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Post by broncolife on Sept 13, 2016 23:26:19 GMT -5
Does anyone think Afrezza wouldn't already be a success if it was completely owned/controlled by a big pharma company?
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Post by avichen on Sept 14, 2016 2:15:01 GMT -5
Yes, that's what the big pharma wants, and they want it cheap. The best way to get it cheap is to kill MNKD and vultures all patents and resources. It's a dog eat dog world.
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Post by matt on Sept 14, 2016 8:00:20 GMT -5
No, I don't think that. Big has nothing to do with product success; the company must have the right call points in the hospital or physician offices. Bristol Myers Squibb, to take an example, is a powerhouse in oncology but they would fail miserably with Afrezza because diabetes is not their franchise. Pfizer and several other large companies decided to exit metabolic drugs to focus on other therapeutic indications, but the result of that decision is a greatly reduced sales force that can call on the RIGHT decision makers. A new company could jump in, but asking to launch an entire sales force on the back of a single drug is a tall order although that is what Mannkind has been forced to do out of necessity.
So who does that leave that still has an established diabetes franchise worth talking about? Eli Lilly, Novo Nordisk, and Sanofi. Sanofi had their chance with Afrezza and we all know how that worked out. Lilly is rightly focused on launching Basalglar in 2017, and it is positioned to turn Sanofi's Lantus into a commodity product within about six months. If I worked at Lilly I wouldn't even look at Afrezza until 2018 because it is hard to do a good launch on more than one product at a time. Could Novo do better than Sanofi? Probably, but in doing so they would have to cannibalize much of their other insulin business so the economics are not there for either Lilly or Novo.
Those are also the same reasons why Afrezza would be extremely tough as an acquisition target. The cost to buy Mannkind at a price that wouldn't send long shareholders over the nearest cliff is something around $2 billion (including assumption of the liabilities and transaction/integration costs). The acquirer would be looking for a return on investment that is, at a minimum, about 9% pretax. That implies that the product would have to contribute about $180 million to the pretax profit of the acquirer's income statement for them to break even. Big companies will eat some modest earnings dilution in year one, but most acquisitions are expected to be accretive to shareholder returns in year two. Run the numbers on how many scripts it would take to generate that level of pretax earnings, not revenue but earnings, and it should become obvious why Mannkind does not have a line of potential acquirers queued up outside the office in Valencia.
As avichen says, if somebody can pick up the business on the cheap then they might. If MNKD were forced to auction its assets in court, the total price would go from $2 billion down to a much lower number, and earning 9% on a much lower acquisition cost is more feasible. |
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Post by beardawg on Sept 14, 2016 8:15:22 GMT -5
What about acquisitions for products still in the trial stage? Seems like that's when most acquisitions happen. They can't possibly expect a return in year 2 for those.
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Post by peppy on Sept 14, 2016 8:23:43 GMT -5
No, I don't think that. Big has nothing to do with product success; the company must have the right call points in the hospital or physician offices. Bristol Myers Squibb, to take an example, is a powerhouse in oncology but they would fail miserably with Afrezza because diabetes is not their franchise. Pfizer and several other large companies decided to exit metabolic drugs to focus on other therapeutic indications, but the result of that decision is a greatly reduced sales force that can call on the RIGHT decision makers. A new company could jump in, but asking to launch an entire sales force on the back of a single drug is a tall order although that is what Mannkind has been forced to do out of necessity.
So who does that leave that still has an established diabetes franchise worth talking about? Eli Lilly, Novo Nordisk, and Sanofi. Sanofi had their chance with Afrezza and we all know how that worked out. Lilly is rightly focused on launching Basalglar in 2017, and it is positioned to turn Sanofi's Lantus into a commodity product within about six months. If I worked at Lilly I wouldn't even look at Afrezza until 2018 because it is hard to do a good launch on more than one product at a time. Could Novo do better than Sanofi? Probably, but in doing so they would have to cannibalize much of their other insulin business so the economics are not there for either Lilly or Novo.
Those are also the same reasons why Afrezza would be extremely tough as an acquisition target. The cost to buy Mannkind at a price that wouldn't send long shareholders over the nearest cliff is something around $2 billion (including assumption of the liabilities and transaction/integration costs). The acquirer would be looking for a return on investment that is, at a minimum, about 9% pretax. That implies that the product would have to contribute about $180 million to the pretax profit of the acquirer's income statement for them to break even. Big companies will eat some modest earnings dilution in year one, but most acquisitions are expected to be accretive to shareholder returns in year two. Run the numbers on how many scripts it would take to generate that level of pretax earnings, not revenue but earnings, and it should become obvious why Mannkind does not have a line of potential acquirers queued up outside the office in Valencia.
As avichen says, if somebody can pick up the business on the cheap then they might. If MNKD were forced to auction its assets in court, the total price would go from $2 billion down to a much lower number, and earning 9% on a much lower acquisition cost is more feasible. quote: Run the numbers on how many scripts it would take to generate that level of pretax earnings, not revenue but earnings, and it should become obvious why Mannkind does not have a line of potential acquirers queued up outside the office in Valencia.
reply: Matt, and/or board, Can you come up with an approximation of that number please?
