MannKind Wins U.S. Panel Backing for Its Inhaled Insulin
MannKind Corp. (MNKD)’s inhaled diabetes treatment won the backing of a U.S. advisory panel, moving the company another step closer in its long-running effort get its first product on the market. The shares rose 74 percent.
Food and Drug Administration advisers voted 13-1 and 14-0 yesterday that the drug, Afrezza, should be approved for Type 1 and Type 2 diabetes, respectively. The FDA doesn’t have to follow the recommendation. FDA staff raised concerns in a report March 28 that the medicine may affect lung function and questioned missing data from a study of Type 1 patients.
MannKind’s shares surged to $6.99 at the close in New York, the largest single-day increase since the company began offering shares in 2004. The price has bounced from a high of $21.70 to a low of $1.60 as Pfizer Inc. (PFE) pulled the only inhaled insulin from the market and the FDA twice rejected MannKind’s therapy, most recently in 2011, after the company switched inhalers.
“Approval at some point now seems inevitable, but issues discussed raise questions regarding the commercial outlook of the drug,” Joshua Schimmer, an analyst with Piper Jaffray & Co. in New York, said in a note to clients.
Risks to Afrezza’s commercial success lie, in part, with Valencia, California-based MannKind’s ability to secure a partner that has the sales force to market the drug.
MannKind is in talks with “multiple companies” to find a partner, Matthew Pfeffer, the chief financial officer, said in a telephone interview before the panel meeting. He said he expects any announcement to come after the FDA’s decision date of April 15.
Schimmer said today that he expects at the FDA to postpone the decision while the agency and MannKind work out the details of Afrezza’s label and risk-management requirements.
MannKind has spent almost eight years seeking approval since starting late-stage trials.
“We are pleased with the advisory committee’s approval recommendation in support of Afrezza, and we appreciate the thoroughness of their review,” said Alfred Mann, the company’s 88-year-old founder, chairman, chief executive officer and largest shareholder, yesterday. “Diabetes is a major health problem in the United States, and we are committed to bring Afrezza to the many patients who might benefit from this novel product.”
While some panel members who recommended approval expressed reservations about potential safety risks, they said MannKind demonstrated Afrezza works. The advisers also said the benefit of an alternative to insulin injections outweighed their concerns or could be addressed in the medicine’s labeling.
If approved, Afrezza may generate $534 million in 2018, according to the average estimate of three analysts compiled by Bloomberg.
The company’s shares declined five straight days leading up to the meeting, including a 17 percent drop to $4.02 at the close March 31, the biggest single-day fall since October 2012, as investors were concerned the panel might react negatively to the diabetes therapy.
About 26 million people in the U.S. had diabetes 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. Type 2 accounts for 90 percent to 95 percent of diabetes cases in the U.S.
Pfizer 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 workers said this may be a concern with Afrezza as well.
FDA staff suggested two post-market studies to evaluate lung-cancer risk in MannKind’s product.
Mann has said his company’s drug is different than Pfizer’s earlier product. The insulin is inhaled before a meal and works faster than injectable products, more closely mimicking natural insulin production in healthy people, the company said.
Afrezza would compete with Eli Lilly & Co.’s Humalog and Novo Nordisk A/S (NOVOB)’s Novolog, both injected insulins. 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 drug called metformin, a pill which can lose effectiveness over time.
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