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Post by biffn on Feb 8, 2016 12:09:18 GMT -5
(c) Transition. The Parties shall negotiate in good faith a written transition agreement pursuant to which the Parties would effectuate this Section 13.3 to coordinate the transition of relevant obligations and rights to MannKind as necessary to Develop and Commercialize Product in the Field in the Territory to ensure no interruption of therapy or coverage for patients, including promptly submitting all necessary filings with Governmental Authorities. Sanofi shall use diligent efforts to cooperate with MannKind or its designee to effect a smooth and orderly transition in the Development and Commercialization of Product in the Territory during the notice and the Wind-down Period. (d) Rights Become Non-Exclusive. Notwithstanding any other provision of this Agreement, following the effective date of termination and during the Wind-down Period, Sanofi’s and its Affiliates’ rights with respect to Product in the Field in the Territory shall be non-exclusive, and, without limiting the foregoing, MannKind shall have the right to engage one or more other distributors and/or licensees of Product in the Field in the Territory.
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A number of corporate lawyers may argue that the Agreement stipulates that Sanofi is required to cooperate with MannKind Corporation, not the other way around. The term "diligent efforts" carries with it a more stringent standard than "reasonable efforts" and it would be an interesting case to consider whether Sanofi could be forced to lower pricing as part of the transition from Sanofi to MannKind. Regardless, Sanofi's rights become non-exclusive following the effective date of termination. At that date, MannKind or an Agent of MannKind may immediately assume negotiations with the major 3rd party payers related to price discounts needed for preferred or similar tier assignment to RAA insulin brands.
When is the Effective Date?
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Post by benh on Feb 8, 2016 13:19:24 GMT -5
Diligent efforts on the transition. i.e Not having things "lost in the post". Sanofi, must ensure that come the transition date, MNKD have every single document and all required information supplied in an organised and coherent manner to allow MNKD to continue operation without delay. That also includes all the necessary filings being complete and on time and without delay.
Once complete and on the agreed date MNKD can implement whatever it is they wish, but in the meantime they cannot force SNY to spend more, or accept less revenue than which has already been agreed.
Sales and marketing from SNY has been agreed by the JAC. They have no obligation to change their current path. Put yourself in SNY shoes. Your CEO is swinging an axe to cut costs? How do you persuade Bandicoot to accept more loss? Unless you can convince that it's to increase probability of settling the loan account balance - due in 10 years. Which will be achieved by selling products in direct competition with SNY portfolio.
Whilst arguments, and some very good ones, regarding SNY strategy being, at best, poor have been made; MNKD's only objection can be that SNY failed to meet the criteria set in those strategic meetings. The CC's throughout 2015 had MNKD showing confidence in SNY.
I don't buy the legal payday or settlement.
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Post by lorcan458 on Feb 8, 2016 13:53:55 GMT -5
BenH,
I think what you're not considering is that as time passed this year, two things became clear that may not have been clear when the initial strategy was set. One was the effective and proper dosing of Afrezza for best results in the real world is significantly different than the dosing used in the FDA trials and the other is that the insurance companies will not budge on tier 2 at the current price.
This new information makes sticking to the agreed plan no longer valid as "prudent business" or "commercially reasonable." It is obvious two things are needed.
1. Lowering the price to be competitive with injectables while negotiating for tier 2. 2. Advertising on par with the Truejo launch.
Just because Mannkind had seats on the JAC, doesn't mean they weren't pressured into complying with a strategy that they objected to. Matt said weeks ago he wanted the price lowered. If the price isn't lowered, Sanofi is showing their hand that the Mannkind reps on the JAC have no power and Sanofi is working against their own partner, hence lawsuit. Whether they will win or not, I don't know, but what I do know is given the behavior Sanofi is currently being sued for, their behavior with Afrezza sure looks like it fits into the same category.
