Seeking Alpha
Deep value, contrarian, long-term horizon, growth at reasonable price
Profile| Send Message|
( followers)

Summary

  • Statistics showed MannKind and Durata have over 91% chance of FDA approval.
  • There are high correlation between percentage of yes votes in Advisory Committees to final approval by the Food and Drug Administration.
  • Investigating into reasons for rejection showed only careless mistakes by drug companies.

In my previous article about MannKind (NASDAQ:MNKD) Afrezza probability of Food & Drug Administration Approval, there were many constructive criticisms regarding Advisory Committee results that I want to address. Before I do that, I want to thank everyone who read and commented. I appreciate everyone's view whether you agree or disagree. Because I value your input, I decided to expand my statistical analysis by over 200 additional data points. Since my data had exploded in size by roughly 10x, I am also including Durata Therapeutics (NASDAQ:DRTX). They had recently received a 12-0 ADCOM on March 31, and looking for FDA Approval May 26, 2014.

Data setup

Date Range: Early 2008 to Nov 2013 that has both ADCOM and FDA Approval Panel within that time.

It is important to note the following:

  1. Each ADCOM count is for each "purpose of use" ADCOM and FDA votes for. For example, Afrezza actually had 2 ADCOM, 1 for T1 and 1 for T2.
  2. This report is broken down more specific than other reports you might have seen. This is because some drugs are searching for multiple approvals for different purposes or went through ADCOM multiple times.
  3. This report includes both drugs and devices.
  4. All data is taken from FDAtracker.

Data broken down by % of ADCOM vote range

(click to enlarge)

(click to enlarge)

(click to enlarge)

(click to enlarge)

(click to enlarge)

I've disclosed all data points used. Some of these may look like duplicates but they are not. It is because the same drug is asking for multiple approvals in different usage. I made sure there are no duplicates.

Here's a simple table of everything.

There is a linear correlation between ADCOM yes votes to FDA approval rate. The higher the yes votes, the higher the chances of FDA approval. Here's a visual chart to see the general trend.

(click to enlarge)

There's a little anomaly going on at 60% and 70% because there's not enough data points at those percentages. However, we can clearly observe the linear relationship between approval rate and ADCOM voting %. From this data we can speculate that Afrezza for T1, has 80% chance of approval and 91% for T2.

Are there good reasons for 6 perfect ADCOMs to lose FDA approvals?

The simple answer is yes if you dig deeper. The first one we see is Organon USA Inc., a subsidiary of Merck, with their drug called Bridion. It made a perfect 10-0 votes for ADCOM and then failed to gain FDA approval because "…The FDA's letter raised concerns about operational aspects of a hypersensitivity study that the agency had requested in 2008."

That sounds familiar to MannKind's second Complete Response Letter where they completely ignored bioequivalency data the FDA asked for the first time.

If you investigate Centocor's 11-0 ADCOM leading to a FDA CRL, you will see that it has nothing to do with the drug efficacy and safety.

(click to enlarge)

Centocor simply forgot to do a Risk Evaluation and Mitigation Strategy. They resubmitted and was approved the following year.

GlaxoSmithKline's Q-Pan H5N1 vaccine received a perfect 14-0 ADCOM but was later rejected by the FDA. This administrative matter is unrelated to the drug and was forced a CRL.

In summary, there are very good reasons for FDA rejections. However, the trend seems to be careless mistakes and not the drug itself. Like I've stated in my previous article, the FDA is very specific just like any other government agency. That's just how the federal government works. If they tell you that you need to do the following to get approved, make sure you meet everything on that checklist and do it on time. ADCOM only make sure the drug is safe and effective.

Conclusion

I hold my belief that there's direct cause and effects for everything that happened. This time MannKind had actually read every word in the CRL and completed everything on the FDA's checklist. I am confident that Afrezza's FDA approval chances are much higher than the data suggest. The fact is MannKind made their careless mistakes twice and was hand held by the FDA through trials 171 and 175 to fix it. When you made mistakes that cost you over $1B, there's a lot of incentive to do it right. Research showed when FDA rejection occurred to perfect ADCOMs, the FDA seems to quickly approve the drug as soon as the company complete all tasks listed in the CRL. My first article on Afrezza showed that MannKind had finally completed everything on their latest CRL.

Disclosure: I am long MNKD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Over 91% Chance Of Approval For MannKind And Durata Therapeutics