The Plot Thickens

The Plot Thickens

It’s truly appropriate that MannKind (NASDAQ:MNKD) is partnered with that soap opera known as Sanofi (NYSE:SNY) as when it comes to speculation over sales of Afrezza there are more plot twists than the old time day time soaps. Yes with each episode of How Afrezza Turns a new number appears and like sands through an hour glass so goes the days of Afrezza. Here is just a small sampling of what has been written;

According to an article posted this weekend on ValueWalk; “As of the most recent week, Sanofi reported cumulative prescriptions of 132.”

Just this morning in a TheStreet.com post; “Doctors have written 290 prescriptions for Afrezza during the first four weeks of the launch, according to Symphony Health.”

As we noted before there are other numbers circulating on the internet which really doesn’t surprise Diabetic Investor given the battle between the MannKind pumpers and an equally strong group of investors who have shorted MannKind’s stock. While the shorts have not been as vocal as the pumpers they have not been silent either. Frankly this is setting up as one of the better battles between pumpers and shorts. Ironically it reminds Diabetic Investor of another battle fought when Exubera, yes Exubera, came to market.

Those new to this space may be unaware that Exubera was actually made by Alkermes (NASDAQ:ALKS) who then partnered with Pfizer (NYSE:PFE). Back in the day a battle began brewing between Exubera believers and those who shorted Alkermes stock. Not unlike what’s happening today several respected analysts were publicly stating that Exubera would reach $3 billion in sales, that it was a sure fire blockbuster. Also like today when the product was first launched there was a great deal of speculation on how it was actually doing.  As we all know eventually Pfizer pulled Exubera from the market and experienced a $4 billion loss.

Just so we are very clear here we are in no way saying Sanofi is going to pull Afrezza from the market, not yet anyway. The drug has been on the market for a month and there is no way anyone, not Afrezza supporters or detractors, can tell how the drug will do over the long term. Listen we know facts sometimes get in the way of a good pump and dump but the facts are we just don’t have enough data to know much of anything. We don’t know if Afrezza is just off to a slow start and will blossom later or if this drug is what Diabetic Investor has been saying all along, a niche product with millions not billions in sales.

This bring us to our second point just how much time does Afrezza have to prove itself, how much data does Sanofi need before they know whether they have a true hit on their hands or whether it’s time to pull the plug. Looking over the various estimates Diabetic Investor has yet to see any analyst project first year’s sales above $60 million. It’s not until year 3 plus that we begin to see some of the more outrageous sales estimates. The question is will Sanofi stick with Afrezza long enough to make those crazy estimates possible?

Again we know that the facts do get in the way but as pesky as they are they cannot be ignored. The fact is Afrezza is very expensive to manufacture as it takes a boatload of liquid insulin to make inhalable packets. Also crimping margins is the fact that Sanofi is giving away Afrezza for free and then subsidizing the cost of refills. Add in sales and marketing costs, future milestone payments to MannKind and well this picture isn’t a rosy as some seem to believe it is.

Yet the biggest wildcard hasn’t even played yet as no one knows what Brandicourt will do when he officially takes command on April 2nd. (Diabetic Investor was hoping he would take office on the 1st as this had the potential to be one the greatest April Fool’s posts of all time.) Just as soap operas loved to introduce new characters to keep the audience tuned in, Brandicourt’s entrance into this drama makes for some interesting speculation.

While we mean no disrespect to Brandicourt he was not the company’s first choice, fact is he was more like the fifth or sixth choice. Now he does have a long and distinguish career but one has to wonder if he’s up to task. It will be very interesting to see how he’s received by management and the very disgruntled sales team. Like it or not Brandicourt will have to deal with the fact that many in the ranks liked Viehbacher and feel he got the shaft. Plus many in the rank and file have the belief that Brandicourt really won’t be in charge and that it will be our good buddy Serge calling the shots.

Given that the French have already starting bashing Brandicourt for his pay package and that the company hasn’t exactly rallied to his defense makes Diabetic Investor believe that his tenure at Sanofi will be a short one. Something that would be a true disaster and the last thing Sanofi stakeholders want to consider. Based on the previous actions and statements made by the board we just don’t see them giving Brandicourt the power to do what needs to be done. Preoccupied with pleasing the French, who honestly will never be pleased, the board is standing in the way.

This is what makes all this speculation mute as the plot is thickening and the cast of characters increasing. So stay tuned boys and girls as things are about to get both more interesting and confusing at the same time. Like sands through the hour glass so goes the saga known as Sanofi.