Staff Writer

News that MannKind Corp. will not achieve its goal of signing a partnership this year for inhaled insulin product Afresa polarized the company's bullish backers and its bearish detractors.

The bulls believe Afresa will be more valuable after its anticipated FDA approval early next year. MannKind's 8-K filing stated that, although the company had made "substantial progress" toward closing a partnership, it decided partners would be better able to "address appropriate deal terms and structure once the label for Afresa is clarified."

Leading the bull camp is Rodman & Renshaw analyst Simos Simeonidis, whose firm helped underwrite a public offering that netted $59.7 million for MannKind in August. Simeonidis wrote in a research report that the delay "could end up actually being great news" because a post-approval Afresa deal could be "much richer" for MannKind, with "more pharma partners at the table, thus better terms and even potential for bidding war." (See BioWorld Today, Aug. 6, 2009.)

But the bears believe the delay was driven less by MannKind's proactive strategizing and more by a potential suitor leaving the company at the altar. Leerink Swann analyst Joshua Schimmer reported that MannKind was nearly negotiating term sheets when its partner withdrew because of objections from regional commercial managers.

The truth, according to MannKind president and chief operating officer Hakan Edstrom, is somewhere in the middle. Edstrom called Schimmer's account a "reasonable explanation" of what happened, but he noted that MannKind had originally intended to wait until Afresa's approval before partnering and had only started negotiations early because one suitor was "very eager." That suitor "ran into some internal issues commercially" and couldn't productively continue discussions, Edstrom told BioWorld Today.

MannKind thus decided to revert to its original plan and conduct negotiations - possibly with the original suitor as well as with others - after Afresa's approval.

But the bears aren't confident in Afresa's prospects for approval or a partnership - not after the implosion of Pfizer Inc.'s and Nektar Therapeutics Inc.'s Exubera.

The first FDA-approved inhaled insulin product, Exubera had been hailed as a probable blockbuster but was pulled from the market amid dismal sales and concerns of lung cancer risk. Shortly afterward, partners Novo Nordisk A/S and Aradigm Corp. dumped their Phase III inhaled insulin product, as did partners Eli Lilly and Co. and Alkermes Inc. (See BioWorld Today, Oct. 19, 2007, Jan. 16, 2008, and March 10, 2008.)

J.P. Morgan analyst Cory Kasimov wrote in a research note that Afresa's approval is "possible but not guaranteed." He acknowledged that MannKind's "robust" Phase III program proved noninferiority to insulin as well as lower risk of hypoglycemia and weight gain, but he worried that the FDA's "current comfort with the chronic administration of insulin through the lungs remains a major question mark."

Kasimov also said he "would have a hard time envisioning a scenario under which Afresa is approved without first going in front of the FDA's Endocrine and Metabolic Advisory Committee," given the lung cancer concerns with Exubera.

Edstrom said that committee is scheduled to meet in December, but MannKind has not been asked to discuss Afresa. He added that the FDA indicated it is comfortable with insulin and does not plan to consult a panel regarding the product.

Edstrom also noted that the FDA appears to be "working very diligently" toward meeting its Jan. 16 PDUFA date for Afresa.

Of course, FDA approval is no guarantee of commercial success, as Exubera's untimely demise proves. But Edstrom believes Afresa has enough differentiating factors to succeed.

Most importantly, while Exubera was simply an inhaled version of injectable insulin, Afresa has very different pharmacokinetics and pharmacodynamics, Edstrom explained. The drug acts quickly, allowing better glucose control, yet it allows insulin levels to return to normal after digestion, preventing hypoglycemia and the need for diabetic patients to eat just to manage their insulin.

Edstrom added that MannKind has observed "absolutely clean histology" with no indications of cancer risk in preclinical or clinical studies.

Additionally, MannKind's inhalers are smaller and more convenient than Exubera. And Edstrom predicted that pulmonary function tests, if required at all, won't be overburdensome.

Shares of Valencia, Calif.-based MannKind (NASDAQ: MNKD) fell about 30 percent on Tuesday and slid another 2.5 percent on Wednesday to close at $6.15.

Published  October 8, 2009