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Post by matt on Jul 7, 2016 9:34:23 GMT -5
I was wondering if the supplemental studies presented at the 2016 ADA Sessions are fair game to mention at a doctor visit? Particularly, the one study that shows the faster in faster out action of Afrezza. Since the studies were presented at a peer reviewed, prominent diabetes gathering, I would think that could be discussed. Thoughts? Good thing to wonder about, but the label is the label is the label. If the supplemental studies are sufficiently powered and controlled to satisfy the FDA, then the company can ask for a change in label copy. That sort of thing happens fairly frequently, but the studies are held to similar standards as the original approval trials. If MNKD can manage a change, that definitely is the way to go. Meanwhile, if the physician asks an unsolicited question about the study presented at the ADA, the salesperson is free to whip out a journal reprint (if the study has been accepted for publication and is not just a poster). The catch is that the physician has to ask for it; the salesman cannot ask a leading question such as "Doctor, did you see the kinetic data presented at the ADA?" The real problem MNKD has with the study to which you refer is that is directly contradicts this sentence: "Despite the faster absorption of insulin (PK) from Afrezza, the onset of activity (PD) was comparable to insulin lispro." That is not a sentence that I made up, that is a direct quote from the FDA approved label for Afrezza. I think if the salesforce were to hit the street with an unapproved claim that directly contradicts what it says in the label it would potentially be a significant issue for the Office of Prescription Drug Promotion. Matt & Mike need to tread very carefully on this point. |
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Post by matt on Jul 7, 2016 6:54:37 GMT -5
Generally speaking, the sales rep must keep the marketing message to the claims that have been allowed on the label for the indications that have been allowed on the label. That is why the label copy is such a big deal when a drug gets approved, and why a "superior to XXXX" is far more powerful than a "not inferior to XXXX" claim.
Reps do get away with providing free handouts that are reprints from medical journals where the article might discuss a medical study (usually far smaller and not as well-controlled as a clinical trial) where the investigator successfully used the drug off-label for some new indication, but it had to be in response to an unsolicited request from the physician. So the rep can't say "Hey doc, have you seen this article about our drug", but if the physician knows about the article they can ask for a copy.
When pharma companies promote beyond the narrow bounds of the label, they can get in trouble with the FDA's Office of Prescription Drug Promotion and, more seriously, can be sued by the Department of Justice for fraudulently promoting medicines for unapproved uses. Since Medicare / Medicaid and other agencies pay for a lot of drugs, this can cost billions in penalties. Pfizer and Lilly have both paid penalties of more than a billion dollars for off-label promotion.
Bottom line, if it isn't on the label the rep can't say much more.
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Post by matt on Jul 6, 2016 6:53:42 GMT -5
... and he was right again.
XBIT is a cancer drug and it played fast and loose with its data and AF called them out on it, and the market responded once it was evident that the emperor had no clothes. What they did was to take a trial drug and separate the TREATMENT group into responders and non-responders, claiming a benefit for the responders sub-group. That is the equivalent of separating MNKD users into those that used Afrezza properly and had well-regulated postprandial glucose, and those who used the product incorrectly and had poorly regulated postprandial glucose. Given those made up group definitions, crafted after the fact from all those who got Afrezza, guess which group would have better controlled Hba1C?
It is the job of a financial journalist to point out flaws in data, whether it is accounting, clinical data, or corporate ethics. If the market then punishes the stock, so be it. That is management's payback for trying to be sleazy. Mannkind has its issues and its warts, but I think it is fair to say the Matt & friends are not sleazy.
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Post by matt on Jul 5, 2016 16:53:02 GMT -5
My understanding is that EVERYTHING was split 65/35, with Sanofi funding the MNKD 35% via the debt facility. There will be some funny numbers in 2016 due to all the write-offs at the end of 2015 but none of that matters because write-offs are just accounting catching up to the cash flow (which happened years before). What does matter is that the sales force can push enough Afrezza out the door at a sufficiently high margin to break even in cash before the money runs out. If MNKD can get to cash break even, then everything else is fixable long-term. If not . . . well, that is not good.
