Waiting for the other shoe to drop

Waiting for the other shoe to drop

“The company is very different today than it was a year ago or two years ago and we have very different needs. The projected sales curve for our lead product is also different than we anticipated. All these things, taken together, cause us to continually re-evaluate our needs and our organizational structure to make it optimal from an efficiency and cost standpoint. This is just good business practice.” These words come from Matt Pfeffer MannKind’s (NASDAQ:MNKD) CFO and came after the company reduced their headcount for the third time this year.

Needless to say shares of MannKind responded negatively to this news trading at or near the 52 week low point.

As everyone knows Diabetic Investor is in the midst of a raging debate on Twitter with the many vocal Afrezza and MannKind supporters. Yes these folk are just having a blast finding new and very creative ways to call Diabetic Investor a moron, idiot or tool working for the short sellers.  As misguided as these people are we do admire their spirit and zest for defending their equally misguided position.

Yet the layoffs could be just the first of series of shoes to drop. Back in August the company failed in their attempt to settle a $100 million convertible loan. With $32 million unsettled the company pushed the deadline back to the end of September, which as we know has come and gone. Yet we have heard nothing as to what’s going on with this very important issue.

The next shoe to drop will likely come on October 29th when Sanofi (NYSE:SNY) releases third quarter results, results which for Afrezza sales likely will disappoint once again. Yes even with the direct to consumer advertising campaign now in place and the sales training over sales of Afrezza continue to lag.

Now this event is much bigger than Afrezza sales numbers as it is at this event that Olivier Brandicourt is supposed to unveil his strategic vision for Sanofi, a vision which we believe will not include any sight of MannKind. The question is will he just pull the plug or allow MannKind/Afrezza to die a slow and very quiet death. To be honest we’re hoping that Olivier saves this announcement for the J P Morgan Healthcare conference in early January, as it will add a little spice to a truly spicy event.

The sad reality is that Afrezza is what we’ve said it is all along, nothing more than a niche product. A niche product from a company that has more financial issues than there are Republican Presidential candidates. A niche product being promoted by a partner who has a notorious history for turning gold into sand when it comes to any diabetes product not named Lantus. A partner who’s facing some very serious decisions for their diabetes franchise, a franchise which seems on death march.

The clock is ticking and it’s just a matter of time before the next shoe drops. Watch out below.