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Post by mnkdmorelong on Jan 13, 2016 20:33:21 GMT -5
Do you know that what you have written in response to my post is totally out of synch with what I wrote. Docs train themselves by other means than just the salesperson. As a group, they read widely. Salesmen can leave articles with the docs that describe the rapid on and rapid off feature. I am glad you helped your Dad. Hope he gets back onto Afrezza. I read what you wrote.. as well as other things you have said .. yes, Docs can prescribe off label, but how many will do so when they do not understand the drug ... or in most cases have never heard of it .. Obviously docs will not prescribe without knowing the drug. My point is that knowing the rapid on rapid off feature of Afrezza does not need to come from the sales rep. It can be from another doc or a trade journal. MNKD does not need to spend money on a superiority clinical trial when it can achieve its goals without it. It's like the Tin Man in the Wizard of Oz. "If I only had a brain!" In Afrezza's case, "if I only had a better label." The drug is only the market. Go out and hump it.
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Post by mnkdmorelong on Jan 13, 2016 20:15:22 GMT -5
All longs should be pleased with the show Matt put on. He laid it out in detail warts and all.
MNKD plans to have a skeleton sales force in the US. Most to the heavy lifting will be via social media and Diabetic clinics. The issue is that without a sales call, doctors listen to other reps like SNY and NVO. But without cash MNKD cannot field a sales force.
Maybe most of the sales in the next year will be overseas at low GM.
MNKD has only themselves to blame for the premium price set by SNY. They must have known about it before they signed the contract.
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Post by mnkdmorelong on Jan 13, 2016 19:29:21 GMT -5
MNKD will have a very small US sales force. Will rely on social media and advocacy groups. They have no choice as they do not have the bucks.
I think Matt has a few tricks up his financing sleeve.
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Post by mnkdmorelong on Jan 13, 2016 18:57:58 GMT -5
Overall, very good presentation by Matt. The TS opportunities look very small. Not like insulin.
Matt did say he would do a secondary if needed.
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Post by mnkdmorelong on Jan 13, 2016 18:50:02 GMT -5
No clear path to more cash.
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Post by mnkdmorelong on Jan 13, 2016 18:46:58 GMT -5
TS programs are very early stage.
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Post by mnkdmorelong on Jan 13, 2016 18:41:31 GMT -5
So far, Matt is nailing it!
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Post by mnkdmorelong on Jan 13, 2016 18:30:23 GMT -5
MNKD goes it alone!
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Post by mnkdmorelong on Jan 13, 2016 18:27:08 GMT -5
Is the presentation on time?
Who precedes MNKD?
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Post by mnkdmorelong on Jan 13, 2016 16:10:25 GMT -5
This doesn't make any sense. If you're going to include the $60M aggregate loss on the left side of the equation, why would you use a 25% royalty figure on the right? One is a cumulative number and the other is an ongoing rate. Matching the $90M annual cash burn to a 25% royalty does make sense. Also, factoring a 50% price cut I suppose is attempting to show before and after required sales. But the gross sales $$ required remains the same in either case, so I don't get including it in this kind of a cost / revenue matching equation. How about $90M = 25% X sales. Break even sales for MNKD = $360 in that solution. It's too simple in my opinion and overstates the requirement, but its one way to look at it. The $60 mln is the aggregate loss for the first year. So everything on the left side of the equation is for one year. It must be balanced by cash flow from the right side. Obviously in year 2 we go through the same exercise. I am assuming the 25% royalty is based on a certain set of COGs and ASPs. If Afrezza's price is cut in half, I am sure the 65/35 split in profits would have moved the 25% downwards.I I made it simple and cut the royalty by 50%. Is it perfectly accurate? No. But it tells us that MNKD needs to do about 1 bln in sales to break even. This is a huge number coming from first year sales of almost nil.
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Post by mnkdmorelong on Jan 13, 2016 15:48:45 GMT -5
Too early PST.
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Post by mnkdmorelong on Jan 13, 2016 15:34:51 GMT -5
"Something tells me that both SNY and MNKD went to market with a premium priced product. They had no response when they got pushback from insurance companies. The no response may be caused by the high COGS. This may be the reason why SNY did not do the EU; prices there are even lower than here."
I have to head off to a meeting (so feel free to continue - maybe other board members can better explain) but, even if I were to accept your inclusion that sales/marketing expenses are part of COGS - which is incorrect - the other problem in your statement above that the "no response" to assumed pushback from insurance companies "may be caused by the high COGS" is that License & Collaboration Agreement gave Sanofi sole power over pricing (a huge mistake in my opinion). Matt has already stated that they identified problems with Sanofi deciding to price Afrezza at a premium early in the launch.
