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With the upcoming PDUFA date for MannKind’s (NASDAQ:MNKD) Afrezza of December 29th, there are just a few weeks left for investors to take a position before this binary event. Investors rely too much on analyst comments and published headlines from journalists that perform cursory due diligence at best. Smart investors who look at the underlying technology, the barriers to entry for insulin therapy and the huge unmet need in the market for a better solution will understand why Afrezza is such an advancement above the gold standards that exist today. There is an enormous opportunity in the market to do a better job of controlling this pandemic that Afrezza addresses. It is estimated that 2 new diabetics are diagnosed every 10 seconds worldwide. If Afrezza can make the impact it should, it could become one of the biggest selling drugs of all time.

There are number of misconceptions that surround Afrezza and whether or not it will find success in the market. These uncertainties continue to pressure MannKind’s share price and I believe all of them are unwarranted. It is important to note that these misconceptions come from the financial community and NOT from the medical community, who has shown a strong willingness to prescribe Afrezza once approved.

Exubera failed and therefore Afrezza will fail:

This one is a tired story told by a bear analyst that is easily dispelled simply by looking at the facts. I’ll layout each of the facts below and if you still think that Exubera foreshadows the failure of Afrezza --then MannKind definitely isn’t the stock for you.

Exubera Facts:

Pfizer’s (NYSE:PFE) Exubera was one of the biggest failures in the history of biotech. Originally projected to do over $2B a year in sales, it was a complete flop when introduced and Pfizer took a $2.8B charge to write-off the program. MannKind’s detractors and skeptics continue to point to the dismal sales of Exubera as an indicator for the future of Afrezza. Here are the facts about Exubera, which ultimately led to its failure.

  • Exubera offered absolutely no medical benefit whatsoever to Rapid Acting Analogs (RAA) None.
  • Exubera achieved peak insulin levels at 49min compared to injected Rapid-Acting Insulin's 52min (Afrezza peaks at 14min)
  • The only benefit of Exubera is that you inhaled it and could prevent mealtime injections, but the kinetics and side effects were similar to regular RAA.
  • Exubera had very complex dosing requirements, unique to the product and not linear to standard insulin units. You still had to perform dose titration before a meal and continue to perform Self-Monitoring Glucose Tests.
  • Prescribers hated it. It offered no advantage as a therapy, had complex dosing and therefore took a lot of time to explain its use to patients. Patients were often confused by how to use it, which took up a lot of time for physicians and their staff.
  • Exubera was priced 20% higher than RAA so Payers didn’t want to cover it.
  • The device itself was very inconvenient.
  • Despite a popular myth, Exubura did not cause an increase in lung cancer risk.

The Exubera "Bong"

It is no wonder that Exubera was such a dud in the market given the facts above. The question is why did Pfizer even bother with it? The ‘other’ company’s efforts at inhaled insulin were ceased after Exubera’s failure. Every single one of those programs was a ‘me too’ effort offering no medical benefit, just like Exubera.

Now here are the facts about MannKind’s Afrezza:

Afrezza Facts:

  • Afrezza is the world’s first Ultra-Rapid Insulin.
  • Afrezza mimics the normal insulin response to a meal that a healthy person would have.
  • Afrezza greatly reduces the risk of hypoglycemia
  • Afrezza is weight-neutral.
  • Afrezza results in lower fasting glucose levels.
  • Afrezza inhaler is convenient and easy to use, tested for patients as young as 4 years old.
  • Afrezza causes no clinically meaningful impact to pulmonary function (1.7% on the Medtone device – similar to Exubera - and about .5% on the Gen2 inhaler.) This is about the same impact you would see by aging 1 year and it reverses when treatment is discontinued.
  • The Device is disposed of every 2 weeks, eliminating concerns over cleaning or long-term durability.
  • Afrezza’s meal-escalation study demonstrated that there was no increased risk of hypoglycemia from Zero up to 150 grams of carbohydrates during a meal. Very little if any need for complex meal titration.
  • Afrezza eliminates the need for painful shots, a major concern for new patients requiring insulin therapy and a complaint for those already on insulin therapy.
  • Afrezza breaks down all of the existing barriers for introducing insulin therapy to a patient!

