Now comes the spin

Now comes the spin

It’s become standard operating procedure that after every Presidential debate the candidates and their handlers head to the spin room. This is where these good folk try to put the best spin possible on how their candidate did. The same phenomenon occurs in the corporate world typically during earnings seasons when CEO’s do their best to turn bad news into good news. This is why we couldn’t wait to hear today’s call from MannKind (NASDAQ: MNKD) and their new CEO Duane DeSisto.

Not like we need a recap but the company received some very bad news this morning when Sanofi (NYSE: SNY) announced they would be terminating their partnership with MannKind. News which sent shares of MannKind down 48.44% today and pushed them lower by 86.77% over the past 12 months.

Before we get to the spin here is surprise number one, perhaps because Duane has just taken over it was the company’s CFO Matt Pfeffer who handled the call. Not sure if this means Duane is having second thoughts although we couldn’t blame him if was.

Surprise number two – the call lasted less than 10 minutes and THE COMPANY DID NOT TAKE ANY QUESTIONS.  Now we won’t say this smacks of cowardice but it sure smacks of something.

So here’s the spin –

This is not the end this is a clean slate.

Afrezza continues to generate positive buzz on social media.

This termination allows MannKind to pursue better formulary position although pricing may need to be adjusted.

Duane is part of the solution he will lead the company though this difficult period.

That’s basically it. Now if any of this sounds like previous MannKind calls it should as this SOP spin for MannKind.

Folks we hate to be the bearer of bad news, actually we don’t, but it’s all over. We will not regurgitate the poor financial state of the company let’s just say the company is not financially sound.

Yet we do have something to look forward to as the company noted they will answer questions at JPM. Now this could be one of the all-time great JPM events as we are interested to hear just how they are going to be get better formulary position. We also curious how they plan to make money if they are forced to lower the price of Afrezza which is about the only way we can see them getting better formulary position.

We hope someone at JPM during the breakout session asks what should be an obvious question namely now that Sanofi has terminated the partnership and is no longer backing Afrezza combined with MannKind precarious financial situation why should payors continue to keep Afrezza on formulary. Does not the possibility exist that patients may be left out in the cold should MannKind cease operations something that is a very real possibility. Would it not be better to begin to transition these patients to another short-acting insulin?

Yes, we know that the patients who are using Afrezza and are happy with it would be disappointed but as Momma Kliff used to say life is full of disappointments.

Diabetic Investor actually believes that while MannKind may be dead Afrezza is not. That once this situation runs its course and MannKind goes belly up someone will come along to pick up the pieces for mere pennies. Frankly there is no incentive for any company to come along now and buy out MannKind. All any company who may be interested has to do is wait it out as MannKind will implode naturally.

At this point there is no need to point fingers, to assign blame or to gloat. Frankly there is more than enough blame to go around and finger pointing is inevitable, this is just the nature of the beast. As far gloating goes we could say we told you so but what’s the point. Believe it or not we did not want Afrezza to fail as we do see a place for it in the treatment paradigm.

Still perhaps the Afrezza failure will teach some people that diabetes is a business and that even innovative products like Afrezza cannot help patients with diabetes when the companies responsible for these products act more like the Keystone Cops than responsible businesses. To be even more blunt the Afrezza failure should send a clear signal that when it comes to diabetes Sanofi has the reverse Midas touch. The huge success of Lantus gave them the opportunity to become a real player in diabetes but they squandered this opportunity away.

Our biggest regret here is that Al Mann the founder and main benefactor of MannKind is still alive to see this day. Whatever one thinks of Al he has been a driving force in diabetes. Al we admire what you have accomplished and have given to the diabetes community. We’re just sorry that Sanofi was your partner for Afrezza.