My thoughts on what matters to MNK, page-7

Hi Madam

To answer your first question on why MSB would want to partner with MNK if there is minimal capital outlay required to finish these two phase 3 trials, the answer is very simple for me (and has been expressed by MSB).

Quite simply it comes down to two things:
1. MSB need cash to continue their operations (you should be well acquainted with this), so a partnership offers MSB much needed short term funding.

2. MSB do not have an established marketing, sales and distribution network - and have clearly made this a key requirement for any partner to provide. That is, if MSB went it alone, they would have to incur significant costs to build a marketing, sales and distribution network - not to mention the amount of time it would take to build up the rapport and network across the US (years).

So a partner with an established distribution channel (hospitals, clinics etc), an experienced and trained marketing and sales force are what MSB need to get immediate traction once a product receives FDA marketing approval.


On your second question, why haven't other 'big pharmas' stepped up and specifically why Celgene never partnered up. I concur with @aatisket and others who have made a similar argument. And that is, Celgene and would have wanted the lion's share of the NPV in the chrone's and aGVHD program.

As you rightly put it, Celgene is very well capitalised and a market leader ... so as you may have seen in some corporate negotiations ... companies like Celgene have all the bargaining power when negotiating with a much much smaller corporate. Celgene did not get to where it is now by being pushovers and handing out cash willy nilly ... they would have tried to strong arm MSB into giving up much of the NPV.

That is of course my view only, and you may go on and say that given the above - this implies that MSB are destined to never do a deal with a big pharma. And my response to that is simply ... timing is everything, and big corporates don't always get it right.

So finding the 'right' partner for MSB, may not necessarily be the partner with the deepest pockets. Rather I believe it is finding a partner who:

a) has a proven ability to market and distribute through the right channels to maximise market penetration;
b) have an existing regenerative medicine strategy/department; and
c) willingness to negotiate a deal where the NPV of the program is fairly shared between MSB and the partner.

On point c), partnering with a big pharma when you don't have an established sustainable business would be very difficult. However this may be more achieving with a second tier pharma who sees your product as complimentary to their strategy and mid-term goals.


In terms of the discussion on 'innovate or die' ... your references to the Q&A are of course nice and rosey responses... as you put it in another thread, corporates will always tell you everything is progressing well blah blah blah.. the deeper discussions on margin squeeze, concentration risk etc are done behind doors and generally kept internal.

However the theme of MNK needing to diversify its revenues has been quoted by analysts and Michael Schuester in the Cell & Gene interview on the 27th April 2017 also mentioned MNK's need to diversify its revenue as 30% is coming from a single product.

So rather than 'innovate or die' - I believe MNK have internally recognised the need to 'diversify' and have spoken to analysts of their intention to do so, and privately with MSB in negotiations had to date.