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Post by patten1962 on May 21, 2016 6:36:04 GMT -5
What would a overseas deal mean to MannKind?
My thoughts are first, what kind of money would be up front in a deal like this? 100 million? 500 million? 1 Billion? No idea but as you can see this could be a huge boost to the Mannkind books!
How would the deal be set? 90%-10%? 60%-40%? Somewhere in the middle? Again, no idea but we can see where a deal of this magnitude would make the future look awesome!
Now let's not forget about our little friends RLS! Where do they fit in this puzzle? Would not only be Afrezza going international. If I am correct we have a 87%-13% deal in place with them. Some of my friends believe they will come back into the picture in the way of a reverse merger. I have no information on this, this is what some people are speculating.
So back to my question, what does this mean for MannKind? I am looking for some of you to give opinions please!
Imho, I feel a deal is coming, Matt and the board want it to be a good deal and not have it be like the one we made with Sanofi! If this deal happens by July, Mannkind could show a profit by 4th quarter or 1st quarter of 2017.
Thank you. Look forward to your replies!
Ps. Really enjoyed my time meeting people from the board and have a new respect for the knowledge you have about this company!
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Post by Deleted on May 21, 2016 6:59:44 GMT -5
A well negotiated deal would give MannKind sufficient cash to allow Afrezza sales to ramp up and become cash flow positive. Negative cash flow is the cause for current share price. Wall Street is betting MannKind depletes its cash before a deal is reached. The financial situation is precarious, no other way to describe it.
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Post by Deleted on May 21, 2016 7:07:13 GMT -5
40 to 50 million with 10 % margin may be. Consider currency conversion and drugs are cheap overseas so Afrezza need to be priced accordingly. Volume overseas should reduce the average cogs in US
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Post by patten1962 on May 21, 2016 7:22:29 GMT -5
40 to 50 million with 10 % margin may be. Consider currency conversion and drugs are cheap overseas so Afrezza need to be priced accordingly. Volume overseas should reduce the average cogs in US So to dumb it down for us healthcare guys, you think 40 to 50 million up front with a 90% to 10% split? Thank you. |
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Post by agedhippie on May 21, 2016 8:59:46 GMT -5
40 to 50 million with 10 % margin may be. Consider currency conversion and drugs are cheap overseas so Afrezza need to be priced accordingly. Volume overseas should reduce the average cogs in US So to dumb it down for us healthcare guys, you think 40 to 50 million up front with a 90% to 10% split? Thank you. ...and that 90:10 split is on a low price. |
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Post by tayl5 on May 21, 2016 9:43:16 GMT -5
I'm not so sure there will be a big upfront payment, at least from the initial deals. It's all about risk, and the experience of MannKind and Sanofi so far in the US would suggest there is a lot of risk. I see deals with maybe $5-10M upfront and either generous royalties or revenue milestone-based payments. The size of the market, the reach of the partner and the cost involved in getting through the local regulatory agencies will also be key factors.
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Post by dg1111 on May 21, 2016 9:56:09 GMT -5
I think that if anywhere near $50 million upfront was on the table, we would not have just seen dilution.
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Post by patten1962 on May 21, 2016 18:04:31 GMT -5
Interesting thoughts. Wondering what Matt and the board would be looking for.
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Post by bthomas55ep on May 21, 2016 18:41:37 GMT -5
I keep thinking that an overseas deal at this point would be a re-licensing deal and not a partnership. For an upfront purchasing fee, an international company would own the rights to re-brand and distribute at their discretion. Mannkind would supply Afrezza for an agreed upon wholesale price and the Pharma could grow their inhalable insulin business in their defined region without royalties. Two ways this benefits Mannkind - 1. They can negotiate a much bigger upfront payment in exchange for selling the rights to a specific region. MNKD is cash starved and someone may step up for $100M to $200M if they can to exclusively own all the rights to their region. 2. Supplying Afrezza at wholesale can still help to cover part of overhead as the story of the product grows. If they can extend the runway to two plus years, this would give the company a real chance to make it to profitability. IMO
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Post by matt on May 22, 2016 8:04:03 GMT -5
As a benchmark, look at the Sanofi deal which was thought to be a very sweet deal at the time. That yielded $150 million for WORLDWIDE rights but imposed 35% of the launch costs on MNKD. Anything now would be less attractive than Sanofi.
The problem with thinking about an international deal is that a deal that encompasses ex-US in total is not going to happen. Pharmas are global businesses for the most part, the regional players that were once common had been swallowed up by the end of the 1990's and what is left is truly niche players that have a presence in only a handful of countries, and none of them very interesting countries from a marketing standpoint. The smaller the region and the less attractive the pricing, the smaller the payment if any payment at all can be extracted. The regional / local players are not deep pocketed companies like the multinationals and won't write big checks simply because they don't have the money. Once you get past the big pharmas and big generic companies, sales of more than a few hundred million is a big number. There are biotechs that do better, but insulin is a pharma product that would be a very poor fit with biotech.
