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Post by mnkdmorelong on Jan 12, 2016 19:33:22 GMT -5
Obviously I don't know if the 35% number Rho quoted and Sanofi gave out is accurate or not. I think it is notable that Rho did not question it. It's also higher than what I've heard some shorts proclaim it was (though it is clearly lower than what those on the long side believe). The fact that it splits the difference makes me think it is not an outlandish number. Regarding the reporting of the LA Times, this is the same newspaper that has regularly treated Al Mann as a local hero for the last few years and has given considerable positive press to Al, Mannkind, and Afrezza. I don't believe it suddenly turned on a dime so as to now start indiscriminately reporting made up negative and / or negatively slanted numbers. YMMV. There are quite a few posters who challenge the 35% number. Does it really matter? More people attend a Toledo Mud Hen's game than use Afrezza. A bigger question is how come there were only 6,000 people in the US willing to try Afrezza? Label or no label, a doc can tell the patient that Afrezza is fast acting and fast leaving. You would think that those diabetics with frequent hypos would be willing to give it a go.
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Post by mnkdmorelong on Jan 12, 2016 16:28:00 GMT -5
I spent many years doing M&A for a large healthcare company. While all your perspectives have merit on some level, that is now how acquisition discussions proceed in the real world (for better or worse). What matters above all to many publicly traded companies is the effect an acquisition has on their near-term income statement. Most companies will gladly absorb an acquisition that dilutes their income for a year to eighteen months, but after that the deal had better be neutral or accretive to earnings. You can criticize that view and say that is no way to run a company, and much of the time I won't disagree with you, but Wall Street analysts will absolutely crucify CEOs that willingly sign up for more than a few quarters of dilution for their shareholders. A big issue with MNKD is that it is not income positive, and needs a lot more time and investment in sales and marketing to get income positive. Somebody at Sanofi looked at the portfolio and recommended pruning Afrezza to help improve Sanofi earnings and frankly, from that perspective, it was the right call. So why do pharmas invest billions in research yet shy away from acquiring wounded but potentially fixable companies like MNKD? It is all about the accounting. If I have a drug in development burning cash on lab experiments, clinical trials, and regulatory filings those all get classified as R&D. Analysts look at R&D differently than they do other expenses and their focus is most often on gross margin less selling and administrative expenses, essentially operating margin without R&D included. Everyone points to MNKD and says how wonderful it is that the drug is FDA approved, but that very approval means that future expenditures to develop the market are selling and marketing expenses. If the acquiring company is more concerned about their short-term operating results than their long-term results this is not a positive from an acquisition standpoint. When I wasn't doing M&A work, I was managing the company's product portfolio. That determined, in part, what technologies we bought, what business units we divested, and where we placed our research dollars. My analysts did Monte Carlo simulations by the hundreds. Eventually it all comes down to maximizing the overall portfolio of products and technologies. In many cases the perceived benefit of investing in Alzheimer's research, pancreatic cancer research, or a non-addictive pain medication will look better on a portfolio analysis than acquiring a company like MNKD. For the reasons I stated above, that will be the case for many companies in the industry and why MNKD will be a hard sell as a buyout. The best bet, in my opinion, is a new partnership deal. I won't be with the likes of an established global player like Sanofi, but a non-US regional player trying to accumulate enough critical mass to enter the US market in a serious way. There are a few of those that might look at the opportunity through a different lens than a Wall Street analyst and that is what MNKD needs at the moment. In some cases companies buy assets not the entire business. In this scenario, the transaction is a balance sheet event. Moreover the "window" to close the transaction could be a year from the acquisition date. Some of the sales and marketing expense for the first year can be considered part of the acquisition cost and be capitalized rather than pass onto the income statement. Wouldn't this accounting method help a buyout scenario?
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Post by mnkdmorelong on Jan 12, 2016 12:28:13 GMT -5
The pivotal point in the US Civil War was the battle of Gettysburg and specifically Pickett's charge. General Lee sent a brigade (12k men) directly against the Union center lead by General Pickett. The charge failed so badly (over 50% Confederate losses) that the grey coats withdrew back to Virginia. The same is true with Afrezza. SNY did a full launch and expected the early adopters to demand Afrezza. Who cares if it cost more? I want Afrezza! This happened to a very limited degree. As the market pushed back on SNY, they tried some DTC ads in magazines. There was no response to the ads. Zero! I think it was then that SNY gave up. What we saw as spotty marketing in the last few months was a manifestation of SNY doing as little as possible. Similar to General Lee, SNY withdrew back to Paris, so to speak, and waiting for the first opportunity to dump MNKD. My point is that SNY started with a full launch and ended up in full retreat. It was not just a marketing study.