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Post by matt on Jul 5, 2016 11:12:00 GMT -5
—The FDA approved Marinol, which is synthetic THC.
That is an interesting point. The FDA and similar regulatory agencies around the world are very concerned about definition of, and delivery of a therapeutic dose. One reason inhaled medications are frowned upon is the variability in the amount of drug delivered to the lung as this can vary widely due to technique by the user. The more potent the dose, the more important precise delivery becomes.
The other matter is potency of the dose. If the active ingredient in a drug is manufactured synthetically (and almost any molecule can be made by a good organic chemist) then the potency is known with a high degree of certainty. Compare that with a plant grown by Farmer Jones in one state with different soil, water, and sunlight compared with that grown by Farmer Smith 1,000 miles away. Both can plant the same seed, but they get very different potencies. Processing plant material to extract specific proteins is a difficult task so pharma companies will wind up using synthetic material just because it is cheaper and easier in the long run.
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Post by matt on Jul 5, 2016 7:14:22 GMT -5
It is great to fantasize about suing Sanofi, but the realities are far different from the fantasy. Even if this were to go to arbitration as the contract requires, the burden of proof is still on Mannkind to show that Sanofi did not meet the minimal requirements of the contract. Sanofi spent enough money to show that they had made "commercially reasonable" efforts. The standard is not that they did everything perfectly or that they could have done more, it is whether the efforts were reasonable. In that kind of a pissing contest, Sanofi would have the upper hand.
What really matters now is whether this company can sell Afrezza on their own or not, because if they can't the company will go belly-up. The company has little cash on the balance sheet, a ton of senior debt, and a depressed share price relative to past years. Do shareholders really want their management to spent their time and precious cash chasing Sanofi in arbitration or do you want that energy focused on the job at hand?
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Post by matt on Jul 1, 2016 7:21:18 GMT -5
I am wondering if the final handoff from Sanofi cannot occur until this transition is complete. July is definetly a major transition month. Transitions like this are usually pretty clean from the Sanofi / Mannkind end. Drug wholesalers and pharmacy chains deal with hundreds of thousands of product codes and Afrezza for them is just one more SKU to keep track of. Sometimes it takes them a few weeks to wake up to the fact that a product is no longer available from Supplier A but can now be ordered from Supplier B. Once that happens an order can be placed with Supplier B and the product will flow down the distribution channel to the retailer. Mostly it has to do with database quality at each point in the supply chain; the big distributors are normally on top of things but those further down the food chain may not be. The problem of course is that if a particular insulin is not available then the physician will substitute a different product and getting the patient back on Afrezza might be a challenge. |
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Post by matt on Jun 30, 2016 14:23:22 GMT -5
and they can show the endos the speed afrezza onset 7 mins lispro onset 25 mins and the unit conversions. The sales team can talk about the abstracts. I don't think they can say that Afrezza has a faster onset when that contradicts the black and white text of the label which specifically says that its onset is similar to Lispro. The abstracts can be distributed as information, but the sales force has to be extremely careful about making any unsubstantiated marketing claims and as far as the FDA is concerned, the label is gospel and everything else is unsubstantiated. With the handcuffs of a restricted label, there is no reason for an endo to switch a patient to Afrezza unless the case can be made that better compliance with insulin therapy leads to better Hba1C control, avoidance of the needle will lead to better compliance, and the benefits of better compliance are more important that the risk to lung function. It will be interesting to see what kind of arguments Mike and friends have come up with for those last two points, because the company will live or die depending on their ability to convince physicians on those points. |
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Post by matt on Jun 26, 2016 10:52:52 GMT -5
It should be clear with a back of a napkin calculation that Afrezza CAN be manufactured and sold very cheaply at scale. People focus on the wrong question. It is not what the accounting cost of production is, but rather the variable cost of manufacturing versus the incremental revenue. When the accountants made MNKD take a big write-down on assets, they reduced future manufacturing costs because the on-going depreciation and amortization of those assets was charged to the P&L in 2015. That can be a bit illusory in the long-term, since depreciated assets do have to be replaced at some point, but the fully burdened cost of making a single unit of Afrezza in 2015 was higher than it is in 2016 from a pure accounting standpoint.