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Post by me on Sept 14, 2016 11:01:49 GMT -5
Those are also the same reasons why Afrezza would be extremely tough as an acquisition target. The cost to buy Mannkind at a price that wouldn't send long shareholders over the nearest cliff is something around $2 billion (including assumption of the liabilities and transaction/integration costs). The acquirer would be looking for a return on investment that is, at a minimum, about 9% pretax. That implies that the product would have to contribute about $180 million to the pretax profit of the acquirer's income statement for them to break even. Big companies will eat some modest earnings dilution in year one, but most acquisitions are expected to be accretive to shareholder returns in year two. Run the numbers on how many scripts it would take to generate that level of pretax earnings, not revenue but earnings, and it should become obvious why Mannkind does not have a line of potential acquirers queued up outside the office in Valencia. quote: Run the numbers on how many scripts it would take to generate that level of pretax earnings, not revenue but earnings, and it should become obvious why Mannkind does not have a line of potential acquirers queued up outside the office in Valencia.
reply: Matt, and/or board, Can you come up with an approximation of that number please?
19,000 scripts per week. |
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Post by Deleted on Sept 14, 2016 11:28:14 GMT -5
quote: Run the numbers on how many scripts it would take to generate that level of pretax earnings, not revenue but earnings, and it should become obvious why Mannkind does not have a line of potential acquirers queued up outside the office in Valencia.
reply: Matt, and/or board, Can you come up with an approximation of that number please?
19,000 scripts per week. try another number. 19k per week translates to may be like 450 mil per yr in revenue minus costs ( 200 mil ) = earnings of 250 mil |
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Post by slugworth008 on Sept 14, 2016 11:32:39 GMT -5
try another number. 19k per week translates to may be like 450 mil per yr in revenue minus costs ( 200 mil ) = earnings of 250 mil Sell locally (US) but think globally - I think they could eclipse 19K per week on a global basis. IMO |
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Post by me on Sept 14, 2016 13:01:53 GMT -5
try another number. 19k per week translates to may be like 450 mil per yr in revenue minus costs ( 200 mil ) = earnings of 250 mil @iam2sekc4u2002 - the original question was regarding pre-tax profit. Your comment suggests that the Gross Profit Margin is approximately $455 per script. I disagree. I used $300 per script [($300 x 19,000 scripts x 52 weeks) - $120mm] = $176.4mm ~ $180mm. First of all, the Retail Price per script is not the Revenue per script that MNKD receives. MNKD's Revenue is reduced by the rebates paid out per script. Secondly, MNKD's Gross Profit Margin is the Revenue (which is less than the Retail Price) less COGS. Anyone can plug in any number they wish... peppy was looking for an approximation. |
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Post by Deleted on Sept 14, 2016 13:12:47 GMT -5
try another number. 19k per week translates to may be like 450 mil per yr in revenue minus costs ( 200 mil ) = earnings of 250 mil @iam2sekc4u2002 - the original question was regarding pre-tax profit. Your comment suggests that the Gross Profit Margin is approximately $455 per script. I disagree. I used $300 per script [($300 x 19,000 scripts x 52 weeks) - $120mm] = $176.4mm ~ $180mm. First of all, the Retail Price per script is not the Revenue per script that MNKD receives. MNKD's Revenue is reduced by the rebates paid out per script. Secondly, MNKD's Gross Profit Margin is the Revenue (which is less than the Retail Price) less COGS. Anyone can plug in any number they wish... peppy was looking for an approximation. well.. I was speculating.. we wouldnt know until Q3 , but for sure when Q4 numbers are out as q4 revenue is all Mannkind's. |
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Post by cjm18 on Sept 14, 2016 13:39:56 GMT -5
The weekly script chart shows a number just under 600 dollars. Is that the retail price of a script?
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Post by op2778 on Sept 14, 2016 16:50:02 GMT -5
What about acquisitions for products still in the trial stage? Seems like that's when most acquisitions happen. They can't possibly expect a return in year 2 for those. That's not a bad idea, more If we take into consideration that today VTAE Was bought for 21usd per share and they are still in Clinical Stage. That said, looks like Matt is a little bit pessimistic about MNKD and Afrezza future. I totally respect his post, but, If we think like he done, looks like MNKD has do nothing of Relevance with TS development. Let's see: I'm thinking about Governments interested in TS. Why? Vaccine for example. Can you see The potencial in places like Africa? No refrigeration needed to use it? Sometimes, we use to think about things like they work in a standard way all over the world (but there are still places where things doesn't work at all). in Italy for example, government is thinking to open specific spaces for drog addicts (like Amsterdam booths to give you an idea). Why? Because of addict getting contaminated because of HIV virus (multiples use of same needles by different people). It's really necessary to open those space? The problem is that probably we are still not ready to legalize drugs, but can you immagine of cocaine inhaled vs actual use? Well, probably I'm a little bit crazy to think like that, but i see future for TS (therapeutic pot is a reality right now). Not necessarely we need a buyer (i know financial situation is ugly for MNKD) but, just thinking louder.....TEVA could be a good partner (i repeat, not to buy The company, but just to use TS for their products). Uhm.......Let's see: Mylan? Epipen business? They don't need to Buy MNKD, but they can pay some Good royalties to us and offer an inhaled Epipen...... looks like Receptor is up to something too.... JMHO of course, but i really don't know nothing about all of this stuff. OP |
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Post by anderson on Sept 14, 2016 19:03:25 GMT -5
Best way to figure out profit is to take the Sanofi agreement and work backwards. Deal was said to be equivalent to mid 20's royalty(http://mnkd.proboards.com/thread/1187). So lets just say 25%;
(total sales) * .25 = Pm :MNKD profit from Sanofi deal.
Pm/.35 = Total profit after all costs.
so
(total sales) * .25/.35 = Total profit
(t0tal sales/scripts) * .25/.35 = Profit per script
170000/277 * .25/.35 = $438.37
Note this figured in both MNKD's and Sanofi's cost for everything. Note this model assumes MNKD's factory is running efficiently.
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