So the better question to ask is what would a deal for Country X or Y mean, since that is what you are really talking about. Once the question is focused you can think about reimbursement rates, who funds the healthcare system, government practices, and so on. Those factors are all over the place, even in a region you might think of as a single place (like Europe). Compare the healthcare systems in a country like Spain, where pricing is very poor and vendors wait up to 18 months before paying, with that of Germany where pricing is strong and wholesalers pay their bills on the 20th day after the invoice date without exception. The only thing the EU markets have in common is a single drug regulator that can approve a product. Take it the next step and compare practices across widely dispersed geographies, say those in China versus Brazil, and you will rapidly understand why it takes a large multinational to manage the level of complexity.
Quit thinking overseas deal (singular) and start thinking overseas deals (plural). Anybody large enough to take on marketing of Afrezza in every international market will want the US as well and I think that ship has sailed. The question is how many international relationships can MNKD handle given that they have relatively thin management capabilities, because each relationship will pose challenges that need to be managed. The danger is taking on too many, not too few.
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Post by esstan2001 on May 22, 2016 8:49:26 GMT -5
As a benchmark, look at the Sanofi deal which was thought to be a very sweet deal at the time. That yielded $150 million for WORLDWIDE rights but imposed 35% of the launch costs on MNKD. Anything now would be less attractive than Sanofi. The problem with thinking about an international deal is that a deal that encompasses ex-US in total is not going to happen. Pharmas are global businesses for the most part, the regional players that were once common had been swallowed up by the end of the 1990's and what is left is truly niche players that have a presence in only a handful of countries, and none of them very interesting countries from a marketing standpoint. The smaller the region and the less attractive the pricing, the smaller the payment if any payment at all can be extracted. The regional / local players are not deep pocketed companies like the multinationals and won't write big checks simply because they don't have the money. Once you get past the big pharmas and big generic companies, sales of more than a few hundred million is a big number. There are biotechs that do better, but insulin is a pharma product that would be a very poor fit with biotech. So the better question to ask is what would a deal for Country X or Y mean, since that is what you are really talking about. Once the question is focused you can think about reimbursement rates, who funds the healthcare system, government practices, and so on. Those factors are all over the place, even in a region you might think of as a single place (like Europe). Compare the healthcare systems in a country like Spain, where pricing is very poor and vendors wait up to 18 months before paying, with that of Germany where pricing is strong and wholesalers pay their bills on the 20th day after the invoice date without exception. The only thing the EU markets have in common is a single drug regulator that can approve a product. Take it the next step and compare practices across widely dispersed geographies, say those in China versus Brazil, and you will rapidly understand why it takes a large multinational to manage the level of complexity. Quit thinking overseas deal (singular) and start thinking overseas deals (plural). Anybody large enough to take on marketing of Afrezza in every international market will want the US as well and I think that ship has sailed. The question is how many international relationships can MNKD handle given that they have relatively thin management capabilities, because each relationship will pose challenges that need to be managed. The danger is taking on too many, not too few. In your opinion, is it plausible by year's end to execute a couple of deals- each with 15-30M upfront, and high single to low teens royalty on revs? I keep thinking Israel, and another middle eastern country... |
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Post by agedhippie on May 22, 2016 9:06:29 GMT -5
I would be extremely surprised if there was a deal done by year end that people would feel happy about. At this point the product looks like it has failed so any major player is going to see turned around in the US before they pay money for rights. Once the US has picked up I could see the possibility of deals. Right now it would look like a gamble and nobody is going to want to spend much on a gamble.
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Post by sportsrancho on May 22, 2016 11:05:20 GMT -5
I would be extremely surprised if there was a deal done by year end that people would feel happy about. At this point the product looks like it has failed so any major player is going to see turned around in the US before they pay money for rights. Once the US has picked up I could see the possibility of deals. Right now it would look like a gamble and nobody is going to want to spend much on a gamble. I just listened to the audio. And it doesn't sound like much happening in the way of overseas. But one thing for sure is that Mike was willing to make a gamble on us. People told him he was crazy. But he sees Afrezza true worth and the light at the end of the tunnel! Everything I've ever done that people told me I was crazy to do has worked out just fine:-) and IMO Mike's got the balls to pull it off! |
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Post by agedhippie on May 22, 2016 11:12:26 GMT -5
I would be extremely surprised if there was a deal done by year end that people would feel happy about. At this point the product looks like it has failed so any major player is going to see turned around in the US before they pay money for rights. Once the US has picked up I could see the possibility of deals. Right now it would look like a gamble and nobody is going to want to spend much on a gamble. I just listened to the audio. And it doesn't sound like much happening in the way of overseas. But one thing for sure is that Mike was willing to make a gamble on us. People told him he was crazy. But he sees Afrezza true worth and the light at the end of the tunnel! Everything I've ever done that people told me I was crazy to do has worked out just fine:-) and IMO Mike's got the balls to pull it off! I think it's a no-brainer for Mike. If it fails then he has failed where Sanofi failed - no stigma there. If it works they he succeeded where Sanofi failed and he gets to write his own check for his next job. There is almost no downside for him and a lot of upside so a huge incentive to make this work. |
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Post by babaoriley on May 22, 2016 11:16:57 GMT -5
I have no personal, first-hand knowledge of Mike, but from what I've read and heard, we're fortunate to have landed him. He's going to afford us the best chance of success. So, if he can't do it, then perhaps this whole Afrezza thing, no matter how much sense it makes to most of us, and for whatever myriad and complex and even nefarious reasons, just wasn't meant to be a commercial success. I'm thinking he can get it done, but it will be a while before we have a clearer feel for our chances.
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