MannKind's (NASDAQ:56400P706) fourth-quarter conference was only 31 minutes long, but the call contained some tidbits of insight from the biotech's management that investors should know.
"In fact, we were just, the other day, asked if we could up the sample pack volumes, since demand for samples has been higher than anticipated."
-- Hakan Edstrom, MannKind's president and CEO
Management didn't give much information on how the launch of its inhaled insulin, Afrezza, was going; that's not too surprising since the drug device has only been on the market for a couple of weeks, and the launch is being run by MannKind's partner Sanofi (NYSE:SNY).
Still, this comment about increasing the output of the sample packs is certainly a good sign that demand is better than Sanofi expected. Unfortunately, we don't know how good that really is, since Sanofi hasn't given any guidance on what to expect for the launch.
"These potential new products have in common the following characteristics: First, they all address serious unmet medical need; secondly, they have comparatively, relatively short development times or low cost of development; third, they all take advantage of the unique benefits of our proprietary drug-delivery technology; and finally, they all address large markets."
MannKind is working on using the inhaled technology that makes Afrezza possible to convert other drugs from an oral or injected format to its Technosphere inhaled format. Let's four important considerations.
First, MannKind is presumably planning on using drugs that are already off patent, so saying they meet a "serious unmet medical need" might be a stretch since other formats of the drug are available. That's not to say improving the format isn't worth pursuing, but management might be stretching the need here just a bit.
Second, considering how long Afrezza took to get to market, investors would welcome getting a drug approved quickly and/or cheaply.
Third, an inhaled drug would obviously be more convenient than an injected drug, and the Technosphere format could make the activity of a drug come on quicker than an oral or injected version.
Finally, it's easier to make money in large markets albeit typically with more competition.
"Our current focus is on product in three areas: pulmonary disease, pain, and oncology support."
While it's annoying that management didn't get any more granular than listing the three general areas, and we don't actually know what active ingredients or the exact indications MannKind plans to go after, it's probably a good idea for MannKind to not tip its hand too early. In addition to investors on the call, I'm sure its competitors listen, too.
"As a relatively small company, we cannot immediately begin working on several ambitious programs simultaneously. So as a practical matter, you can expect us to begin full-scale development activities on one target at a time, with each successive new target to be rolled out some month later."
Investors might not like the delay, but not working on all the drugs simultaneously seems like a good idea, because it'll spread out the development of the new crop of drugs. While the cost of developing the drugs is fairly minor right now, as they progress through clinical development, the cost will increase. Having multiple phase 3 programs starting at the same time might be a little much for MannKind.
Speaking of money ...
"Cash and cash equivalents at the end of the year totaled $120.8 million compared to $70.8 million at Dec. 31, 2013."
-- Matthew Pfeffer, MannKind's CFO, principal accounting officer and corporate VP
The year-over-year increase in cash, of course, has to do with the $150 million MannKind got as part of the marketing deal it signed with Sanofi. MannKind got an additional $50 million in manufacturing milestone payments after the fourth quarter ended, so the company actually has closer to $170 million in the bank. There's also potential to borrow another $30 million from its namesake Al Mann and another $50 million in stock that it could sell at the market.
Considering that Sanofi is covering MannKind's portion of the loss on the Afrezza partnership up to $175 million, it looks as if MannKind has plenty of cash to get its next drugs off the ground. Hopefully, by the time the drugs have advanced deep in the clinic, Afrezza will be throwing off cash or it can find development partners to cover costs for the new drugs.
Brian Orelli likes short conference calls; he thinks companies should just issue a transcript of what they're planning on saying on the conference call and then start with the Q&A portion of the call. He and The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.