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Post by mnkdmorelong on Jan 13, 2016 21:21:18 GMT -5
One question that I'm interested in is how much inventory we already have. I think we have a huge amount of Afrezza warehoused, so selling in bulk overseas at lower margin for cash now when we need it might make very good financial sense. You know, this may have some merit. MNKD has a huge amount of lyophilized insulin that is not of the brand cleared by the FDA. This was the $10 bln of Afrezza statement Al made a few years back. The FDA is not in Korea nor Shenzhen China. If still active, this insulin could be formulated into a special overseas product.
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Post by james on Jan 13, 2016 21:21:24 GMT -5
One question that I'm interested in is how much inventory we already have. I think we have a huge amount of Afrezza warehoused, so selling in bulk overseas at lower margin for cash now when we need it might make very good financial sense. Absolutely. They also need to cover the Amphastar commitment before that eats yet more cash.
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Post by bthomas55ep on Jan 13, 2016 21:32:23 GMT -5
One question that I'm interested in is how much inventory we already have. I think we have a huge amount of Afrezza warehoused, so selling in bulk overseas at lower margin for cash now when we need it might make very good financial sense. Absolutely. They also need to cover the Amphastar commitment before that eats yet more cash. I did hear Matt mention they were renegotiating contracts with Vendors. Amphastar likely high on this list.
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Post by dreamboatcruise on Jan 13, 2016 21:55:27 GMT -5
Matt was a statesman tonight with respect to the SNY relationship. But I could see his blond hair turning red as he spoke. When he negotiates with SNY for a severance agreement, he will not be so tactful. It's like this: You marry a woman and have a kid. You want another kid; she only wants one. Was the guy "had?" Perhaps, but Matt was not compelled to say anything. I am not saying that SNY did our company right, but I am not ready to get caught up in the 'it's all SNYs fault' hysteria. The presentation was good, but it was the Q & A that sold me it was time to increase the position. I had a meeting start at 4:00 so only heard the canned presentation. What convinced you in Q&A?
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Post by james on Jan 13, 2016 22:23:53 GMT -5
I agree, as optimistic as the new roadmap is, there is significant risk and cannot be done with zero sales force. So, some expense for a sales force (and reimbursement specialists to negotiate with payers), etc. must be expected and where those dollars come from is not yet known. Matt gave little detail here. There was a discussion about Deerfield that was cut off quite quickly - perhaps MNKD would intend to sell some revenue rights to Deerfield (or similar) for near term cash to pursue this strategy. I'm probably making that up from nothing and I don't know if I like it, but I got a brief sniff of that in between what was said. Deal with the devil if you ask me; I'd sooner have dilution at the first reasonable opportunity. Hopefully, there is some parting SNY money (Al loan extension was not brought up) or enough to come in an international rights deal to forestall going down the Deerfield road any farther. Quick overseas expansion does not address the need for revenues to cover the $90M core burn rate. But it could certainly cover fixed Afrezza costs and prevent the more serious issue of having to bring on new Afrezza expenditures impacting cash flows. The whole SNY pricing thing will remain a mystery I am afraid. I find it hard to believe they would sign a contract knowing where this would land. SNY would have had to do a lot of convincing that this was the right strategy. Consider MNKD as a pre IPO company. If they can prove an increase in value, more funding comes their way. I caught the same Deerfield hint as you did. Maybe a few dollars from SNY; at least forgive the loan balance. Maybe not surprising is that Al Mann did not mount the stage with a money bazooka. He may be tapped out. From my perspective, MNKD needs $200-250 mln cash. They need to put on some FTEs in the US to service sales. A two year runway is needed. Even then they may not be cash flow neutral. I don't think we're far off in thinking here. Pondering over this, I prognosticate roughly $300M in cash needs over next 2 years to keep the effort rolling; that is considering current Afrezza sales and current growth rate. With items mentioned in the presentation, I see maybe $150M in cash sources (partner opportunities going well) to go with the $60M on hand. So, perhaps the 2 year gap is as low as $100M; less if sales can be ramped a bit faster. I think that timeframe could be sufficient to project a path to profitability and an additional $100M or more may not be so hard to acquire late this year or early next, given some of these cards playing out (this timing is also suggested on Matt's slide). Deerfield should be a last resort in my opinion. 2018 to 2019 would look very different; but, pretty much impossible to predict what happens past 2017.
