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Message: Another possible Price Model post FDA positive decision
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Good evening from Ottawa:

I was take another stab at the precious model using numbers from the Griffith Security notes and found that they could probably not be applied becau Mannkind does nothave the production capacity to meet anyhing larger than 0.67 of posssible world wide market with their current infastructure. Griffith uses 7% market capture within year one as noted, the model I am puttting up here ends the first 10 years of production with only a conservative 8% of world market based upon population of 285M diabetics world wide.

Take a look and tell me what you think, I will be on the train again to Montreal and will be looking for things to do. Need some info on Infastructure costs (ie what will an additioanal plant/new line cost to bring on line.) I am asssuming current facility can handle 2M clients annually, but not sure what it will cost to double, quadruple,...

Thanks in Advance for any feed back

OOG

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INPUTS:

Variable Model 2
Share Count 500M 350000000
Outstanding Debt: $500M ??? 500000000
Partner: none, Mr Mann takes is via the share count 0%
10 year market protection (patents) 10
Annual Cost of treatment: $2200 2200
Contribution Margin per patient: $1000 1000
Market Size 40M NA + 30M Euro + Remainder (currently negating)
North America 35,000,000.00
Euro 40,000,000.00
Others 210,000,000.00
Total Market 285,000,000.00
Simple Tax Rate 30% 30%
Tax Right offs of $1B 1000000000
Dividend Rate 4% (probably better to roll it over on Build out) 4%
Pharma P/E ratio: 10X ??? 16
Market Penetration Years 1-10 (1%,2%,3%,4%,6%,10%,15%,20%,25%,30%) just guessing though, but thats why I love spread sheets.
Y1 0.67%
Y2 1.25%
Y3 2.00%
Y4 2.75%
Y5 3.50%
Y6 4.25%
Y7 5.00%
Y8 6.00%
Y9 7.00%
Y10 8.00%
Rate of Reinvestment for build out year 1-5: 50%???
Y1 50%
Y2 40%
Y3 30%
Y4 25%
Y5 20%
Y6 10%
Y7 10%
Y8 10%
Y9 10%
Y10 10%

OUTPUTS:

Model 2
Year Mrkt Size Penetration Mrkt Shr Rev/User Cost/User Contribution EBITD Tax Credits Taxes Debt Service Partner Reinvestment Net to Shrhlds Share Count Net Earnings / share Share on P/E
1 285,000,000.00 0.667% 1899810 2200 1000 1200 2,279,772,000 100,000,000 583,931,600 125,000,000 - 785,420,200 785,420,200 350000000 2.24 35.90
2 285,000,000.00 1.250% 3562500 2244 1030 1214 4,324,875,000 178,542,020 1,118,920,480 125,000,000 - 1,232,381,808 1,848,572,712 350000000 12.36 197.71
3 285,000,000.00 2.000% 5700000 2289 1061 1228 6,999,486,000 757,299,498 1,342,546,302 125,000,000 - 1,659,581,909 3,872,357,789 350000000 20.00 319.98
4 285,000,000.00 2.750% 7837500 2335 1093 1242 9,733,631,078 923,257,689 1,996,831,634 125,000,000 - 1,902,949,861 5,708,849,583 350000000 27.81 444.97
5 285,000,000.00 3.500% 9975000 2381 1126 1256 12,527,023,371 1,113,552,675 2,644,554,336 - 1,976,493,807 7,905,975,228 350000000 35.79 572.66
6 285,000,000.00 4.250% 12112500 2429 1159 1270 15,379,285,978 1,311,202,056 3,302,583,738 - 1,207,670,224 10,869,032,017 350000000 43.94 703.05
7 285,000,000.00 5.000% 14250000 2478 1194 1284 18,289,946,618 1,431,969,078 4,055,014,907 - 1,423,493,171 12,811,438,540 350000000 52.26 836.11
8 285,000,000.00 6.000% 17100000 2527 1230 1297 22,182,711,718 1,574,318,395 5,080,495,120 - 1,710,221,660 15,391,994,938 350000000 63.38 1,014.07
9 285,000,000.00 7.000% 19950000 2578 1267 1311 26,152,067,109 1,745,340,561 6,100,279,571 - 2,005,178,754 18,046,608,784 350000000 74.72 1,195.52
10 285,000,000.00 8.000% 22800000 2629 1305 1324 30,197,014,651 1,945,858,437 7,113,245,958 - 2,308,376,869 20,775,391,823 350000000 86.28 1,380.43
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