Scale really does matter. I worked many years for a major industry player and our principal product sold for between $1.10 and $1.25 per unit when I joined the company in the early 1980's, and our manufacturing cost was 65 cents. Along came Medicare DRGs in 1984 and suddenly hospitals would no longer pay $1.25. Ten years later our average selling price was down to 60 cents, and our cost of production was below 40 cents. Last time I spoke to someone in the company, the selling price was headed to 45 cents and manufacturing costs were still declining, and because of inflation the comparison between $1.25 and 45 cents is even more dramatic. When you have scale, seemingly minor projects that take a tenth of a cent out of the unit cost become economically interesting, but if you are stuck with low volumes the cost of the engineering project outweighs the benefits. We could absorb a lot of engineering projects because our daily production volume was over two million units so those little projects that saved a tenth of a penny were each worth $750,000 a year to the bottom line, and over time there were many little projects.
I hope MNKD takes advantage of the new accounting cost to drive penetration, even if it only to break-even, so that they can learn how to manufacture at scale. Even if MNKD never makes a penny off of insulin, that might be OK if they learn to product other products in the delivery system as a far more competitive cost.
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Post by matt on Jun 25, 2016 12:53:42 GMT -5
ok Help!!.. How is being part of the Russell microcap a big deal?. Why wasn't MNKD added when MNKD was 6 7 8 or 9 bucks. Is it because now it's only 1.25...? What is the benefit.. exposure..? Isn't part of the NASDAQ considered a bigger deal. have a good weekend. Thanks for any insight. The reason it is important to be part of practically any index is that there are mutual funds that track all of these indices. You want to invest and be guaranteed the returns like the S&P 500? No problem, put your money in an S&P Index fund and the fund managers will give you that exact return at a cost of about 8 basis points per year. Trading in the fund is all computer driven so the fund always owns the exactly correct 500 stocks and in the exact proportion to their weight in the index. Since the computer doesn't get a management bonus the fees are very small. If you don't like the S&P 500 then there are funds that do biotech, oil & gas, small cap companies, foreign companies, etc. all with diversified holdings and reasonable management fees.
The index fund guarantees the return on the index so it must absolutely must own each and every stock in the index, so there is guaranteed demand for the stock to the extent of the demand for the index. Remember, there is no fund manager picking the investment because it is all done by computer. So when a stock enters an index, there is a big buy-in that happens as we have seen this past few days. Conversely, the knife cuts in the other direction as well and if Mannkind gets dropped from the index the computers will be totally unemotional and sell 100% of their holdings. A lot of "institutional ownership" is not smart money fund managers placing bets on a stock, but rather a computer somewhere continually rebalancing its target portfolio, and to the extent that many of the large brokers run index funds, that ownership shows up as Fidelity, Goldman Sachs, State Street, and so on even though they have nothing to do with the buying or selling decisions.
So is it good or bad? If Mannkind appreciates relative to the rest of the funds in the index then the computers will have to rebalance their index weighs and buy more Mannkind and sell the other stocks, which in turn will amplify the share price gains, but it will also amplify the losses if Mannkind underperforms the index and the computers sell to rebalance. Demand for the index will, indirectly, drive some demand for Mannkind because if more people want to put more money into the Russell Microcap Index, the computer will dutifully take their money and buy the stock, and vice versa. Overall, except for the days when a share is added or dropped from a particular index, or when a serious rebalancing occurs, I think it is a neutral.
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Post by matt on Jun 24, 2016 15:40:42 GMT -5
It tells me that someone is buying and accumulating , as some of you say on this board , when there is a buyer , there is a seller , but you would have expected it to go down like everything else. I think at this point most of the funds are out of MNKD and with the price decline the stock is not a significant weight in any of the indices either. That tends to blunt the wild swings, both on good days and on bad days. |
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Post by matt on Jun 23, 2016 14:39:56 GMT -5
Shouldn't the character have a belly button . . . an outie of course.