Consider a comparison of all the time and money spent on the Truejo launch. That was mearly a rebranding of near identical technology. Afrezza is a revolutionary new treatment. Take the amount of money and effort needed for a simple launch, Truejo, and add to that the extra effort that would be required for a "commercially reasonable" launch of Afrezza. Sanofi should have given at least as much visibility to Afrezza as they did to Truejo if they truly mean to give it a reasonable chance at commercial success.
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Post by Deleted on Feb 8, 2016 13:57:23 GMT -5
BenH, I think what you're not considering is that as time passed this year, two things became clear that may not have been clear when the initial strategy was set. One was the effective and proper dosing of Afrezza for best results in the real world is significantly different than the dosing used in the FDA trials and the other is that the insurance companies will not budge on tier 2 at the current price. This new information makes sticking to the agreed plan no longer valid as "prudent business" or "commercially reasonable." It is obvious two things are needed. 1. Lowering the price to be competitive with injectables while negotiating for tier 2. 2. Advertising on par with the Truejo launch. Just because Mannkind had seats on the JAC, doesn't mean they weren't pressured into complying with a strategy that they objected to. Matt said weeks ago he wanted the price lowered. If the price isn't lowered, Sanofi is showing their hand that the Mannkind reps on the JAC have no power and Sanofi is working against their own partner, hence lawsuit. agreed. Reducing price is may be a month of talks and a day for execution.
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Post by factspls88 on Feb 8, 2016 14:08:54 GMT -5
"Just because Mannkind had seats on the JAC, doesn't mean they weren't pressured into complying with a strategy that they objected to. Matt said weeks ago he wanted the price lowered. If the price isn't lowered, Sanofi is showing their hand that the Mannkind reps on the JAC have no power and Sanofi is working against their own partner, hence lawsuit."
My response:
Let's hope Mannkind had someone taking minutes at that meeting and circulated them to all members of the JAC to serve as proof that the the issue was discussed and that they accurately reflect Matt's comments as relayed to us during the conference call.
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Post by mnholdem on Feb 8, 2016 14:28:34 GMT -5
I'm pretty certain that MannKind management also made public comments both before and immediately after the Feb-2015 launch that Afrezza's per-unit price would be comparably-priced to RAA insulin.
Sanofi did NOT deliver that pricing strategy and replaced it with a 30%-50% premium instead. That didn't seem to be a partner that was working in concert with MannKind. Regardless, management's comments that they wanted competitive pricing has been a matter of public record for over a year.
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Post by benh on Feb 8, 2016 15:00:06 GMT -5
Good points.
I counter that the JAC meetings are regular. If pricing was considered a primary issue, did MNKD present strong analysis to counter the SNY strategy.
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Post by agedhippie on Feb 8, 2016 15:09:19 GMT -5
Consider a comparison of all the time and money spent on the Truejo launch. That was mearly a rebranding of near identical technology. Afrezza is a revolutionary new treatment. Take the amount of money and effort needed for a simple launch, Truejo, and add to that the extra effort that would be required for a "commercially reasonable" launch of Afrezza. Sanofi should have given at least as much visibility to Afrezza as they did to Truejo if they truly mean to give it a reasonable chance at commercial success. A big advertising spend on Afrezza at this point will be wasted money. Until the insurance is sorted out people might want it but they cannot get cover for it so they drop out and that is what we have been seeing. That is before you consider the education drive necessary to get doctors to prescribe Afrezza properly.
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Post by BlueCat on Feb 8, 2016 16:57:27 GMT -5
Good points. I counter that the JAC meetings are regular. If pricing was considered a primary issue, did MNKD present strong analysis to counter the SNY strategy. Its all hindsight now - other than any pending legal or negotiation. But - are we sure the JAC even met all the time? Once a month? Here's an example of what COULD have happened easily .... For SNY, NBD. They could go once a quarter. And in that meeting respond to MNKD concern - "Vraiment? Ok. We look into it and get back to you". Next meeting they say they are "waiting for data". The next meeting gets missed. Then the following meeting there is some data that's inconclusive, so its decided to put together a subcommittee to discuss further. At this point, 6 mos have gone by, and MNKD, on a very different schedule, has been pulverized. This stuff seriously happens all the time in big biz.