I realize that you used the words, "may have caused" but the whole idea of Afrezza having a high COGS is ridiculous, in my opinion, and I'm convinced that MannKind has plenty of room to competitively price this product, which implies that Sanofi chose NOT to. Early on, I thought that was because Sanofi was gathering real-world data that would soon justify the high price. Now, I (and many others) think that Sanofi priced Afrezza to prevent/limit coverage by 3rd party payers.
I did not include sales and marketing expenses in COGS. That would be silly. The model I created is actually very simple. It goes like this from the perspective of MNKD: How much does Afrezza sales have to be when marketed by SNY for me to achieve cash flow break even. We know that MNKD burns $90 mln and that the shared cost of $60 must also be included for cash to start flowing. We know that the 35/65 deal is similar to a 25% royalty on sales. We also know that the ASP of Afrezza must be cut in half for any sales volume to build. It's a simple equation: Cash needed = Cash Flow from SNY. Or in numbers: $150 mln = 25% X 50% (price cut) X Sales The number when calculated is $1,200 mln. No need for COGS
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Post by mnkdmorelong on Jan 13, 2016 13:28:01 GMT -5
"What is going on here? I think what the numbers are telling me is that Afrezza has a high COGS." - mnkdmorelong
By using MannKind's $45M expenses over three quarters (per Sanofi loan facility), you have included sales & marketing expenses in your calculations.
Cost of goods sold (COGS) are the direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin. Also referred to as "cost of sales."
COGS is a manufacturing term. It includes all the direct and indirect cost of making the widget. Examples of indirect cost are machine depreciation, building depreciation. It is the all-in cost of the product as it leaves the factory. Once outside the factory, there are distribution costs; the largest is salesman's commissions. Collectively, COGS + Commissions comprise Cost of Sales. Why would I not include the $60 mln in my calculation? My model is based on 25% royalties on Net Sales.I don't get what you are writing.
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Post by mnkdmorelong on Jan 13, 2016 13:15:34 GMT -5
No, the TS step is accounted for with BIOAVAILABILITY. Approx 80pct of the insulin in subq's reach intended target as opposed to approx 37 pct of TS Afrezza - this is the difference - Exhubra was in the low 20's or high teens. Do the math - you need approx twice as much ts insulin as you would subq insulin. Bioavailability. Ah! I get your point. Insulin is attached to the TS particle by electrostatic forces. Why does not all 100% become available? I thought that was the deal? Another question is dosage. If TS particles deliver a variable amount of insulin, this is bad.
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Post by mnkdmorelong on Jan 13, 2016 13:12:06 GMT -5
How important is the label? Is this holding Afrezza back? Posters on this Board do not realize that the ambit of the label goes no further than the drug company. The FDA controls how the product is made, the label, and how Afrezza is marketed. The FDA has no control over the docs who can say whatever they want about Afrezza. Or prescribe it in any way they think is appropriate. The FDA has no control over the patient who acts on "off label" information he or she received from her doc or from the web. You don't see the FDA shutting down Sam Finta's web site or any other website even though the information is off label. The FDA will shut down fraudulent website; But Sam and others are just telling their story. I and many others thought that Afrezza's rapid on and rapid off feature is a killer app that diabetics would rush to get a hold of. Clearly this has not happened. Sam Finta is an early adopter. How long will it take the great diabetic masses to use Afrezza if at all. My hope is once the price is "right-sized", diabetics will give Afrezza a shot. You are wrong... I helped my dad get on Afrezza.. the docs had no clue what it was and obviously DID NOT understand the drug ... nor were they interested in changing .. Most people I talk to have never heard of Afrezza and that is because it was never properly marketed..and. you cant train doctors about Afrezza if you are restricted by the FDA on the true benefits and what you can say.. .... you can continue with your rant.. but it is obvious you have no idea what you are talking about because you have not been out there dealing with the situation in real life ...
I have seen first hand what Afrezza can do... my dad ended up going off of it because he had no doctor support and also his insurance company dropped coverage.....Most docs I talked to hadn't heard of it.. or were waiting for some other docs to prescribe it first.. Afrezza represents a change in the standard of care... a very minimal launch.. (there was no full launch) could not overcome the obstacles that Afrezza faced ......
Do you know that what you have written in response to my post is totally out of synch with what I wrote. Docs train themselves by other means than just the salesperson. As a group, they read widely. Salesmen can leave articles with the docs that describe the rapid on and rapid off feature. I am glad you helped your Dad. Hope he gets back onto Afrezza.
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