Save the date

Save the date

It’s a rare occurrence that Diabetic Investor is actually looking forward to a quarterly earnings call. Yet we have put a big red circle around October 29th as that’s when our wine drinking friends in France that three ring circus also known as Sanofi (NYSE:SNY) reports third quarter results. This has become a red letter day not just because we’ll gather more evidence as to why Afrezza is failing in the marketplace but also hear Olivier Brandicourt outline his strategic vision for the company.

Before we speculate a little as to what Olivier may say let’s take a look at where things stand today.

  1. Afrezza sales while improving marginally continue to disappoint.
  2. Toujeo sales remain below expectations.
  3. The settlement with Lilly (NYSE:LLY) over the Lantus patent infringement lawsuit should send a very clear message that Olivier is getting ready to throw in the towel.

Word is Olivier is about to do what every pharmaceutical company does when they are in big trouble; reduce headcount. Yes as Diabetic Investor predicted this upcoming beheading will be a big one and will impact non-European operations. Simply put for the U S based Sanofi employees who enjoy reading Diabetic Investor, now would be a good time to update your resume. We’re not exactly sure when the ax will fall but fall it will.

Our guess is that Olivier will follow standard operating procedure claiming that he had little choice but to reduce headcount. That margins continue to shrink, competition continues to intensify and the goose that laid the golden eggs has turned into an ugly duckling. He will likely try and talk up the diabetes pipeline which should be a pretty neat trick since the pipeline sucks.  Yet most importantly he will try and explain away why the companies two newest drugs, Afrezza and Toujeo, just aren’t doing all that well.

Now here is where things get really interesting as we know that Toujeo is here to stay but what about Afrezza and the MannKind (NASDAQ:MNKD) partnership. Will Olivier have the stones to do what needs to be done and end this charade before it becomes another Exubera? Or will he keep throwing good money into a very bad idea? Perhaps he will take the cowards way out and give Afrezza a few more months so that it can conclusively prove that it is what we said it is all along – nothing more than a niche product.

We’re also curious if he’ll address the financial issues facing MannKind. Financial issues which have become more acute now that the company has just completed another round of layoffs but also dished out about $30 million to pay off the convertible debt. Put simply without a major cash infusion MannKind’s long term viability is in question. Does Olivier really want to risk being put in the position of having to bailout MannKind? Should he not strike first, end the partnership and not suffer the embarrassment of seeing their partner declare bankruptcy.

As we have noted in the past Olivier has a perfect out here as he can do what Sanofi does best when they are in trouble; throw the now beheaded Chris Viehbacher under the bus. Yes nothing would give our good buddy Serge greater pleasure than seeing Olivier, his handpicked successor to Viehbacher, throw Viehbacher under the bus. Heck Serge just doesn’t want Viehbacher thrown under the bus, he wants the bus to back up and make sure the job is done right. Listen if there is one thing the French know well other than wine is how to perform a gruesome beheading.

So save the dates folks this call could be one for the ages. Can’t wait.