNKD run out of cash and go belly up. Is this reasonable? I know a lot about the Provenge story. Afrezza's FY losses are $175 mln - This can be cut down by a percentage as that 175mil includes premium as Sanofi is big pharma and costs run higher. Launch costs also higher but should be less now. they have VP's / directors / international team working on Afrezza which can be cost adjusted.. Corporate costs run 120 mil... Pharma margin in US can be more than 70% Cut the price to less than injectables - insurance will force patients to Afrezza Lets wait and see what Mannkind comes up with "Through the first nine months of last year, MannKind reported manufacturing costs of $15.7 million on Sanofi’s $5.5 million in Afrezza sales.. do we know how much was produced ..not interms of $$$ , but boxes .. I know ofr sure 54K samples - each sample lasts 10 days
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Post by mnkdmorelong on Jan 8, 2016 22:49:45 GMT -5
>Greg
I have serious concerns about your reasoning abilities:
The $175 million was the loss to the Afrezza jv, not to MNKD.
If MNKD goes it alone, it is as if they are the sole JV partner.
Now, doing the simple math, lets, for argument's sake, accept the $265 million breakeven, which is based on last year's revenues of $10 million. How do you jump to the conclusion that sales of $500 million would be necessary to essentially reach breakeven as a corporation? Are you suggesting gross margins would be in the neighborhood of only 50%.
Yes, I am saying gross margins after sales commissions is about 50%! You think the number is 80%? How is this possible when we know ASP will need to drop 60% just to be competitive on price? I keep telling you that the $265 mln costs goes up as revenue rises due to salesman's commissions. And no, the lowering of COGS due to higher volume will not overwhelm the ASP reduction and salesman's commissions.
Getting back to your careless use of words, first, I have no idea what "you view $265 mln" means and second, where exactly did I say "sales need to be only $200 mln to show cash flow positive on Afrezza?" I did imply that sales of $220 million would be more reasonable to get to breakeven, and this based on the costs that derived from SNY's cost structure. I fully acknowledge this ignores MNKD's other costs, but, as I noted, getting Affrezza sales to rise meaningfully would give the company many more financing options. At this point Afrezza sales dictate everything.
Your mistake is in assuming $220 mln sales is all that is needed to get to breakeven. You completely ignore the $90 mln corporate cash burn. Who in his right mind will endorse a plan that ensures the bankruptcy of MNKD? Breakeven means cash flow neutral; nothing more nothing less. c
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Post by lorcan458 on Jan 8, 2016 23:15:13 GMT -5
Mannkind needs to make several simultaneous moves:
1. Lower the price to the same level of injectables for 2016, even if that is a loss. We need scripts to grow to force tier 2 coverage. We can renegotiate for a fair price in 2017 from a much stronger position. 2. Sign a TS deal with upfront cash, even if we're giving more of the profits to the partner. The first one to sign gets the sweetheart deal. We need cash now and another TS product on the market ASAP. This also puts us in a stronger position later. 3. Hire a PR firm to build awareness of the Mannkind brand (genius philanthropic founder, temperature stable oxytocin to help save lives, the world's only monomer inhaled insulin). Talk about Technosphere and how inhalation avoids the GI tract. Obviously there are some FDA limitations, but not in talking about the technology in general. 4. Try to have Afrezza walks in other states and build on the great work being done in Florida. 5. Offer a national healthcare (China, Israel, Saudi Arabia, etc.) discount on bulk orders (1, 10 and 50 million box pricing levels).
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Post by greg on Jan 8, 2016 23:25:24 GMT -5
>Greg I have serious concerns about your reasoning abilities: The $175 million was the loss to the Afrezza jv, not to MNKD.
If MNKD goes it alone, it is as if they are the sole JV partner. Now, doing the simple math, lets, for argument's sake, accept the $265 million breakeven, which is based on last year's revenues of $10 million. How do you jump to the conclusion that sales of $500 million would be necessary to essentially reach breakeven as a corporation? Are you suggesting gross margins would be in the neighborhood of only 50%.
Yes, I am saying gross margins after sales commissions is about 50%! You think the number is 80%? How is this possible when we know ASP will need to drop 60% just to be competitive on price? I keep telling you that the $265 mln costs goes up as revenue rises due to salesman's commissions. And no, the lowering of COGS due to higher volume will not overwhelm the ASP reduction and salesman's commissions. Getting back to your careless use of words, first, I have no idea what "you view $265 mln" means and second, where exactly did I say "sales need to be only $200 mln to show cash flow positive on Afrezza?" I did imply that sales of $220 million would be more reasonable to get to breakeven, and this based on the costs that derived from SNY's cost structure. I fully acknowledge this ignores MNKD's other costs, but, as I noted, getting Affrezza sales to rise meaningfully would give the company many more financing options. At this point Afrezza sales dictate everything.
Your mistake is in assuming $220 mln sales is all that is needed to get to breakeven. You completely ignore the $90 mln corporate cash burn. Who in his right mind will endorse a plan that ensures the bankruptcy of MNKD? Breakeven means cash flow neutral; nothing more nothing less. c I'm clearly wasting my time, I can't go on endlessly correcting your errors. It's hard to have a serious discussion with someone who continually uses words carelessly and either takes things out of context or only considers part of an argument. Just pointing out a few errors or careless use of words in your latest attempt: 1. Since the original starting point were the historical losses, the losses are certainly attributable to the Afrezza joint venture, not MNKD. 2. You do understand what jv stands for, right? What is a sole joint venture partner? 3. Do you know the distinction between gross margin and operating margin??? Just for your edification, sales commission falls under the gross margin line. Anyway, good night mnkdmorelong, this has been as much fun as being long mnkd the last several months.
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Post by me on Jan 9, 2016 12:25:35 GMT -5
3. Do you know the distinction between gross margin and operating margin??? Just for your edification, sales commission falls under the gross margin line.
Anyway, good night mnkdmorelong, this has been as much fun as being long mnkd the last several months. greg - just to ensure a very careful use of words, you meant, "... below the gross margin line," did you not? In other words, commissions are an operating expense impacting operating margin, and not a COGS impacting gross margin. Is this what you meant?
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Post by slugworth008 on Jan 9, 2016 12:54:46 GMT -5
No need to repeat myself. If you have a better number, publish it with justification. mnkdmorelong, As was established on a different thread, your $500 million number was virtually meaningless. Your starting point was off by 250% and you moved from $300 to $500 in a matter of minutes. Now you use that silly number as if it means something. Before you ask others to come up with a better number, you should first generate a better number yourself, one you can justify far better than you did before. Comparing MNKD to DNDN is also rather silly. Do you really know anything about Provenge or did you just pick DNDN because it fits your negative narrative? Bang, Pow, Zap - Love it!!!
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