Such a deal

Such a deal

Diabetic Investor is anxiously looking forward to Tuesday October 28th. No this is not let’s celebrate Miller Lite day or drink some prisoner day. No this is the day Sanofi (NYSE:SNY) announces third quarter results and hopefully will explain their rational behind the MannKind (NASDAQ:MNKD) deal.

Just by way of review take a look at how MannKind shares have performed since the deal was announced.  The deal was announced on Monday August 11th with MannKind shares closing at $8.13 on Friday August 8th. On the 11th shares traded as high as $10.08 closing that day at $8.53. Yesterday barley a month after the deal was announced shares closed at $5.91 and are trading lower this morning.  Now Diabetic Investor doesn’t want to cast any aspersions on our wine drinking friends in Paris but the folks at Sanofi might just be wondering if they bet on the wrong horse.

Diabetic Investor finds it interesting, actually laughable, that MannKind issued a press release early in the week noting that they received their first payment from Sanofi. Perhaps the company which is known to overstating and under delivering was getting worried that investors were concerned that Sanofi would find a way to weasel out of the deal. That they needed to reassure investors who were dumping shares faster than Bears fans who down Miller Lite, that this deal was for real.

Again we don’t want to make it sound like Sanofi acted rashly, that they are now in full blown panic mode but it does say something that shares of MannKind are down almost 30% since the deal was announced.

Quite frankly Diabetic Investor isn’t expecting much when the company does announce earnings, at least not much honesty anyway. More than likely we’ll hear the French version of horse manure or what we call in America bull crap. We’ve said it before and we’ll say it again they can put all the lipstick they want on a pig but at the end of the day it’s still a pig.

Now compare the three ring circus that’s going on at Sanofi, with no ringmaster to boot, to what’s going on at Lilly (NYSE:LLY) or Novo Nordisk (NYSE:NVO). Lilly continues to launch diabetes drugs like Aaron Rodgers throws touchdown passes. While Novo has begun taking much needed steps to reconfigure their business, small steps but steps nonetheless.

Folks it’s about time we start acknowledging the obvious that when Lantus officially comes off patent, when it comes to diabetes Sanofi is a dead duck. They can try and tap dance around this all they want but they have nothing in the pipeline that will come remotely close to helping offset the revenue lost when Lantus goes off patent. That they don’t have anything remotely close to an actual strategy in diabetes and baring a major acquisition they will become irrelevant in diabetes.

In fact Diabetic Investor has come up with a name for the dance management will use when trying to explain the disastrous decisions they’ve made. Welcome to the hippie hippie shack.  While this may not the Macarena or Gangnam it will be just as entertaining.  Yes we’ll hear how great U300 is or all the synergies Afrezza® has with Lantus or how the coming GLP-1/Lantus combination will revolutionize diabetes management but just as the Chicago Bears couldn’t touch Aaron Rodgers last Sunday, Sanofi can’t stop the freight train that’s headed straight for their diabetes unit.

Looking back years from today Diabetic Investor wonders what Sanofi management will be saying about this deal with MannKind. Will they acknowledge that perhaps this deal wasn’t actually a good idea, that Afrezza has more hurdles to overcome than Napa has wine? Or will they rationalize that it was the right thing to do, that’s its actually smart business to spend billions to make millions. Such a deal, OY.