Your point that Sanofi started with a full launch is contradicted by Sanofi themselves in their 2014 presentation laying out their initial commercialization strategy (aka Phase 1) for Afrezza.
By their own admission, Sanofi's target was patients with early diabetes who either needed insulin initiation or insulin intensification. These are facts, which have been presented by Sanofi.
Sanofi's multi-$million commercialization efforts did NOT target existing prandial users. Most of the excellent results you hear by Type 1 diabetics like Sam & Eric were the result of social media and NO Sanofi marketing whatsoever toward that population, whether you consider it directed at the endos or the patients.
In this respect, perhaps your analogy of Pickett's charge is a fair representation of what happened:
- Sanofi targeted the CHEAPEST diabetes treatment - oral anti diabetes (OAD) medications
- Sanofi overpriced Afrezza (30%-50% premium to RAA insulin) - any wonder 3rd Party Payers refused to cover?
- Sanofi did NOT target existing prandial users - they didn't even meet with them until last month!
If Sanofi wanted 3rd Party Payer reimbursement for Afrezza, then they chose the absolute WORST target to go after, pitting $285/month Afrezza against $4 to $100/month metformin in their initial commercialization.
If Sanofi wanted patient acceptance for Afrezza, then they chose the absolute WORST target to go after, which are the early diabetics who are resistant to the idea of having to start insulin therapy. Both MannKind and Sanofi may have thought that excluding the needle from the equation would make all the difference.
We'll probably never know, because there was no way health plans would approved prescribing early diabetics to basal+prandial when the prandial in question - Afrezza - has not been empirically proven to be superior, yet carries a 50% premium price tag.
Sanofi's "Pickett Charge" hit a brick wall. Instead of realizing they should re-direct and attack the RAA-injectables market with a comparable or lower pricing strategy, MannKind's ally chose to retreat and set sail back to France.
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I think that Sanofi's strategy of targeting early diabetics may have actually succeeded (assuming, that is, Sanofi wanted Afrezza to succeed) if they had immediately initiated a superiority study and had priced Afrezza correctly. Without any clear proof of superiority over RAA insulin, they chose the worst strategy possible of trying to convince skeptical 3rd Party Payers convert patients from cheap OAD treatments to an inhaled insulin therapy that cost 10x-30x what metformin costs and 50% more than the cost of existing prandials.
Flawed pricing guaranteed failure. No amount of needle-phobia will convince 3rd Party Payers to assign Tier 2 coverage to Afrezza at its current price. Patients, even those who are deathly afraid of needles, chose to stick with orals rather than have to pay that much money out of their own pockets.
There's more to the story, and Alfred Mann fits into it as well, but the bottom line, IMHO, is that demand for Afrezza never materialized because Sanofi's initial commercialization strategy for Afrezza was deeply flawed, virtually guaranteeing that Sanofi CEO Olivier Brandicourt would pull the plug. He did.
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You simply cannot fix a situation where you have a bad product with poor marketing strategy (Exubera).
But you can easily fix a situation where you have a terrific product that was poorly marketing (Afrezza).
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My failure in all of this was in not listening to those who advocated that Sanofi is NOT the best at launching diabetes drugs. They did it right with Lantus, but have failed many times since.
Some say that Sanofi has tainted Afrezza's name. I suggest that another pharmaceutical company may win the prize because, frankly, Sanofi never got Afrezza's name out into the market in any meaningful fashion. Not even close.
It is known fact that many T2 continue on orals or Meformin when they should be on insulin but couldn't stand the needle. This was highlighted at the AdCom. Attacking the T2 market first made sense as is an unmet need. Weather this is right or wrong, MNKD signed onto it otherwise SNY would not have been the partner. Many posters on this Board want to vilify SNY. I do not defend SNY. My only point which seems to have gotten lost is that SNY's intent at the get go was to sell Afrezza for revenue. It was not a marketing study. It was not a limited pre-sale launch as stated by the OP. Let's use Pickett's charge as an example. General Lee sent his men into the Union center to create a breach. He wanted to kill as many Union soldiers as possible. After the charge failed so profoundly, General Lee could not claim his intent was to only determine the strength of the Union center, and not to engage fully. It is this BS when applied to SNY that I am writing against.
