Good evening one et al:

I know I was asking earlier about what additional capacity would cost and got back some info from others on this board, hate to say it but I am going to have to go back and trace through the thread again so that I can add additional assumptions into the pricing model.

During this conference at about the 19min mark they begin to talk about capcity. I am summarizing but in essence he stated that current capacity was 1 line and that they intend to launch with 3 lines in total. In addition to this he added that Danbury has the current infastructure to support 12 lines when fully utillized giving the company the output capacity to service 2,000,000 clients annually.

I had mentioned in a past post that Griffin Securities, Nov 2011 report suggests a 7% market uptake within the first year in the US or about 1.8M (7% X 25.8)(http://www.cdc.gov/diabetes/pubs/pdf/ndfs_2011.pdf). The conversation states that the bottle neck in the process is fill and finish of the dosages and goes on to suggest that they have considered using localization of filling operations to meet demand in excess of current Danbury build out production, (i.e. they would produce the compond and ship it in bulk to locations world wide for finish)

So (he takes a breath), it sounds like they can add to the capacity quickly to produce to the potential US market by adding the additional 11 lines and that current capacity amounts to 166k patients annual requirement, or approximately $332 M in sales (166K * $2000/y) which should net the coy about $166M (or if at 3 lines at launch $499M) in revenue after COGS is factored out.

Using the launch numbers of 3 lines and 0.5 billion in net revenue and applying a a P/E of 16 (average of a couple of the big pharmas) give Mannkinnd a ballpark value of $8.0B. If we assume final share count of around 350M (additional dilution or effects of a partnership) then folks by sometime in 2016 this coy is worth north of $22.50.

Extrapolate this to full production and we get a figure closer to $90/share.

An now in the infamous words of Itell: "things that make you go hmm" pargraph:

http://www.griffinsecurities.com/upload/reports/Griffin_MNKD_Research_Note_08Nov11.pdf

if you read the Griffin report (pg 32 Summary) and adjust the dates to allow for the timeline adjustments they expect to see market take up of 20-23% 2 years after introduction, I'll let the reader do the math on that one. And if that doesn't get your attention, remember, we are talking about the US domestic market only, or about 10% of the worlds diabetic population (again further math is required).

So if anyone is interested I have posted an estimate based upon a more conservative market penetration over a 10 year period but ending at about 20% of worldwide market share, the numbers are staggering even allowing for massive infastructure reinvestment and amounts given up for partner/distribution arrangements. If interested drop me a message and I can send you the excel worksheet. I would love to get any additional feedback on it or as I like to think of it as what could potentially be a lot of peoples retirement package calcuation.

OOG