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Post by compound26 on Feb 8, 2016 17:04:29 GMT -5
Note that in the third quarter conference call, Hakan also noted that he certainly would like to see some TV ads. Below is what Hakan said: seekingalpha.com/article/3669586-mannkinds-mnkd-ceo-hakan-edstrom-q3-2015-results-earnings-call-transcript?part=singleKeith Markey"Okay, thank you. And then I have sort of a -- I think that you are facing somewhat of a chicken and an egg question here. On the one hand, Sanofi probably doesn't want to spend whole lot of money on direct-to-consumer advertising, especially television for instance, if they don't have reimbursement in place. But on the other hand, I am just wondering do you think that direct -- if they did some direct-to-consumer advertising that really generating the great deal of interest that patients walking into the doctor's office and talking to their insurance companies would have any beneficial effect on trying to move those negotiations forward?" Hakan Edstrom"Well, I know that there are certainly plans from Sanofi point of view in ruling at that direction. The timing tends to usually be based on what level of awareness do you have in the professional communities, so you are not, say, surprising doctors with, say, patient demand or patient questions that they may not be prepared for. Whether it would impact the negotiations with insurance companies, I don't really know how compelled they are, but that type of the information, it would certainly demonstrate to them that, but there is a perceived need of the product out in the market place. So I think from our point of view, it certainly would not hurt. The question is what is an appropriate timing and approach to have that as a, say, a support mechanism." But in the end, we know that Sanofi never run any TV ads for Afrezza. So apparently, in 2015, Mannkind wasn't in total agreement with Sanofi in either pricing or marketing (TV ads is an example). However, being the junior partner, they basically have to acquiescence to whatever Sanofi decided in the JAC.
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Post by benh on Feb 8, 2016 17:31:37 GMT -5
Good points. I counter that the JAC meetings are regular. If pricing was considered a primary issue, did MNKD present strong analysis to counter the SNY strategy. Its all hindsight now - other than any pending legal or negotiation. But - are we sure the JAC even met all the time? Once a month? Here's an example of what COULD have happened easily .... For SNY, NBD. They could go once a quarter. And in that meeting respond to MNKD concern - "Vraiment? Ok. We look into it and get back to you". Next meeting they say they are "waiting for data". The next meeting gets missed. Then the following meeting there is some data that's inconclusive, so its decided to put together a subcommittee to discuss further. At this point, 6 mos have gone by, and MNKD, on a very different schedule, has been pulverized. This stuff seriously happens all the time in big biz. That certainly could have happened. MNKD didn't have to attend the JAC. SNY could make decisions in their absence. This is a fundamental part to the Collaboration agreement. Sales and marketing was SNY. What I'm countering is the notion that SNY are going to be digging further in their pockets. I don't see it. I don't see them reducing pricing on 2MM $ Rev between now and April. The reduction would have to directly influence the next 8 week sales to a greater extent than the loss in Rev. In addition, the JAC bought the product from MNKD at an agreed price. So the price reduction actually comes more off SNY part of the agreement than MNKD's. Again, just don't see SNY going for this.
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Post by bradleysbest on Feb 8, 2016 17:40:49 GMT -5
And if they did & scripts pick up they will look like the fools that they are!
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Post by factspls88 on Feb 8, 2016 18:26:13 GMT -5
I'm pretty certain that MannKind management also made public comments both before and immediately after the Feb-2015 launch that Afrezza's per-unit price would be comparably-priced to RAA insulin. Sanofi did NOT deliver that pricing strategy and replaced it with a 30%-50% premium instead. That didn't seem to be a partner that was working in concert with MannKind. Regardless, management's comments that they wanted competitive pricing has been a matter of public record for over a year. They definitely said before the launch that the price would be comparable to RAA's. I don't recall if it was said shortly after the launch, but it doesn't make sense to me that they would have said it then given that the price would have to have been set at the launch.
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