All hat no cattle

All hat no cattle

What’s the difference between a MannKind (NASDAQ:MNKD) earnings call and an interview given by Republican presidential candidate Donald Trump? At least the folks at MannKind don’t go out of their way to insult someone every time they open their mouths. Other than that MannKind and the Donald have a lot in common. Like the Donald the company is very short on specifics when they speak. Also like the Donald the company must think that there is no such thing as fact checking.  The reality is the Donald and MannKind also share another similarity as neither will achieve their stated goal. As they say in Texas both the Donald and MannKind are all hat and no cattle.

Now we know mundane things like the facts don’t matter to the many MannKind zealots who continue to believe that Afrezza is the greatest thing to happen to diabetes since the invention of insulin, but these pesky facts just keep coming up. This is the reason the company spent an extraordinary amount of time explaining the financials. There was a point during the call we began to wonder whether this was an actual earnings call or a lecture on the interworking’s of corporate finance. The company went into great detail on the reasons behind how the $100 debt was refinanced. Next came an equally detailed discussion on the ins and outs of shorting MannKind shares and how the true believers can help the company fight these evil short sellers.

Next came the first in a series of less than truthful statements as the company claimed the reason Sanofi (NYSE:SNY), their much ballyhooed partner, did not mention Afrezza during the company’s second quarter earnings call, didn’t even put Afrezza anywhere in the presentation, was because Afrezza is not part of the company’s global strategy and this was a global call. Well why then did Olivier Brandicourt state during the company’s first quarter call; “In February, Afrezza the new inhaled insulin was also launched in the U.S. market. It’s only been a couple of months since the launch, because of requirements imposed by FDA for starting patients on this therapy and the necessary time to gain market access, it will take time for Afrezza to demonstrate its full potential.” Why then was Afrezza included in the presentation that accompanied this earnings call? Was the first quarter call not also a global call, is not Sanofi a global pharmaceutical company?

The next less than truthful statement was that month over month prescriptions for Afrezza are growing. Yes we suppose this is an accurate statement but the implication was this growth has been significant, which is a major departure from the truth. The problem is prescription growth is not accelerating as everyone had hoped it would. That physicians remain skeptical, that poor formulary position continues to impede growth as does the need for additional tests.

Now we would couldn’t call the next two statements less than truthful rather pure fantasy as the company in their attempt to show how much their partner really does love them pointed to the Afrezza direct to consumer advertising campaign and the new Afrezza sales goals given to the Sanofi sales reps. Let’s cover the DTC campaign first, a campaign which involves old fashioned print media, a new Afrezza web site and some online ads. When asked when Sanofi would add TV ads the company fumbled for an answer basically saying that TV ads might come when Afrezza sales justify such an expense, which by our way of thinking means never.

Yet it was the new Afrezza sales goals given to the Sanofi sales team that gave Diabetic Investor the biggest chuckle of the morning. Having talked with several of these sales reps we were aware that new goals have been set. We are also aware that according to these people the goals are not just unrealistic they are pure fantasy. As we have noted in the past Afrezza has several issues, issues which aren’t going away and are definitely having an adverse negative impact on sales. As many reps expressed to Diabetic Investor they wouldn’t complain about the new goals had management done something to help them achieve them.  The harsh reality is goals are nice but its actual results that count and right now real results for Afrezza have been underwhelming.

So why then did shares of MannKind get a boost this morning when trading began and why are they still up? The company had a net loss of $0.07 per share, compared to a consensus estimate of a net loss of $0.08 per share. Basically they beat estimates which is viewed as a positive. Yet with MannKind as we have seen so many times the devil is in the details and the reality is the details for MannKind aren’t good.

As we said before MannKind and the Donald have a lot in common. Both play very fast and very lose with the “facts”. Both are very short when it comes to actually giving specifics, actually backing up their over the top claims with actual details. Both are followed by a group of outspoken zealots who while very vocal do not represent the majority.

Although it’s possible that Mr. Trump could actually capture the nomination the odds of this happening by almost every estimate are slim to none. Yes he makes for great TV ratings and brings lots of eyeballs to the web. Yet when it comes to bringing any real substance to the many serious issues facing this country the Donald just doesn’t cut it. The reality is people will eventually tire of the bravado, brashness and continued insults.  That Donald will be seen for who he really is just a blowhard who happens to be a billionaire, a nice sideshow but not the real deal.

The same can said for MannKind and the future of Afrezza. Yes it’s possible that at some point in the distant future Afrezza will become the blockbuster drug the zealots think it is. That the many issues facing Afrezza will be overcome.

Still Diabetic Investor can’t get away from those pesky facts as unimportant as they may be. Facts which show that the issues facing Afrezza are not just very real but also hurting sales. Facts which show that Sanofi hasn’t strayed from their roots and has the reverse Midas touch for any diabetes drug not named Lantus. Facts which clearly indicate by any measure Afrezza sales have been underwhelming to this point and show no signs of improving in the near future. Facts which confirm what we’ve been stating since day one Afrezza is nothing more than a niche drug.

Yet this won’t stop MannKind or their supporters from doing the old Texas Two Step, from doing everything they can to keep everyone from looking at those pesky facts. As we said before for MannKind and Afrezza its all hat and no cattle.