MannKind

No Advisory Committee: Analysts have backed off this one a bit, but some still say the lack of an Advisory Committee means that the FDA won’t approve Afrezza by this PDUFA date. It isn’t surprising at all that an Advisory Committee wasn’t required for Afrezza. There is already precedent for pulmonary delivery of insulin with the approval of Exubera – who had their own advisory committee in 2005 where the expert panel members voted 7-2 in favor of approval. That Advisory Committee was to discuss the efficacy of Exubera and the pulmonary delivery of insulin. Afrezza is a far better product than Exubera for all of the facts described earlier and the FDA knows this. Advisory committees are usually called when there is a Risk vs. Benefit discussion that needs to take place with feedback from outside experts or if the drug under review is a new, novel compound. Afrezza is simple insulin carried on completely inert particles. Afrezza had no serious safety flags through dozens of trials and 5,000 patients that would require a Risk vs. Benefit discussion. There is absolutely nothing with Afrezza that would warrant an Advisory Committee. If one was deemed necessary by the FDA, it would have been called during the initial review in 2009.

Patient Acceptance: Diabetics are ‘used’ to taking multiple shots a day and won’t want to change. Are you kidding me? This is one of the most asinine statements that I’ve heard on numerous occasions. Now, while this may be true for some, it will be the exception and not the rule. This was even demonstrated in the Quality of Life study referenced earlier, where when given the choice of continuing to use injected RAA insulin or switching to Afrezza, 75% chose to switch. Now think about the millions of diabetics who should be on insulin therapy but resist it. Taking shots is the most widely referenced barrier to entry for beginning insulin therapy. MannKind presented a poster presentation at the 2010 ADA conference to discuss a survey conducted directly to almost 1,100 Type 2 Diabetics regarding the interest of inhaled insulin given the medical benefits laid out in the survey – over 68% of responders said they would be interested in it, and that is before they see commercials on TV or hear about it from their physician. Most of the reasons for the interest expressed by patients were better control of high blood sugar after a meal, avoiding the discomfort and inconvenience of shots along with less weight gain.

FDA won’t allow MannKind to switch Delivery Devices: There is no FDA Draft Guidance for Bioavailability and Bioequivalence Studies for Pulmonary delivery. The closest thing is Draft Guidance for Nasal delivery (local action.) In the research I've done, the FDA is most concerned about particle size and drug exposure when it comes to new devices. A good comparison is nebulizer machines. Studies show there is a wide variation of drug exposure and particle size across nebulizers. There are acceptable ranges accepted by the FDA. For Bioavailability and Bioequivalence in different classes of drugs, there are generally recommendations given by the FDA. Many of those just require In Vitro studies. Comparative studies are also common. YOU DO NOT HAVE TO RUN ALL NEW TRIALS to show bioequivalance. In the case of Gen2, all that needs to be demonstrated is that the drug delivered to the deep lung is similar and the particle size is similar. The recommendation from the FDA is that you consult with them when designing bioequivalance studies. THAT IS EXACTLY WHAT MANNKIND DID. In fact, they ran the recommended assays to demonstrate bioequivalance that the FDA wanted along with another standard. MannKind’s Gen2 inhaler is simply a more efficient, simpler form of the Medtone inhaler.

Conclusion:

The street has no idea of the profoundly positive impact Afrezza will have in the world of diabetes therapies. Once Afrezza is approved and once the absorption kinetics of it is understood by healthcare providers and patients, Afrezza will become the new “normal science” for treating diabetes. Afrezza will overtake basal insulin as the first course of insulin therapy for type 2 diabetics going onto insulin therapy (earlier in the treatment plan) and will replace existing RAA options for a majority of patients already on prandial insulin. When this happens, not only will Afrezza reach “mega-blockbuster” status but it could become the most valuable drug of our time. The Paradigm Shift of Afrezza is inevitable -- improving the health and Quality of Life for millions of diabetics.

In a future article, I’ll cover how Afrezza breaks down the existing barriers to insulin therapy and how that equates to huge market share. In the meantime, you can read a post on my Instablog regarding the subject here.

Disclosure: I am Long MNKD.

Source: Clearing Up the Uncertainty Around MannKind’s Afrezza