It was supposed to be a great marriage of a new product and deep pockets. In 2014, the pharmaceutical giant Sanofi agreed to market Afrezza, an inhalable insulin created by Mannkind Corporation. It didn’t work out that way. In the beginning of 2016, the two companies parted ways after a disappointing rollout and terrible Afrezza sales. Following the demise of the Sanofi-Mannkind agreement, speculation swirled about MannKind’s commercial future and Sanofi’s motivations.
On a April 26 conference call for investors and analysts, Mannkind officials laid out plans to directly market Afrezza, concentrating on three steps:
-putting performance and prescribing information in the hands of diabetes care professionals
-working to gain better acceptance of the drug by payors and insurance companies
-backing away from the premium pricing set at the drug’s commercial launch¹
-Cooperation with independent medical practices in the opening of specialized diabetes care centers
The drug appears to have a loyal user following, judging from posts to diabetes care blogs and message boards – that positive chatter from users has been padded somewhat by investors who back Mannkind. Some users, though, have reported bronchial irritation and coughing after use. Label warnings and precautions include recommendations against use by persons who smoke or have impaired respiratory function. The prescribing information recommends periodic lung capacity and function testing.
In the U.S., where Afrezza was first cleared for commercial distribution, the Food and Drug Administration maintains strict control over parties authorized to move pharmaceutical products through the regulatory process and then to distribution to patients and practitioners. That control was restored to MannKind on or about April 5th.
In the time between cessation of the MannKind-Sanofi pact and restoration of product rights to MannKind, MannKind CEO Matt Pfeffer remained guarded against voicing information about the company’s strategic plans. In investor and analyst calls he hosted during the period, and in filings submitted to the Securities and Exchange Commission, he and other company officials have been candid and straightforward about the financial challenge associated with developing Afrezza and recouping those costs through U.S. sales. Now adding to that challenge will be the need to build an internal sales organization from the ground up.
There are several things that MannKind officials couldn’t discuss publicly during the transition of the Afrezza NDA back to MannKind that were revealed in the recent earnings call. They include:
-Mannkind officials blame the erosion of sales from uncertainty of supply after Sanofi’s unexpected cancellation of the 2014 marketing agreement. Doctors hesitated to keep patients on the medication or move new patients toward it without knowing that adequate supplies would be maintained
-Patients and doctors may have misunderstood the need to adjust basal dosages downward in connection with Afrezza usage in substitution for mealtime bolus injections
-MannKind officials now feel in a position to directly negotiate favorable pricing with payors and large dispensing pharmacies
-The company is now addressing misconceptions among practitioners about the nature and complexity of recommended periodic lung capacity testing, and will work with practitioners to save costs to acquire the appropriate testing equipment
-The company will pursue regulatory clearance in Canada, Australia, South America, and the Middle East, where certain reciprocities based upon Afrezza’s FDA clearance are available
In the investor and analyst conference call on March 14, Mr. Pfeffer said:
“I reiterate to investors listening today the themes first discussed in my presentation at J.P. Morgan in January – MannKind is here to stay. We fully intend to realize Al’s vision² for the inhalable insulin developed here at MannKind and manufactured by us, Afrezza. MannKind senior leadership is tackling every challenge with vigor and with the goal of making sure people with diabetes have access to this compelling product and we make the best possible decisions for the long-term strategic advantage. Bottom line, we are committed to fulfilling the last chapter of Al’s business legacy.”
The company is participating in presentation of peer-reviewed papers at the American Diabetes Association 76th Scientific Sessions in New Orleans in June 2016 and a number of poster presentations. An earnings call to review first quarter 2016 financial results and present projections has been scheduled for May 9.
¹At publication time, Afrezza’s list price falls in the $285 to $300 range for a kit of 30 4-unit cartridges and 8 60-unit cartridges at pharmacies in the Boston area.
²Alfred Mann, founder of MannKind Corporation, passed away on February 25.
Editor’s note – Jim Cahill voluntarily disclosed that he has 100 shares of Mannkind common stock that he purchased on January 15, 2016. He has since divested these funds from his active holdings.
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