After reading many articles on Seeking Alpha about the assured blockbuster success of AFREZZA, an inhaled ultra-rapid acting insulin for treatment of Type 1 and Type 2 diabetes mellitus from MannKind (NASDAQ:MNKD), I was interested in taking a deeper look into the history of this product, the FDA review (found here), and the data in the approved product label (found here). The question of whether the data for AFREZZA are adequate for FDA approval has now been answered (yes). The question can now shift to whether there are adequate data for a compelling marketing message for AFREZZA.
The claims that can be made in marketing a pharmaceutical product are substantially limited by the data in the FDA approved label, also known as the Prescribing Information (PI; the detailed sheet of small print that comes with every FDA approved product). For a product to be marketed successfully, the company needs to be able to make compelling claims in promotional materials and in discussions with prescribing physicians and payers, i.e., they need to be able to make claims that differentiate their product from those of competitors. This is particularly true in a highly competitive market such as diabetes. What the FDA does or does not allow in the label (or, conversely, requires in the label) speaks to the safety and efficacy data that FDA finds are supported by the scientific and clinical evidence. The claims that can be made in promotional materials are highly constrained by the data that FDA allows in the PI, and have to be balanced by the risks that FDA requires to be stated in the label. So, what are the safety and efficacy data in the PI for AFREZZA, and what differentiating claims can be made? These questions are critical for understanding what claims MNKD will be able to make when marketing AFREZZA.
First, there is a Black Box Warning for acute bronchospasm, and the PI states that spirometry (a type of lung function test) should be performed on all patients prior to initiating treatment with AFREZZA, as well as follow-up testing during therapy. Few physicians who treat diabetes are going to be set up to perform spirometry, which means either referring patients to another physician for these lung function tests or training a technician in their own offices to perform this test. That's a hassle, and a barrier to entry. Physicians will have to be convinced that the efficacy and safety profile for this product is worth that extra time, cost and effort.
Moving on, we see that the PI includes a Warning and Precaution for use in patients with active lung cancer, or risk for lung cancer, and that the benefit of treatment with AFREZZA should outweigh this risk. In the clinical trials for AFREZZA there was a small numeric imbalance in the incidence of lung cancers, with more cases in patients on AFREZZA vs. patients on placebo or injectable insulin (2 vs. 0, respectively). An additional 2 cases in patients exposed to AFREZZA were reported after the clinical trials were completed. That makes 4 patients with lung cancer on AFREZZA, vs. none on placebo or injectable insulin. Small numbers, but an earlier attempt at inhaled insulin, Exubera, marketed by Pfizer (NYSE:PFE), also had a numeric imbalance in lung cancer. Additionally, the long-term lung cancer mortality study performed by Pfizer showed imbalances in lung cancer mortality (6 cases in 12,605.9 Patient-Years [PYs] in the Exubera group and 2 cases in 11,802.5 PYs in the comparator group), and lung cancer incidence (12 cases in 11,180.7 PYs in the Exubera group and 3 cases in 10,467.9 PYs in the comparator group). Note that MNKD is also required to conduct a long-term lung cancer mortality study with AFREZZA.
Thus, the imbalance in cases of lung cancer in the AFREZZA-treated patients is consistent with what was seen with Exubera during its development and short time on the market. Further, there is a biologically plausible explanation for the risk of lung cancer. Insulin is a growth factor and drives cellular proliferation; delivering a growth factor to the lung epithelium several times a day for years of treatment is a real risk that many physicians and patients will think twice about.
The next crucial item in the label is the data in the Clinical Trials Experience section. First, the safety data - what's interesting here are the hypoglycemia data, or more to the point, what's interesting is the hypoglycemia data that aren't in the label. Because the goal of treatment in diabetes is to reduce the levels of blood glucose, there is an inherent risk of low blood sugar (hypoglycemia) as a result of treating the high blood sugar in diabetes. It is a delicate balance, and it stands to reason that if you are effective at bringing down blood sugar, you risk bringing it down too far. Symptoms of hypoglycemia can range from mild or moderate (e.g., shakiness, dizziness, confusion) to severe (e.g., seizures, coma or even death), and its occurrence is something that patients often fear.