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Post by mnkdmorelong on Jan 12, 2016 12:13:52 GMT -5
You really ought to stay away from numbers. First you had that ridiculous $500 million in revenues to breakeven. Now it's $400 mln on the launch. $200 million was upfront and milestone payments. Exclude all of the other non-marketing costs and you'll come up with a more meaningful number for what was actually spent on making the launch a success. Anyway, you're now the second person on ignore. It's always good to know what others are thinking but almost everything you've posted shows that doesn't apply to you. Greg. Mannkindlong is probably one of his various aliases here. My god only here 3 weeks and already 3 stars. This board has been great but could use colon cleanse occasionally! This Board could use a dose of reality. The Afrezza Luddites want to whitewash the failure of Afrezza and blame SNY. Anyone who breaks the cocoon of invincibility you have on AFrezza is demonized. The failure of Afrezza is complex and there is plenty of blame to go around. But to say SNY only wanted Afrezza marketing data in 2015 so they could do the launch right is pure BS. And then SNY terminates the contract after acquiring the data they need at a cost of $400 mln. Does this make any sense?
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Post by mnkdmorelong on Jan 12, 2016 11:46:16 GMT -5
Who is retarded? SNY spent $400 mln on the launch. If you know anything about pharma, the sell is to the doc who writes the scripts. DTC is to get the patients to talk to the doc about a new drug. And how much was spent on Exburea? Please. Can you honestly say a full launch contains no TV or radio advertising? A full launch it was not! Yes, I can say a full launch does not need to contain TV or radio, or print ads! How many drugs are launched each year? How many of these drugs use media advertising?
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Post by mnkdmorelong on Jan 12, 2016 11:43:54 GMT -5
how do you know what Sanofi expected or what their plan was? Do you know what was discussed with Mannkind prior to the CEO getting fired and if the plan remained the same after the NEW CEO took over? You have no clue what Sanofi decided to do or not to do. I don't either. But what we do know is that their so called full launch was weak and would have never been done with any drug the company developed themselves. Their launch was one of trepidation and half measures when compared to other full launches. Let's make this simple as we can argue until the cows come home. The OP said that SNY's intent was just to get marketing data on Afrezza. Meaning, how to market Afrezza. I contend that SNY fully launched Afrezza with intent to gain revenue. SNY did not intend to just get marketing data. The fact that the launch failed brings into question the quality of the launch. This is true. But the failure in no way changes the original intent from revenue growth to just marketing data.One cannot change one's horse in the middle of the stream.
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Post by mnkdmorelong on Jan 12, 2016 11:33:13 GMT -5
Yup full launch. Some mags, a few ads on google. Jesus man a you truly this retarded? Who is retarded? SNY spent $400 mln on the launch. If you know anything about pharma, the sell is to the doc who writes the scripts. DTC is to get the patients to talk to the doc about a new drug.
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Post by mnkdmorelong on Jan 12, 2016 10:59:04 GMT -5
Here we go again. SNY spent a lot of money on a full launch of Afrezza. It was not a marketing study. It was not a partial launch. MNKD did not go on a date with a chaperone. They wanted to and needed to bang the gong. A company does not fly hundreds of people around the country to learn how to sell a product when all they want is data. Why would SNY spend $400 mln to just get data and then cancel the contract so they cannot use the data. Makes no sense. The launch of Afrezza using SNY's sales and marketing resources failed miserably. Only $8 mln in sales. Total disaster which has tarnished the value of the Afrezza franchise and TS technology. FYI: Perception is reality when the optics are sooooo bad. If you call not one radio ad, not one TV ad, not a full force of reps contacting all doctors that treat diabetes but just a handful of reps and advertising in Time and specific diabetes magazines, then yes you are right. It was a full launch. The pivotal point in the US Civil War was the battle of Gettysburg and specifically Pickett's charge. General Lee sent a brigade (12k men) directly against the Union center lead by General Pickett. The charge failed so badly (over 50% Confederate losses) that the grey coats withdrew back to Virginia. The same is true with Afrezza. SNY did a full launch and expected the early adopters to demand Afrezza. Who cares if it cost more? I want Afrezza! This happened to a very limited degree. As the market pushed back on SNY, they tried some DTC ads in magazines. There was no response to the ads. Zero! I think it was then that SNY gave up. What we saw as spotty marketing in the last few months was a manifestation of SNY doing as little as possible. Similar to General Lee, SNY withdrew back to Paris, so to speak, and waiting for the first opportunity to dump MNKD. My point is that SNY started with a full launch and ended up in full retreat. It was not just a marketing study.
