Thank You, Al

Thank You, Al

When it comes to this wacky world of diabetes few people have had as much impact as the late Al Mann. After building MiniMed into the finest insulin pump company he sold it off to Medtronic. Since we know the back story to this deal and the people involved we won’t go into the details. Let’s just say that Al is one hell of a salesman and he knew how to cut deals that were heavily tilted in his favor.

This morning the folks at MannKind (NASDAQ: MNKD), a company Al not only founded but also funded, should be drinking a toast to their now departed founder and funder. Take a look at this per a press release issued after yesterday’s earnings call;

“MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD) today announced that MannKind and Sanofi have entered into an agreement with the following terms:

  • The promissory note and security agreement between MannKind and Aventisub LLC, a Sanofi affiliate, are terminated, with Aventisub agreeing to forgive the full outstanding loan balance of $71.56 million.
  • MannKind is also relieved from its obligation to pay $0.5 million in previously uncharged costs related to the collaboration.
  • Sanofi will purchase $10.2 million worth of insulin from MannKind in early December as part of its preexisting commitment to purchase insulin following termination of the collaboration and MannKind’s exercise of a “put” option.
  • The balance of the insulin “put” option ($30.6 million) is accelerated with Sanofi completing the cash payment of $30.6 million to MannKind by January 9, 2017.  This payment will be made without MannKind being required to deliver any insulin to Sanofi.
  • All issues arising out of the license and collaboration agreement, the supply agreement, the promissory note, the security agreement and the transition agreement are resolved.”

During yesterday’s earnings call current company CEO Matthew Pfeffer stated;

“In addition, it should be noted, that the termination of the promissory note and security agreement allows MannKind to pursue the sale of its Valencia, California facility an adjoining property, which is now on the market for roughly $25 million, without are being required to use the proceeds to reduce balance of the loan. So, this is another source of non-dilutive liquidity for MannKind.

Collectively, as result of this agreement, we have improved our financial position by over a $130 million. This will go long way towards meeting our near-term financial needs.”

Listen we already knew that Al likeness is carved into the Mt. Rushmore of diabetes greats but this announcement also proves something else we knew, that Sanofi (NYSE: SNY) is one of the stupidest companies ever and belong in the diabetes Keystone Cops Hall of Fame. Keep in mind that Sanofi also announced the other day that one of the drugs in their diabetes pipeline has been delayed due to manufacturing problems. Seriously we wish we were making this up but we aren’t. Sanofi continues to demonstrate that when it comes to diabetes they not only have the reverse Midas touch with an uncanny ability to turn gold into sand, they also have the worst deal making skills in the business.

We can’t wait for the day when Google becomes the latest company to learn that yes Sanofi has tons of money but when it comes to diabetes partnerships the only thing they are good at is, well come to think of it there is nothing they are good at when it comes to these partnerships. Not only will the people at MannKind agree with this but so too would the people at Medtronic (NYSE: MDT) another company that HAD a partnership with the company but walked away because, surprise, surprise Sanofi couldn’t execute.

So, what does all this mean? First and we already knew this Al Mann is one of the all-time diabetes greats. Second, MannKind has bought themselves some time. Third, and this we knew as well Sanofi if they had it would screw up a winning Powerball ticket. Fourth, while MannKind has some breathing it won’t change the structural issues facing Afrezza. And finally, as if needed any more proof, welcome to the wacky world of diabetes where anything can and usually does happen.