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Post by pktrump on Jan 13, 2016 22:28:44 GMT -5
James
What did you think of the Royalty Pharma comment regarding financing going forward?
I'm sure a Royalty venture would require a steep % of the profits, but so did SNY.
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Post by dreamboatcruise on Jan 13, 2016 22:43:31 GMT -5
James What did you think of the Royalty Pharma comment regarding financing going forward? I'm sure a Royalty venture would require a steep % of the profits, but so did SNY. I just read the quick from memory transcript given here, but I assumed that what the question was is whether MNKD would accept a one time lump sum amount for Afrezza. Perhaps I was misreading that. Otherwise I don't know why it would be a big deal doing royalty vs profit split as the numbers could also be adjusted to make those two methods roughly comparable.
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Post by james on Jan 13, 2016 22:46:26 GMT -5
James What did you think of the Royalty Pharma comment regarding financing going forward? I'm sure a Royalty venture would require a steep % of the profits, but so did SNY. I'm not sure I really grasped this discussion. My notes on what was said for that were incomplete as I was trying to catch up to the concept. I have no specific experience to judge this at present. I think we would need to look at some representative transactions to see how favorable that kind of deal might be. My gut is that this would be something similar to what I don't want to see via Deerfield. Maybe to step back, I think MNKD clearly does not have the resources to float both TS development and Afrezza market development, yet both must be done. It could be questioned whether they have the resources for either. My takeaway from this presentation is that the near term plan is to sell what rights they can on the TS side to provide development funding there while focusing what remains of their resources on market development for Afrezza. The question of selling US royalty rights to Afrezza could be seen in a better light in the second half of this year with an inflection of sales growth, or it could also become a strict necessity if plans fail to gain traction. The only thing I am really confident in is that operations should continue past 2016 and that Afrezza will stay on the market for the next couple of years minimum and patient access should increase. So a win for diabetics if nothing else. Perhaps that is what matters most.
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Post by od on Jan 13, 2016 22:56:30 GMT -5
Perhaps, but Matt was not compelled to say anything. I am not saying that SNY did our company right, but I am not ready to get caught up in the 'it's all SNYs fault' hysteria. The presentation was good, but it was the Q & A that sold me it was time to increase the position. I had a meeting start at 4:00 so only heard the canned presentation. What convinced you in Q&A? Matt's confidence, candor, and lack of finger-pointing.
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Post by dreamboatcruise on Jan 13, 2016 22:57:20 GMT -5
james... oh, that makes sense now. I didn't catch that it was selling the royalty rights to a 3rd party purely for cash rather than to a partner that would commercialize aid in commercializing Afrezza. Why would it be easier to find that than someone to simply invest in MNKD?
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Post by james on Jan 13, 2016 23:00:48 GMT -5
james ... oh, that makes sense now. I didn't catch that it was selling the royalty rights to a 3rd party purely for cash rather than to a partner that would commercialize aid in commercializing Afrezza. Why would it be easier to find that than someone to simply invest in MNKD? Royalty Pharma is an a company that is ready made to do these transactions. I confess I didn't know they existed until tonight.
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Post by lorcan458 on Jan 13, 2016 23:14:16 GMT -5
When I asked the question about inventory, I didn't even think about the other insulin. I was thinking that we were running multiple production lines for a while. I'm under the impression that we made far more than we sold and gave out as samples. I wonder if it would be possible to do a deal with Dexcom to loan out the CGMs for a couple of weeks until users are dialed in with Afrezza and then have a 3-tier system.
