Well since the entire Northeast is shut down by the Snowmageddon, I decided to do some tweaking on the share price prediction during the run-up to PDUFA #3. I want to thank BobW for more accurate share counts.

For the 2011 NDA, the label would have been for T1s and late stage (insulin using) T2s. Share price had risen to about $10, and I had assumed ~100M outstanding shares for a MC of 1B. Bob had provided much better DD that included the convertible, restricted shares, options etc. and came up with a more accurate number of 185.5M shares. So this would actually give a run-up MC of closer to 2B.

We all know the label will be expanded; the question is by how much. If you read the Griffin report (I put a link in the link library), the sense is that Afrezza could be indicated for virtually all diabetics. It may eventually be indicated in pre-diabetics as a means of protecting the b cells from further destruction.

Just looking at figures for the US in 2010:

25M diabetics

80M pre-diabetics

105M total potential market

T1 (5%) = 1.25M

T2 (90%) = 22.5M

Gestational (5%) = 1.25M

% of T2 using insulin (27%) = 6.075M

During NDA #2, label was for T1 and insulin using T2 (1.25M + 6.075M) = 7.325M. This is 29% of all diabetics and 7% of all diabetics + pre-diabetics.

If the label were for all diabetics, our potential market size is about 3 times larger.

If the label included all diabetics and pre-diabetics (granted this may take a while longer), market is 15 times larger.

Looking again at Bob’s calculations, going into PDUFA #3, we will be closer to 400M shares. As I said above, previous run-up valued MNKD at ~ 2B (my corrected value).

Label for all diabetics (3 X larger market):2B X 3 = 6B à s/p = 15

Label for diabetics + pre-diabetics (15 X larger market):2B X 15 = 30Bà s/p = 75

For now, I think the label for all diabetics is reasonable; pre-diabetics would be a few years down the road. I just wanted to illustrate the potential. If you really want to dream, the global statistics are 285M diabetics and an additional 344M pre-diabetics. Over the next 20 years, these numbers are expected to be 438M diabetics and 472M pre-diabetic. Personally, I’ll be happy if we hit $10 on the run-up. I can wait for the rest; I’m in this for the long haul.

What I have not factored into this equation is capacity. Obviously, our capacity has not changed. But was the assumed valuation then based on full capacity in a relatively short period of time? I can’t answer this.