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Post by matt on Jun 20, 2016 6:57:38 GMT -5
You cannot look at retail prices, or even co-pays, and figure out what a drug really costs. There is a complex web of rebates in the industry and the explanation of how those work used to give me a raging headache (and I am a numbers guys!). In essence what happens is that pharma companies buy loyalty by promising a certain rebate if a health plan or pharmacy benefit manager converts a certain percentage of their patients to that preferred brand. Normally the rebate is only paid on the back end after the pharma company can verify from IMS data whether the plan hit the target conversion.
So the full retail pharmacy price for a given drug might be $50, the price though a PBM might be $30 with the patient paying a $20 of that as a co-pay, but the real price to the health plan might be $0 because the rebate might cover the part the co-pay doesn't cover. In some cases the co-pay is more than the full retail price of some older drugs, but nobody ever tells the patient that they just spent $20 on a co-pay for a $10 prescription. In those cases the plan can actually make money. With that as a backdrop, what is your definition of "real price" to the customer?
Rule of thumb for proprietary pharmaceuticals is that the gross profit margin needs to be 75-80% in order to cover the cost of sales and marketing, distribution, research and other costs to still leave a reasonable pretax profit. That translates into a 4X or 5X markup on manufacturing cost, so if Afrezza really costs $20 to produce as peppy stated, that would imply a selling price of $80 to $100. Anything less and the company will perpetually underperform financially when compared with other pharma companies.
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Post by matt on Jun 19, 2016 7:35:39 GMT -5
Once it is established as superior they will have to cover it and it is by far superior. Managed care will never "have to cover it" in the next 5 to 10 years. There are many drugs known to be superior for a subset of patients that are not covered, or only covered in extreme circumstances.
Despite your assertion that Afrezza is "far superior" the data simply does not exist to support that today. You might be right, but proving that assertion is what will take 5 to 10 years. Managed care is focused on getting paid insurance premiums and then providing an acceptable level of care, not the best level of care just acceptable, for less than the premium charge. If MNKD can show an insurance company that their total cost of providing care will go down within the typical time horizon of the insured patient being on their program, then you will see Tier 1 reimbursement.
The challenge here, and with any insulin, is that controlled glucose levels lead to reduced costs for expensive care events like heart attack, stroke, amputations, etc. but MNKD will have to prove that the extra cost of Afrezza translates into lower costs for the managed care company. That is a large and long trial, certainly not something that will happen this decade. The other challenge, and this is a defect in our reimbursement system, is that MNKD is asking insurance company A to pay for Afrezza today but if the patient switches insurers the long-term cost incurred by company A today will accrue to the benefit of insurance company B in future years. Since the typical insured switches their plan on average once every three years this is not a trivial concern for the insurance industry.
If all companies covered every drug the same, it wouldn't matter because the long term cost and benefits would equalize over the entire population of insureds. However, that is not how the market works and some insurers (United Healthcare for example) will do anything to make an incremental dollar today while other insurers (Aetna, many of the Blue Cross affiliates) are a bit more forward thinking. So long as different parts of the payor market have different financial incentives, coverage for a more expensive alternative will be difficult in the absence of long-term studies proving its cost effectiveness within the time horizon the patient will remain with the insurance plan. For that there is no easy answer.
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Post by matt on Jun 15, 2016 7:33:07 GMT -5
The filing date, also called the priority date, is the date on which the patent application was lodged with the PTO. This is important for two reasons:
1. It is the date the authorities use to determine who was the first to discover an invention. First to file wins the patent. Under the old law if you could prove that you had discovered something earlier but you had filed later you could still be awarded the patent but that no longer happens, so filing date is of critical importance. The same priority date is carried over to foreign applications filed within the statutory.
2. If the patent is eventually granted, the 20 year life runs from the filing date (with some exceptions).
As part of the patent granting process, after the PTO has reviewed the application it has to be published so that other inventors can object to the scope of the claims or raise interference actions. That is where these patents are today; they have been published for objection but have not yet been granted.
Normally the time from application to publication is about 18-24 months, and publication to grant is another 12 months or so, but that time line varies widely. Some patent examiners are faster than others, some companies are faster in relying to questions and challenges than others, and the subject matter of the patent is important to the depth of the queue. In general, it is hard to say anything in general!
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