1. People with great insurance or who can afford it simply buy the CGM instead of just keeping it for a few weeks. 2. People with good insurance get partially reimbursed and Dexcom and Sanofi both give a bit of a discount to help them keep it, if they want it. 3. People with bad insurance can borrow a CGM from their prescribing doctor for 2 weeks, or whatever the dial-in period is for Afrezza.
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Post by lorcan458 on Jan 13, 2016 23:29:44 GMT -5
There is a CGM device being developed in the UK called Gluco-Wise that uses radio waves on the skin between the thumb and forefinger. Knowing how cheap electronics are to mass produce, it could be very attractively priced, if accurate enough. Google is working on the contact lens and I'm sure there are many others that might end up being affordable. It would be a dream scenario if something like gluco-wise could become available for under $200. You'd have a CGM, Dreamboat and Afrezza, all without needles.
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Post by oldfishtowner on Jan 14, 2016 8:09:55 GMT -5
I agree, as optimistic as the new roadmap is, there is significant risk and cannot be done with zero sales force. So, some expense for a sales force (and reimbursement specialists to negotiate with payers), etc. must be expected and where those dollars come from is not yet known. Matt gave little detail here. There was a discussion about Deerfield that was cut off quite quickly - perhaps MNKD would intend to sell some revenue rights to Deerfield (or similar) for near term cash to pursue this strategy. I'm probably making that up from nothing and I don't know if I like it, but I got a brief sniff of that in between what was said. Deal with the devil if you ask me; I'd sooner have dilution at the first reasonable opportunity. Hopefully, there is some parting SNY money (Al loan extension was not brought up) or enough to come in an international rights deal to forestall going down the Deerfield road any farther. Quick overseas expansion does not address the need for revenues to cover the $90M core burn rate. But it could certainly cover fixed Afrezza costs and prevent the more serious issue of having to bring on new Afrezza expenditures impacting cash flows. The whole SNY pricing thing will remain a mystery I am afraid. I find it hard to believe they would sign a contract knowing where this would land. SNY would have had to do a lot of convincing that this was the right strategy. Consider MNKD as a pre IPO company. If they can prove an increase in value, more funding comes their way. I caught the same Deerfield hint as you did. Maybe a few dollars from SNY; at least forgive the loan balance. Maybe not surprising is that Al Mann did not mount the stage with a money bazooka. He may be tapped out. From my perspective, MNKD needs $200-250 mln cash. They need to put on some FTEs in the US to service sales. A two year runway is needed. Even then they may not be cash flow neutral. Forgiving the loan balance doesn't help. The loan isn't due until 2024. I would rather SNY lend MNKD another $100 million and add it to the balance if Matt can't get anything else from SNY. If MNKD can't pay back the loan in 8 years then Afrezza will have failed to become the blockbuster we assumed it would be and we made a terrible mistake investing in this company.
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Post by agedhippie on Jan 14, 2016 8:27:54 GMT -5
When I asked the question about inventory, I didn't even think about the other insulin. I was thinking that we were running multiple production lines for a while. I'm under the impression that we made far more than we sold and gave out as samples. I wonder if it would be possible to do a deal with Dexcom to loan out the CGMs for a couple of weeks until users are dialed in with Afrezza and then have a 3-tier system. 1. People with great insurance or who can afford it simply buy the CGM instead of just keeping it for a few weeks. 2. People with good insurance get partially reimbursed and Dexcom and Sanofi both give a bit of a discount to help them keep it, if they want it. 3. People with bad insurance can borrow a CGM from their prescribing doctor for 2 weeks, or whatever the dial-in period is for Afrezza. Insurers are very black and white over CGMs. If you are a Type 1 with good insurance you can probably get one, otherwise no and partial cover (point 2) does not exist. There are always exceptions but it's a reliable rule. The big gap is Medicare which does not cover CGMs at all so even if you previously had one you will lose it when you switch to Medicare. There are a lot of prospective non-invasive CGM devices out there but nothing commercially available or even near commercial. Glucowise is a meter replacement and not a CGM. There are a couple of Israeli companies with prototypes using a variant of oximeter type devices but not practical at this point.
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