Back to the future

Back to the future

Perhaps Diabetic Investor has been at this just a little too long. We mention this as we couldn’t help but think we were traveling back in time while listening to the MannKind (NASDAQ: MNKD) Afrezza commercialization update. This feeling of déjà vu hit us hard when management mentioned …wait for it … they are in active discussions with … wait for it… several potential partners who are … wait for it … very interested in Afrezza. All we could think of at this point is that if we had a dollar for every time this was mentioned we would be rich beyond our wildest dreams.

Now let’s give this new team some credit as at least they are coming up with a reasonable strategy which looks good to the untrained eye. Yet for all the refocusing, retargeting and better physician education this is merely rearranging the deck chairs on the Titanic. These are cosmetic changes which do not deal with the core issues facing Afrezza, which are

Afrezza cost too much to make and is priced too high to be widely adopted by payors. Now MannKind can and may lower the price of Afrezza to improve its very poor formulary position but this will not solve the other problem. Unlike liquid insulin there is only a slight drop in manufacturing costs as Afrezza volume increases. Simply put if they lower the price they are going nowhere in a hurry as they won’t be making much of a profit which is exactly what they need to be doing if they are going to have any chance at all at raising the capital they desperately need.

This brings us to another déjà vu moment when management talked about their poor financial position and acknowledged the pink elephant in the room, that they are going to need more money. Just as we heard back in the day when the legendary founder Al Mann, god rest his soul, was running the company management hasn’t ruled out any possible option for raising additional capital, including but not limited to selling the first born male child … oops we digress.

We would like to give management credit as during the Q&A they had several opportunities to take a whack at their former partner, our wine drinking friends in France, good old Sanofi (NYSE: SNY). Yet even when served up with some juicy fastballs right down the middle of the plate, the company refused to swing. Which we find slightly ironic, amusing, hypocritical and flat out nuts as the same people asking these layup questions so management could bash Sanofi are some of the same people who screamed that Sanofi was a great partner.

Listen we knew all along that Sanofi would screw this up, we weren’t shy about saying so and we are enjoying every minute of watching these idiots as they show how truly ignorant they are.

The sad reality here is that nothing much has changed expect now MannKind is once again single. Afrezza, while an effective therapy option, is nothing more than a niche product which unfortunately costs too much to make. On the best of days, it could be a multi-million-dollar product on the worst it will be off the market.

Here we would like to take a short detour and send a message to all the diabetes bloggers out there who have been hyping Afrezza any chance they could. Please do a service to the people who visit your blog and tell them it’s a better than 50/50 chance that Afrezza will not be here a year from today. That it would be a good idea to explore alternatives to Afrezza now before it’s too late. This has always been Diabetic Investor’s biggest concern what would happen to patients who are using Afrezza should MannKind go under.

Our case against MannKind, Sanofi or Afrezza has never been that the drug did not work or that there wasn’t a place for the drug in the treatment paradigm. Our case against Afrezza was that the business model absolutely sucked, that this was nothing more than a niche product and not the billion-dollar blockbuster many imagined it would be. So all you bloggers out there in blogger land, do a service to the patients out there who are using Afrezza and tell them the damn truth.

Now back to the future which is something unfortunately MannKind and Afrezza does not have. Even if by some miracle they can find someone dumb enough to partner with them, even if they expand into international markets and can refocus, retarget and recharge this won’t change much. Sadly, even more money, money which they desperately need, things won’t change much, about all more capital will do is delay the inevitable.  More money will not make the limitations of Afrezza disappear, it will only prolong the agony.

We give management all the credit in the world for making a go at it, for not just throwing in the towel. Let’s just hope they have great severance packages when the end finally does come. For the end is coming we just aren’t sure when.