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Post by mnkdmorelong on Jan 12, 2016 10:29:01 GMT -5
Simply because where we are now MNKD has spent far less on marketing than Pfizer on Exubera. Also Afrezza, inhaled insulin should not be compared to something of less efficacy. The real valuation of MNKD has changed, only the perception has changed. Ask yourself this question: Do I invest in the new delivery technology, Technosphere, with Afrezza using the only monomer insulin on the market or am I following the volatility of Psycho-Investor. The new CEO of SNY was the one in charge of Exubera, which failed, so the question was am I still taking the risk or do I stay with what i know best? Today we all know his position. The perception of MNKD valuation has diminished but Technosphere technology is still intact and the launch of Afrezza wasn't effective since it was a Pre-launch but very informative giving us access data which will enable us to not just perform better but also better liver experience for diabetics. Here we go again. SNY spent a lot of money on a full launch of Afrezza. It was not a marketing study. It was not a partial launch. MNKD did not go on a date with a chaperone. They wanted to and needed to bang the gong. A company does not fly hundreds of people around the country to learn how to sell a product when all they want is data. Why would SNY spend $400 mln to just get data and then cancel the contract so they cannot use the data. Makes no sense. The launch of Afrezza using SNY's sales and marketing resources failed miserably. Only $8 mln in sales. Total disaster which has tarnished the value of the Afrezza franchise and TS technology. FYI: Perception is reality when the optics are sooooo bad.
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Post by mnkdmorelong on Jan 12, 2016 8:41:08 GMT -5
One thing that is worth pointing out is that using less basal insulin is not unique to Afrezza, it also happens with pumps. There is research into why and the answer is that people tend to use the very long tail on basal insulin to offset some of their meal time insulin needs. That's bad practice but very common because basal testing is often done badly or not at all. I think the two are unrelated though. Pumps require you to more accurately set your basal profile which lowers the basal requirement. Afrezza is faster acting so there is less need for an assist to apparently get into range. If infusion systems and Afrezza lead to less basal insulin usage, why would any insulin company be interested in a partnership? Perhaps the SNY-MNKD JV was doomed from the get-go. Therefore if there is another JV in the cards, the new partner should not be in the business already. TEVA has been mentioned. All this is good rational thinking but..... A salesperson who does not sell into the insulin market may not call on endos. So we need to find a company whose salespeople already call on docs that prescribe insulin. I think this is more than possible. There will be much more training required to teach the diabetes disease and needs.
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Post by mnkdmorelong on Jan 12, 2016 8:11:02 GMT -5
I also would not totally rule out the Medtronic idea. If Minimed had a closed loop system that incorporated Afrezza use in its algorithms in a proprietary way, that would give it a serious leg up on the competition. The fact that MDT's joint development effort with Sanofi went kaput gives this idea a bit more life. There has been too much written on this Board concerning MDT's interest in Afrezza. In a closed loop system, the CGM measures blood sugar and infuses insulin as needed. This is worthless for Afrezza because it is inhaled, not infused. But some may argue that the MDT system can tell the user when to take Afrezza. No so. You take Afrezza before a meal. A CGM cannot read the human's mind and determine when a meal will be eaten. The quantity of Afrezza inhaled is also a function of the meal to be eaten. How is the CGM going to figure this out?
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Post by mnkdmorelong on Jan 12, 2016 5:00:46 GMT -5
Techno sphere is currently worth nothing. How can you give it any value? There is no partner or product. It's a fairy tale until then. Afrezza is currently worth nothing bc scripts are so poor. I'm trying to put out numbers without blowing smoke. Is $200M for a novel drug delivery platform a fairy tale? How did MNKD have a value in it's early stages of development? And yet there were investors... We do not know how far along the product development really is. We only know that there is at least 2 or 3 years of work on potential formulations and that trials have not begun. The suggestion has been that 2 TS formulations are near to entering a clinical stage. Apparently, we may hear from the CMO this Wednesday with more detail about this very topic. My contention on Afrezza is that many folks are writing off the value of Afrezza without committing numbers to paper. With due respect, they may lack the tools to perform that kind of analysis properly. Sales are growing and as such, we can make extrapolations, estimate likely expenses and discount future value. Certainly my valuations may be off as well, but I would like to see additional informed attempts at this. MNKD is like a baseball phenom who came on the scene having a 100 mph fastball. The kid was sure to succeed and was worth a lot. Today, the same kid is 30 yo and everybody can hit his fastball that has degraded to 88 mph. His baseball worth is far lower and consequently investors have shied away. As I have written before, the key to the NPV analysis is how fast can Afrezza sales rise due to a price decrease. This is guesswork which means the NPV model for Afrezza is guesswork. Even using the early adopter model, neither Exubera nor Afrezza gained early traction. Perhaps inhaled insulin is not a "gotta have" product. As for TS: What company will want to burn a billion dollars in drug development after seeing the Afrezza and Exubera debacle? There is value to Afrezza and TS. It will not be $5 ps.
