Maybe this wasn’t such a good deal

Maybe this wasn’t such a good deal

Looking at shares of MannKind (NASDAQ:MNKD) today, down over 13% at the moment, and well below where they stood when their deal with Sanofi (NYSE:SNY) was announced, one has to wonder whether this deal which everyone thought was so great might not be so good after all. Perhaps investors have finally realized that the obstacles facing Afrezza are as real as Diabetic Investor says they are. Truth is no one will really know if this was a good deal or not until Afrezza is actually on the market.

Yet based on how shares of both MannKind and Sanofi have traded since the deal was announced its pretty clear investors aren’t overly confident. Now Diabetic Investor could gloat and say we told everyone this deal was not the answers to their prayers. That just as we were right about Exubera, when everyone and we mean everyone, said we had lost our mind and that there was no way inhaled insulin would fail. Which is exactly what happened costing Pfizer (NYSE:PFE) $4 billion to boot, thank you very much.

Perhaps a better way to look at this is what bothers investors more the hurdles that face Afrezza or their lack of confidence that Sanofi has what it takes to overcome them. As we noted before this is a great deal for MannKind as quite frankly they had everything to gain and nothing to lose. Quite frankly if Sanofi hadn’t come along another company would have stepped in and done a deal. The fact is inhaled insulin, even with the many hurdles we have noted, seems too good to be true. To so many companies this is a dream product, insulin is a proven therapy option, insulin use is increasing, diabetes is growing at epidemic rates and patients would no longer have to suffer through “painful” injections.  Just as we heard back when Exubera came to market, inhaled insulin is sure blockbuster.

Asked another way, perhaps investors are saying that if Pfizer couldn’t turn a sure thing into a blockbuster, why should Sanofi who has a knack for turning gold into sand, do any better. They might just be looking at Apidra, the iBGStar or Lixisenatide and saying that other than Lantus, this company has a less than impressive track record in diabetes. Diabetic Investor can’t wait to hear Sanofi explain away this deal when it becomes obvious that Afrezza is nothing more than what we said it is a niche product.

Using history as a guide the company will just allow Afrezza to fade away into the background. This is what they have done when it became obvious Apidra was a colossal failure. This is what they did when it became obvious that the way cool iBGStar was a way cool failure. This is what they are doing this very moment with Lixisenatide which is on its way to become yet another Sanofi diabetes disaster. Diabetic Investor suspects the same thing will happen for Toujeo®, which is supposed to replace, when it becomes obvious that this product won’t come remotely close to replacing Lantus.

We can only wait and see how they explain away why they didn’t do a better job of protecting themselves when Lantus faces generic competition.  Honestly this could set a new high or low depending on perspective for corporate double speak. In fact Diabetic Investor sees an interesting parallel here between what’s going on at Sanofi and what went on at Roche. Way back in the day Roche was the market leader in BGM and after a series of poor decisions went from the penthouse to the outhouse. For a time it was pretty funny listening to the company explain how they did such a great job of turning a billion dollar franchise into a million dollar one. At first they barely acknowledged what was happening, which reminded Diabetic Investor of the Black Knight who as his arms were getting hacked off stated; “It’s just a flesh wound.”

It wasn’t until they could no longer avoid the pink elephant standing in the middle of the room, that they noted things weren’t going to well. This is like the captain of the Titanic noting as the water was rising, “Hey I think we’ve got a problem here. Perhaps we should get passengers into the lifeboats.”

Given how these things have gone in the past we also doubt investors will care much, after all Sanofi can easily afford to blow a billion bucks. Heads should roll but they won’t.  Heaven forbid that management be held accountable for their many poor decisions or the inability to execute. The fact is when the day comes and Sanofi is no longer a serious player in diabetes people will do what they always do; talk about what might have been.  Sad but very true.