It’s always something
Yesterday MannKind (NASDAQ:MNKD) announced that the FDA will not be able to complete their review of Afersa™ by their previously announced action date of January 16, 2010. According to a company issued press release:
“The FDA explained that it has not yet completed its inspection of the insulin manufacturing facilities of N.V. Organon, a third-party supplier to MannKind. Organon is a subsidiary of Merck Inc. MannKind’s new drug application references Organon’s drug master file for recombinant human insulin.”
The company went on to state the FDA has not given them a time frame as when the inspection will be completed or when they’ll issue a final determination for Afersa™. Diabetic Investor does not necessarily see this as a major setback for MannKind as there are no other inhaled insulin’s on the market and the company still does not have a partner to help them market the drug. However, this news gives the company another excuse for not having a partner. Based on recent statements made by the company getting approval for the product was all that stood in the way for a partnership agreement. With that event delayed it looks like we’ll have to wait until later this year to see if all this partnership talk is for real.
We also learned yesterday that insiders at Insulet (NASDAQ:PODD) have been dumping their shares. According to SEC filings which can be found in the investor relations section of the company’s web site www.myomnipod.com, insiders are selling shares with reckless abandon. An intriguing development when the company just announced a deal with Ypsomed to sell and distribute the OmniPod overseas.
When Diabetic Investor first reported on this deal with Ypsomed it appeared to be a great move for the company. Ypsomed is experienced in the insulin pump space and has an established network to market and sell the system. However, looking closer at the deal there is more to the story. According to documents filed with SEC;
“Ypsomed has agreed to make minimum annual purchases of the OmniPod System specified in the Agreement. At the minimum annual purchase levels called for in the Agreement, the Company’s sales to Ypsomed under the Agreement would exceed $100 million over the five-year term. The minimum annual purchase levels are heavily weighted towards the final years of the five-year term; accordingly, it is expected that the Company’s 2010 revenues under the Agreement will not be material.” (Note Diabetic Investor added the highlighted section.)
As Diabetic Investor has been stating for some time the ultimate goal for Insulet has been to be acquired. Additionally we have noted that company must bring their COGS down to a reasonable level so that they show a profit on a consistent basis. As innovative as the OmniPod is a company cannot survive over the long term selling the product they make for less than what it cost to make. The company has made strides in lowering their COGS but still must do more to be an attractive takeover candidate.
Considering that insiders are dumping their shares logic would indicate that this sale most likely won’t take place anytime in the near future. While Diabetic Investor is sure that the company will do their best to explain away these recent sales, the fact remains that insiders wouldn’t be so quick to dump shares if they felt a deal was close.
All we can say at this point is that the upcoming presentations by both MannKind and Insulet at JP Morgan next week just became more interesting.