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Post by mnkdmorelong on Jan 11, 2016 18:37:54 GMT -5
All the news that has flowed out of MNKD for the last 3 months has been negative. But it is the small stuff that provides keen insights.
In the post SNY termination cc, DeSisto was not to be found. I think that Insulet amped up the non-compete issue and DeSisto did not want to appear to cross the line lest he infuriate Insulet.
The offer of employment to DeSisto was withdrawn. Desisto never joined MNKD. He sat in Rhode Island.
Al Mann did not re-take the mace of power as CEO.
Matt Pfeiffer is the new CEO; They didn't even bring back Hakan even though he is still part of the company.
MNKD did not say a new CEO search would begin.
Reading these tea leaves is easy. MNKD is falling apart. They don't have any prospects. No plan. We will hear the "evaluating strategic alternatives" line again on Wednesday.
However, there is good news: MNKD stock did not go down today.
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Post by mnkdmorelong on Jan 11, 2016 16:58:28 GMT -5
Many on this Board have hinted that SNY did not like the way Afrezza reduced the sale of basal (Lantus) insulin usage. Maybe so. Why then would an insulin infusion company want to buy a company whose products reduce the infusion of insulin? There could be a couple of reasons: 1. The Dexcom / Google partnership would be alive and well with Afrezza in the mix. In fact, support from Google may be what it particularly attractive for Dexcom to reach out to MNKD, if they did. 2. Dexcom's CGM might be a device that would become popular for T2s so they could fine-tune their dosing; either as a purchase or a rent/lease. 3. Even if Afrezza reduces the amount of basal insulin needed by T1s, it doesn't eliminate it so it wouldn't cut into sales for that reason; only if patients switched from pumps to injections and CGMs for their basal dosing would it have an adverse affect on pumps. 4. The biggest upside is if Afrezza goes mega-blockbuster and drags CGMs along with them because of Afrezza and the Google instrumentation. The potential huge upside in CGM sales could dwarf the reduction in pumps. The combination of Google, CGMs, and Afrezza could secure a significant market share across all T1s and T2s world-wide over the next ten years. Lots of money to be made if this is done correctly. How can Afrezza increase the use of CGM? I can't see T2s doing it. Is there a halo effect from Afrezza being in the lineup? Maybe if it ever delivered blockbuster sales. If it didn't, the CGM company would have burnt 8 figures of dollars. Not worth it.
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Post by mnkdmorelong on Jan 11, 2016 16:34:04 GMT -5
Here's some crazy inferential logic for you to consider... Duane DeSisto's hiring announcement said that MNKD was prepared to defend him if Insulet pressed an NDA suit, but his hiring was withdrawn for just that reason. It seems unlikely that MNKD was kidding, or that they didn't analyze his NDA agreement correctly, or that Insulet filed a cease-and-desist that surprised MNKD. It also seems unlikely that Duane wanted to back out, and he and MNKD decided the best way to avoid losing face was to blame it on Insulet. Instead, perhaps circumstances changed post the SNY announcement, and DeSisto suddenly acquired an actual NDA conflict of interest. A buy out wouldn't do it since that would reduce his NDA exposure. But a new partnership could be a reason for increased NDA exposure. A new TS partnership wouldn't have been a surprise, but a new Afrezza partnership could have been a surprise. Therefore, perhaps we will hear some better news when/if that partnership is announcement. I'm thinking that a Medtronic Afrezza partnership would be the type of event that would cause this type of reaction by DeSisto and MNKD, but that's purely speculative on my part. As I said at the beginning "crazy inferential logic." Many on this Board have hinted that SNY did not like the way Afrezza reduced the sale of basal (Lantus) insulin usage. Maybe so. Why then would an insulin infusion company want to buy a company whose products reduce the infusion of insulin?
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