MannKind Corp. (MNKD)

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In spite of the fact that we commend Mr. Deepak for his astute research, our research suggested that MannKind should be valued in the ballpark of $54 per share. The share price estimates were based on "comparative market analysis," which leverages on data of similar companies. We conservatively assumed that Afrezza would only be able to capture $3 billion revenues from the rapid acting analogue (RAA) market.

For small biopharmaceutical companies, the constant "market cap/revenue" should be a multiple of roughly 30. We also properly accounted the 35 percent of the 35/65 profit-splits with Sanofi. Additionally, we discounted 30 percent of revenues for the exclusion of patients with COPD plus those who smoke.

$3 billion x 30 market cap/revenue = $90 billion market cap

$90 billion market cap ÷ 402 million shares outstanding = $223 per share

35 percent x $223 per share = $78 per share (properly accounted for the 35 percent of the 35/65 profit split)

30 percent x $78 = $23 (discounted for COPD and tobacco abuse)

$77 - $23 = $54 per share of MannKind

The $54 share price is conservative given that the appraisal did not take into account the MannKind's proprietary Technosphere novel drug delivery platform as well as the potential for Afrezza to expand the mealtime insulin market (due to the drug's high efficacy in curbing the progression of insulin resistance) plus Afrezza's ability to capture the larger prediabetes market.

Furthermore, we believe that comparative market analysis works best for developmental and early stage biopharmaceuticals rather than employing "COGS, P/E, DCF, and etcetera," as MannKind has yet to generate any sales; therefore, it would not be best to employ the traditional valuation methods at this point. Needless to say, it will be more appropriate to appraise MannKind using traditional methods in either mid to late 2015, when we have more data regarding Afrezza's ability to deliver blockbuster sales.

https://www.retailinvestor360.com/biotech/595-mannkind-corporation-jefferies-votes-confidence-in-afrezza-and-vincata-raises-mannkind-s-po-to-54.html