Only a Fool believes

Only a Fool believes

Way back in 1979 and yes that’s a very long time ago, the Doobie Brothers (and if you don’t know who the Doobie Brothers are check out YouTube) wrote a song entitled “What A Fool Believes”. Over the weekend the folks at the Motley Fool penned an equally interesting piece entitled “The 3 Most Disappointing Drug Launches Of All Time” and leading the way the number one failure …wait for it… none other than Afrezza. According to the Fool’s healthcare analyst Todd Campbell;

“I suppose anything can still happen, but the launch of MannKind‘s (NASDAQ:MNKD) inhalable insulin Afrezza has to go down as one of biopharma’s biggest disappointments of all time.

Afrezza’s inhaled, rather than injected, dosing was supposed to catch on like wildfire, but with just 1 million euros in first-quarter sales and 2 million euros in second-quarter sales, there’s little for investors to write home about.

Perhaps, Afrezza’s lackluster demand stems from worries over lung safety and necessary lung tests, or perhaps it’s simply because injections “work” just fine for the vast majority of patients.

Either way, the inability for marketing partner Sanofi (NYSE:SNY) — one of the globe’s most successful diabetes makers — to spark demand is about as disheartening as it gets for MannKind’s investors. Granted, there’s still time for Afrezza to catch on, but given that Sanofi can walk away from its licensing deal with MannKind as early as next year, that time is limited.”

It’s hard to argue with Mr. Campbell especially since we agree with his analysis, although we think he’s being overly kind when he states that there’s still time for Afrezza to catch on. Now on the market for over 6 months reality is beginning to set in, reasonable people are beginning to see Afrezza for what it is; nothing more a niche product.

We specifically noted that REASONABLE people are beginning to see this as the many MannKind zealots and Afrezza supporters are anything but reasonable. These people continue to drink the Afrezza Kool Aid, they continue to believe that the new direct to consumer advertising campaign will be nothing short of magical. They continue to believe that just because a small but very vocal group of Afrezza users are getting good results that every insulin using patient should be using Afrezza. Heck these people believe that every person with diabetes should be using Afrezza.

They continue to ignore or dismiss the many very real hurdles that will prevent Afrezza from becoming widely adopted. Yet what they miss most is what Diabetic Investor and now Mr. Campbell is saying- the current short-acting insulin’s work just fine and they are cheaper than Afrezza.

The way we see it the countdown has begun and by the time the J P Morgan Healthcare conference rolls around in early January 2016 cracks will begin emerging. Rumors are rampant within Sanofi that layoffs are just around the corner. The sales team sees what’s going on and not just with Afrezza, they also see that Toujeo isn’t doing all that well.

Olivier Brandicourt, the new CEO has noted that he will reveal his strategic vision for the company during the company’s third quarter earnings call which is scheduled for October 29th.  We suspect that should things continue as they are and we see no reason they won’t, Olivier will have no choice but to acknowledge the pink elephant in the room. That the dismantling of the MannKind partnership will become almost a forgone conclusion. That Afrezza like Exubera before it could not fulfil the hype that becoming a blockbuster is nothing more than a pipedream.

Keep in mind that Olivier has a history with Exubera and the last thing he wants is a $4 billion blunder on his watch. He witnessed first-hand how Pfizer kept throwing good money into a doomed product. He knows that while Toujeo isn’t doing as well as projected the company can at least make money selling Toujeo. He knows that if the diabetes franchise has any chance at all at recovering Afrezza has got to go.

The worst thing he can do is drink the Kool Aid to fall into the same tap Pfizer did, for if he does then he’s a fool and as the Doobie Brothers song goes “only a fool believes”.