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I have a diverse background—as a financial journalist, resident physician, mixed martial artist, painter, entrepreneur, chemistry instructor and web developer—that enabled me to pioneer the “Integrated Investing Research” approach. I provide consulting to clients, both the retail and... More
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Vincata Enterprises LLC
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Retail Investor 360
  • How Sanofi's Growth Strategy Will Catapult Afrezza Into A Blockbuster Drug 0 comments
    Aug 20, 2014 8:57 AM | about stocks: MNKD, SNY

    Published at Retail Investor 360: Tuesday, 19 August 2014 15:40Written by Doctor Hung V. Tran, MD, MSDisclosure: We are long MNKD and we do not have any financial relationship with any company we cover.

    360 Catalyst Keys

    • Afrezza is one of Sanofi's carefully chosen medicines to catalyze the French Powerhouse Pharma's next leap in earnings. Likewise, Sanofi's other chosen drug is Regeneron's cholesterol lowering drug, Alirocumab
    • Bloomberg sources are suggesting that Sanofi is bidding against GSK to acquire another stellar drug, Pirfenidone, to treat Idiopathic Pulmonary Fibrosis (NYSEARCA:IPF).
    • The quality of Sanofi's chosen drugs speaks volumes for the quality and prospects of Afrezza
    • Sanofi's powerhouse sales/marketing teams will deliver three powerful blockbusters (Lantus, Alirocumab, and Afrezza) to the same patients who have multiple coexisting diseases including obesity, high cholesterol, prediabetes, and diabetes
    • Sanofi's elite sales/marketing teams for Lantus already have existing relationships with hospitals, clinics, and physician offices around the world. The teams can sell/market Afrezza with minimal costs, saving both time and money
    • In assessing the global picture, MannKind's 35 percent portion of the 35/65-profit split will be substantial due to the aforementioned Sanofi's synergistic growth strategy.
    • Sanofi's label expansion will catalyze Afrezza's dominant blockbuster sales, because Afrezza is the prime candidate to cover the astoundingly large prediabetes market.
    • Many companies that tried to capture the obesity market directly are delivering disappointing results. A better way to capture obesity is indirectly through diabetes and prediabetes.

    The Story

    The market has been confused regarding Mannkind's recent partnership with Sanofi to commercialize the company's lead drug, Afrezza. MannKind expects to launch Afrezza as treatment for both Type 1 and Type 2 diabetes as early as the first quarter of 2015.

    Contrary to the market's negativity, the 35/65 profit split for MannKind Corporation (NASDAQ: MNKD) and the company's commercial partner Sanofi SA ADR (NYSE:SNY), respectively, is favorable for both parties. If Afrezza registers blockbuster sales as projected, then it is highly favorable to receive less as an up front payment but a larger share of the profits - which was the deal MannKind secured. The notion that MannKind should receive 50 percent of the profits is unrealistic, because similar companies receive significantly less than 20 percent of profits.

    In addition, as a rule of thumb, companies that form partnerships early in their lead drug's development usually receive less than 10 percent of the profit. It wasnot coincidental that MannKind delayed closing the partnership deal entail after FDA approval, because members of the management like Dr. Mann are highly experienced in deal-making, and have unparalleled track records of performance. Therefore, investors should smile rather than frown upon this deal.

    It's not unreasonable to conclude that Sanofi acknowledges Afrezza's capability to replace Lantus' $6 billion in revenues, as Lantus's patent will expire in February 2015. Otherwise, why did the French Powerhouse Pharma, the most dominant global diabetes leader, choose Afrezza over other diabetes drugs?

    (click to enlarge)

    Source: Sanofi

    To read more, please click on this LINK ...

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