Just had this kicking around the skull for a few days and thought I might throw it out for discussion. Bear with me if I ramble a bit and forgive the speeling mistakes.

Background Points:

1. Mannkind is currently on track to start production with 3 F&F lines giving production capacity of 150-166k per line or a max output to service 450-500k clients. This amounts to about a 25% build out of the current Danbury facility.
2. Mannkind has enough insullin to produce 10B worth of finished product, assuming $2000+ per client annually this is approx 5M patient years worth of supply.
3. I have been assuming that a partnership deal will cost MNKD approx 50% of the revenues after normalized costs are realized leaving Mannkind with $500 of $2000 cost to patient annually.

Question:

• Could Mannkind make a go of it alone for the first year using Mr Mann's line of credit if a good partner does not step up to the table.

Possible Solutions:

• I am thinking that this might be possible if the deal is not doable. They will have capacity at startup to serve 500k pers annually which amounts to less that 1.7% of the US&Can diabetic populate (T1&2)
• I think this could be accomplished by a very small marketing force, that would target specific population demographics.
• I might suggest the elderly as they seem to have central areas of concentration. Seniors because of growing demographics and population concentration (think arizona, florida) and those in a more institutional type care situations such as long term care facilities.
• I might also suggest the childhood demographic via such organization as the US Jr Diabetes Associations, this would probably spread like a good old California brushfire and quite literal blow through anything that the competion throws up.

Supporting thought lines:

• Remember the old shampoo commercial about telling 2 friends who tell 2 friends who tell... you get the idea. One client telling 5 clients at 8 fold will require the doubling of the current production capaciy to eight lines. This sound far fetched 8 fold but this also assumes starting from a zero demand base. Pretty sure I have seen a few posters here or on yahoo stating that they plan to switch over when it becomes avail. Pretty sure we are already at 4 folds in (think of the numbers already through the trials)
• Is it possible to target the client base via their Insurance provider? Suggestion is that a marketing partner is going to cost them $500 per client annually. Why not approach one or two of the larger insurance companies and pomote the product by undercutting current therapies to the tune of half of what the partner would be walking with (1750 vs current 2000). Taking the other $250 annually and using that to increase production to meet building demand. 250 * 500k = 125 million annually will pretty much allow for complete build out of an additional 9 lines to Danbury and paying back 40M of any of Mr Manns credit facilities that had to be used. This will bring production to 2M annually or about $2B (4B Rev- 2B n's line ofCOGS) in profits. The intro deal will only be good for the first year but once the insurance company realizes the net benefits of the regiment to the other associated costs, I don't think the discount will make much of a difference any longer. Wonder if Obamacare program might be interested?
• Production will in my estimation need to be maximized sometime in the second or third year of production because the world will be knocking at the door which amounts to 300M Type 1&2 and does not include the Pre-diabetics that keep getting honorable mention at presentations. So Danbury will not be able to service even 1% of the potential market at that point.
• I conservatively believe that 10% of the world diabectic population will cross over from their current therapies once the benefits are realized and a viable source becomes available but in order to do this max production has to grow 5 fold to approx 60 F&F lines (12 is the max at Dandbury)

That pretty much summarizes the Diabetic issue and I don't even want to get started on the other applicable of Afrezza or items in the Onocolgy pipline that are currently awaiting the funding to dust them off.

Just for fun though, with a share count of 550M shares, no partner, COGS of 50%, a P/E of say 25 and a market penetration of 30M the Market Cap and pps start to look very delicious (sorry for the Apple reference)

1000 Contibution Margin per patient X 30M patients = 30B annual profit (earnings)

30B * 25 P/E = 750 B market cap (yes with a B)

750 B / 550 M Share count = 1360 pps. (or about 45 for every million clients served)

I am willing to take a measly 10% of that, if we can get this past the FDA & Euro bodies.

Enjoy the ride,

OOG