MNKD has touted that the most important advantage of the rapid-on/rapid-off profile of AFREZZA is equivalent efficacy on reducing blood glucose levels with reduced risk of severe hypoglycemia. However, there are no data in the label that support that claim. In fact, based on the FDA's review of the AFREZZA data (as can be found in the FDA Briefing Information, which was made public on the FDA website prior to the April 1, 2014 Advisory Committee meeting), it is clear the FDA does not agree that the data support a claim for equivalent efficacy. The FDA states clearly that efficacy of AFREZZA is statistically and clinically worse than injected rapid-acting insulin, in both Type 1 and Type 2 diabetes. Hence, any reduced incidence of hypoglycemia is likely due to reduced efficacy in controlling blood glucose levels. Therefore, there are no data in the label for reduced incidence of hypoglycemia and this means that MNKD cannot make any marketing claims about reduced risk of hypoglycemia.
With respect to the lower efficacy of AFREZZA as compared with injected insulin, start with the data in Type 1 diabetes (Table 4 in the PI). Here we see head-to-head comparator efficacy data for AFREZZA vs injected rapid-acting insulin (insulin aspart). What's important to note is that fewer patients on AFREZZA reach the treatment goal of HbA1c‡ <7% as compared with patients on injected insulin aspart (13.8% vs 27.1%, respectively). As a side note, it is a peculiar finding that patients on AFREZZA actually had greater reductions in fasting plasma glucose (FPG) compared with patients on injected insulin aspart (-25.3 mg/dl vs -10.2 mg/dl, respectively). FPG and HbA1c are two different ways of measuring changes in blood glucose levels (FPG measures short-term changes, HbA1c measures long-term changes), and are expected to go in the same direction. It is a strange finding with no clear biological explanation. In any case, patients on AFREZZA were statistically less likely to reach HbA1c goal, and that poses a problem for MNKD in marketing this product.
As to the efficacy of AFREZZA in Type 2 diabetes, the data in the label are from a study of AFREZZA vs. placebo in patients not adequately controlled on oral antidiabetic agents (Table 5 in the PI). So, basically, in patients on oral therapy, the efficacy of adding insulin (AFREZZA) was compared to the efficacy of adding no insulin (placebo). Here we see that AFREZZA is superior to placebo as measured by both HbA1c and FPG. What's clearly missing are the head to head data of AFREZZA vs. injected insulin in Type 2 diabetes - studies that were performed but aren't in the PI. What we can learn from the FDA review of AFREZZA is that MNKD did conduct a clinical study in which the efficacy of AFREZZA was compared to rapid-acting injected insulin in patients with Type 2 diabetes, and AFREZZA was statistically inferior to injected insulin. So yes, AFREZZA works, but it does not work as well as injected rapid-acting insulin, and so MNKD cannot make any claims about equivalent efficacy.
So, what does this label for AFREZZA offer in terms of approved data that can be used to make substantial claims to differentiate this product in the crowded diabetes market? MNKD cannot make a claim of better efficacy compared to injected insulin, or even equivalent efficacy. They cannot make a claim of reduced hypoglycemia compared to injected insulin. The only differentiating factor that AFREZZA possibly has in its favor is convenience of dosing (inhalation vs. injection). And without supporting data of improved patient compliance leading to better efficacy, a claim simply based on convenience is not a very compelling story. Further, given the ease of insulin injection these days, one has to question how significant an advantage inhalation really is, except perhaps in the most needle-phobic patients.
Finally, with all that this label doesn't give them, it does give them a Black Box warning for lung function, and a Sword of Damocles for lung cancer hanging over the product. Can convenience alone tell a compelling story in the market and create a blockbuster product? Time will tell, but my professional experience says successfully marketing AFREZZA will be an uphill battle for MNKD, and whoever their partner may be.
With the limitations that this label puts on promotional activities, the market uptake of this product may be quite a bit slower and peak sales lower than the more bullish investors are hoping for. Marketing launch activities alone can cost hundreds of millions of dollars, and the required lung-cancer outcomes trial will cost a minimum of $250 million-$300 million. MNKD will have to sell a lot of AFREZZA to recoup development costs, marketing costs, outcomes trial costs, and justify the current market cap of $3.73 billion. Investors may want to tread cautiously.
‡ HbA1c is a form of hemoglobin that is measured in a laboratory test to provide information on average blood glucose levels over long periods of time. HbA1c levels are generally considered the gold standard by which treatment success in assessed in treatment of hyperglycemia (high blood glucose) in diabetes. Higher levels of HbA1c are understood to indicate poor control of blood glucose levels, and have been associated with increased risk for cardiovascular disease and microvascular damage, which can lead to such diabetes-related complications as nephropathy (kidney disease) and retinopathy (damage to the retina of the eye). The treatment "goal" for most patients with diabetes is HbA1c value at or below 7%.
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