Billionaire Plans Cure for Blindness as He Approaches 90Caroline Chen
Alfred Mann spent $1 billion of his own money and 13 years of his life to get a breakthrough diabetes treatment approved by regulators. Now the 89-year-old Las Vegas billionaire wants to cure blindness.
Mann’s 17th company, Second Sight Medical Products Inc., is expected to begin trading tomorrow after an initial public offering that may value the business at more than $300 million. (Ticker symbol: EYES.) The company’s eye implant is currently limited to patients who still have a functioning optic nerve. The next stage is to connect the implant directly to the surface of the brain, a treatment that would target all forms of blindness, said Chief Executive Officer Robert Greenberg.
Curing blindness may be a hurdle for Mann at least as difficult as bringing to market the inhalable insulin developed by MannKind Corp. -- the company he named after himself. The technical challenge to develop a drug like that flummoxed Pfizer Inc., then the world’s biggest drugmaker, and proceeded in fits and starts for MannKind.
Even as Mann approaches 90, his team says he’s up to the task. “He’s an inspired man,” said Hakan Edstrom, president and chief operating officer of MannKind, who has worked with Mann since the company’s founding. “His mind is no older than 25 years, even if the body is getting a little rusty.”
Second Sight, based in the Los Angeles neighborhood of Sylmar, plans to raise more than $30 million in its offering, selling 3.5 million shares for $9 each. Mann, who will be chairman, will own 32 percent of the shares, according to company filings.
The IPO was initially planned for today, though is still awaiting final regulatory approval and is now scheduled for tomorrow, said Audra Friis, an outside spokeswoman for Second Sight.
To reach its goal of curing blindness, the company will rely on Mann’s reputation of dogged persistence.
In 2001, Mann set his sights on diabetes, a disease that affects more than 29 million people in the U.S. His plan was to create an inhalable insulin in powder form, which would save patients the trouble of injections.
MannKind faced challenges from the start. Before the drugmaker could finish clinical trials of its drug, called Afrezza, its future was thrown into question when New York-based Pfizer Inc. abandoned its own inhaled insulin treatment Exubera in 2007.
Pfizer wrote off $2.8 billion after Exubera didn’t catch on with doctors due to the cumbersome design. MannKind shares fell 7.4 percent that day. Then MannKind received a rejection from U.S. regulators in 2010, and a second in 2011. The agency asked the company to run two more studies.
That moment was “probably the biggest disappointment,” said Edstrom. “We knew we had to spend a couple other hundred million dollars to get it through that process. That’s when we had to face the question, is this worth it?”
Mann said he didn’t think twice.
“I have never considered abandoning the effort because I firmly believe that Afrezza has the potential to bring significant benefit to the still growing and enormous population of people with diabetes,” he said in an e-mail response to questions.
The Food and Drug Administration cleared Afrezza in June as a fast-acting insulin to be used at meal times for those with Type 1 and Type 2 diabetes. The drug’s labeling will warn that spasms in the airways of the lung have been seen in patients with asthma and chronic obstructive pulmonary disease and will advise against smokers using the medicine.
Afrezza sales will reach $895 million in 2018, according to the average estimate of analysts compiled by Bloomberg. That’s a sliver of what other top-selling insulins bring in. Its use may be limited to patients who can’t or won’t take injections, rather than replacing the shots, which have been used for years and are familiar to patients and doctors.
Mann founded Second Sight in 1998. The company got U.S. approval last year for the first implantable visual prosthetic approved to treat retinitis pigmentosa, a hereditary disease in which patients experience a progressive degeneration of the light-sensitive cells of the retina.
The device, called Argus II, is placed on the surface of the retina. It converts video images into electrical pulses that stimulate the remaining viable cells, restoring some vision. It’s now been implanted in about 90 patients around the world, said CEO Greenberg, and is in trials to expand its use.
‘Make It Work!’
“We had spent years in animal trials with failure after failure, and it looked like, perhaps, we could never get it to work,” Greenberg said in a telephone interview, talking about development of the Argus II. Mann “said the problem we’re facing is a technical one, a mechanical engineering problem, it’s solvable. He would say, ‘Go back and figure it out! Make it work!’”
The company is now developing another product that would directly stimulate the part of the brain responsible for vision, which “will be able to treat nearly all forms of blindness,” with a market of about 5.8 million people, according to company filings. The cortical implant is still in development, and will hopefully begin trials in humans in two years, Greenberg said.
Joshua Schimmer, a New York-based analyst at Piper Jaffray & Co. has covered MannKind on and off for four years. “At times, he’s been a lone voice among many doubting investors,” the analyst said.
Mann is also known for his willingness to pour his own money into his projects. His holdings in MannKind alone are worth $250 million, and his total wealth is estimated by Forbes at more $1 billion. He spent $975 million of his own funds on Afrezza and now holds about $100 million worth of Second Sight’s shares.
“We’ve been at universities and MBA classes and students always ask Al, ‘So, what do I need to be successful?’” Edstrom recounted. “He says you need a great and validated idea for why your product will be successful in the market place.”
Then, Edstrom says, Mann’s next three slides all say the same thing: “Capital. Capital. Capital.”
Even now, Mann has not fully recouped his investment. MannKind joined with France’s largest drugmaker, Sanofi, in a deal to commercialize Afrezza. Sanofi will pay MannKind as much as $925 million, and the companies will share any profits.
Despite his age, Mann said he’s as tireless as ever: He gets to the office at 7 a.m. or 8 a.m. and works for about 12 hours. He was active in helping to set up the IPO for Second Sight, talking to potential investors during the road show, according to Greenberg.
“He’s joked before that he’s set a retirement date for when he’s 144 years old,” Greenberg said. “It’s not work for him, I think, it’s just what he’s been put on this earth to do.”
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