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MannKind’s Inhaled Insulin Tied to Lung Function Concerns

MannKind Corp. (MNKD)’s inhaled diabetes drug, found to be effective against Type 2 diabetes, is linked to potential breathing problems that may limit its use in patients with lung diseases, U.S. regulators said.

Afrezza, a powdered insulin used through an inhaler, would be the Valencia, California-based company’s first marketed product. A Food and Drug Administration staff report today tied the drug to a decline in lung function, bronchial spasms similar to asthma and coughing that caused some patients to stop treatment, according to an online document.

If approved, Afrezza may generate $583 million in 2018, according to the average estimate of three analysts compiled by Bloomberg. The report suggested labeling was needed to limit its use in smokers, asthma patients or those with kidney or liver impairment. Also, while Afrezza worked in Type 2 diabetes, its effect on Type 1 is less clear, the staff said.

“The documents read a lot better than what people had feared,” Graig Suvannavejh, an analyst with MLV & Co, said in a telephone interview. “There are safety issues that are raised, not surprisingly, but based on my read I don’t see anything that is a showstopper that would torpedo the advisory panel meeting.”

He said investors had been concerned the FDA would criticize the strength of the effectiveness data and studies comparing different inhalers. FDA advisers will meet to discuss the drug on April 1.

Panel Concerns

“We are incrementally more concerned about the risk for a negative outcome,” Jason Butler, an analyst with JMP Securities in New York, said in a note to clients. “Our primary concerns relate to the FDA’s negative view on the efficacy of Afrezza in Type 1 diabetes patients and the drug’s impact on lung function, especially in at-risk patient populations.”

MannKind fell 7.1 percent to $4.83 at 4 p.m. in New York trading, after gaining 42 percent in the previous 12 months.

The company has spent more than seven years trying to gain approval. The FDA rejected the drug twice, most recently in 2011, after the company decided to switch inhalers during the review process. That prompted regulators to seek more data on the new device.

Afrezza would compete with Eli Lilly & Co.’s Humalog and Novo Nordisk A/S (NOVOB)’s Novolog, both injected insulins, Matthew Pfeffer, MannKind’s chief financial officer, said in a telephone interview. Novolog generated $3 billion in sales last year and Humalog brought in $2.6 billion, according to data compiled by Bloomberg. Many diabetics begin treatment on an older insulin called metformin, a pill which can lose effectiveness over time.

Cancer Risk

Pfizer Inc. (PFE) made the only other inhaled insulin, Exubera, approved in 2006. The New York-based drugmaker pulled the product after sales were lower than expected, according to the FDA staff report. The drug was associated with a higher risk of lung cancer because insulin is directly deposited in the lungs and the drug is a growth factor. FDA staff said this may be a concern with Afrezza as well.

FDA staff suggested two post-market studies to evaluate lung-cancer risk.

Diabetes affected 26 million people in the U.S. in 2010, or 8.3 percent of the population, according to the Centers for Disease Control and Prevention. The condition, which is caused when the body doesn’t use insulin properly or doesn’t make the hormone, is the seventh-leading cause of death in the U.S. Insulin is a hormone secreted by the pancreas that helps the body control blood sugar.

MannKind is in talks with “multiple companies” to find a partner to help it sell Afrezza, Pfeffer said. He expects an announcement to wait until after the FDA’s decision on the therapy expected by April 15.

“Pricing would be set in combination with a partner, and they would have a lot to say about that,” he said. “It’s ultimately their call. Our expectation is that we’d be priced at parity with injected insulin in pen form. Getting parity pricing would be a big advantage in the marketplace.”

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Andrew Pollack

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