The “Mann” Has Spoken

The “Mann” Has Spoken

It seems that Diabetic Investor has struck a nerve with not just our wine drinking friends in France but also with good people at MannKind (NASDAQ:MNKD). As everyone knows we’ve spent a fair amount of time discussing why we believe Afrezza won’t become a blockbuster. Why Sanofi (NYSE:SNY) made a very costly mistake partnering with MannKind, that this partnership is not the solution to the many problems faced by Sanofi and their beleaguered diabetes unit. That the possibility exists that whoever takes over at CEO could well decide this was a bad deal and terminate the partnership.

Well early this afternoon Diabetic Investor had a nice conversation with none other than MannKind founder and main benefactor Al Mann. Now not surprisingly Mr. Mann believes Diabetic Investor doesn’t truly understand the Afrezza story, how it’s a “better” short-acting insulin, how it will be a commercial success even though Sanofi has a less than stellular track record in diabetes for any product other than Lantus. He acknowledged that the issues we see, the obstacles Afrezza must overcome exist but will be overcome because it is a “better” short-acting insulin and that Sanofi won’t screw it up as they done with everything else they have touched in diabetes other than Lantus.

Although we must admit after listening to Mr. Mann we’re even less confident, if that’s even possible, that Sanofi will get it right with Afrezza. When discussing the issue of getting Afrezza on formulary Mr. Mann noted in the discussion MannKind has had with payors, payors indicated that provided Afrezza came in at only a 10% premium over conventional insulin they would place it in Tier 2. However, and we would recommend sitting down here, our wine drinking friends believe Afrezza should carry an even higher premium and would be content if Afrezza was placed on Tier 3. Now how this would help Afrezza achieve greater sales by making it more difficult for physicians to prescribe Afrezza only the French know. Honestly Diabetic Investor is beginning to believe that Sanofi could screw up a winning lottery ticket.

When asked what it would cost should the new CEO whoever that may be came in and decided to terminate the partnership, Mr. Mann indicated MannKind would receive approximately $250 million.

Now Diabetic Investor has no idea what if anything the new CEO will do, however whoever it is just might do a little math and reason better to pay $250 million to get out of this deal rather than spend two or three times that amount on a product that could well end up as a niche product with sales in the millions, if that. That perhaps it’s better to fix the issues with the diabetes unit, to perhaps go after AstraZeneca (NYSE:AZN).

Just in case anyone believes that Sanofi isn’t a soap opera we suggest they listen to comments made by Chairman Serge Weinberg. On a call with analysts Mr. Weinberg noted that “local management” in the U.S. wasn’t doing their jobs. Adding; “It appears that our sales force management on Lantus in the U.S. could have been better. Clearly we have not been as good as we should have in managing this sales force in this market.” To Diabetic Investor these comments are just one more reason to believe that the company just doesn’t get it. Blaming the sales force is an old standby when the real problems are with the management team. A team that has likely never sold anything in their lives and more likely doesn’t understand the sales process.

So please explain to Diabetic Investor why anyone believes Sanofi who has a knack for screwing things up, a company now in complete disarray, a company who is more concerned about placing blame than fixing the problem will all of a sudden get their act together and actually do something right in diabetes and that something is Afrezza. Listen we know it’s a wacky world out there but not that wacky.