This is just crazy
Yes, we have had some fun with our friends at MannKind (NASDAQ: MNKD) and when company founder, the late Al Mann was around a MannKind conference call could be very entertaining. Yet on the flip side we have never quite understood the passion this company inspires with investors. We get the patient side as we keep stating Afrezza does work, this has never been the issue with the company. The issues are strictly business and this latest quarter illustrates exactly what we are talking about.
Let’s examine a few items from today’s earnings announcement.
“For the second quarter of 2017, total net revenue of $2.2 million was comprised of $1.5 million of Afrezza product net sales
Cost of goods sold was $5.1 million in the second quarter of 2017”
Ok let’s stop for a moment and think about that Afrezza revenue of $1.5 million the cost of goods $5.1 million – now we may not be a math whiz but hey do the simple math and then THINK.
Ok back to what’s in the earnings announcement;
“Selling, general and administrative expenses were $18.6 million for the second quarter of 2017 compared to $11.1 million for the same quarter of 2016, an increase of $7.5 million or 68%.
During the second quarter of 2017, we received net borrowings of $19.4 million from the Mann Group.”
Again, let’s stop and THINK – costs are going up so naturally they borrow more money from the Mann Group.
Perhaps the numbers are one of the reasons shares of MannKind have fallen almost 75% this year. Perhaps investors are waking up to the fact that sponsoring a reality show isn’t exactly a wise way to spend money when the company is losing money with each sale. Perhaps its beginning to dawn on investors that about the only thing this company does extremely well is borrow money from the Mann Group.
Listen you can talk all you want about needing to build a sales team to increase sales. But seriously do they really need their own team could they not do this just as effectively and A heck of a lot cheaper with rent-a-reps. Would it not make sense to do whatever they can to conserve cash rather than spending money recklessly on a stupid reality show. One just might think that investors would wise up and realize that the Mann Group does not have unlimited funds and will eventually turn off the cash spigot.
The hope with MannKind is the same it has always been, that some other idiot will come along and buy the company. That there is another company as stupid as Sanofi (NYSE: SNY). Heck even Sanofi was smart enough to run away, although thanks to Al they paid a heavy price to do so.
So, what does the company say about all this? What they always say; Afrezza has blockbuster potential, that they are optimistic and on track to make things happen. Of course, the pipeline looks outstanding and will yield another great product. Yes, all is good at MannKind despite the obvious financial issues, so no worries.
It’s appropriate that MannKind and OneDrop work together as both companies share management teams that have lots of chutzpah and love hyperbole.
In all seriousness, the MannKind story has never really changed, MannKind is all sizzle and no steak or as a Texan might say all hat no cattle. Yes, Afrezza works but it is NOT better than injectable insulin. Yet it is much more expensive to make and while inhaled it is NOT easier to use than injectable insulin.
Given the dynamics of the insulin market and with biosimilar short-acting insulin around the corner there isn’t much of a future for Afrezza. At the end of the day it is what we have always said it is nothing more than a niche product with millions in sales but NEVER EVER billions in sales, no way, no how.
Had Momma Kliff listened to this call and looked at the numbers we know exactly what she would say; “What’s all this mishegoss!” Which is Yiddish for crazy or senseless behavior. Hey what can we say Momma Kliff was well ahead of her time and knew mishegoss when she saw it.