Mannkind Afrezza Launch 2.0: How It Is Different This Time Around

| About: MannKind Corporation (MNKD)

Summary

Better data = better presentations to physicians and patients.

A dedicated, focused, and targeted sales force.

CEO and company are 100% focused on the success of Afrezza.

Mannkind (NASDAQ:MNKD) is finishing up final preparations for its commercial launch of Afrezza under the company's own branded product scheduled for July of 2016. Mannkind regained the full rights of Afrezza back from Sanofi (NYSE:SNY) on April 5th, 2016, and has been in a transition period since then preparing its commercial operation and self-branded product for the upcoming relaunch. A few reasons why this launch might produce better sales than Sanofi's failed launch last year include the fact that the company has better data from studies at this time, will have a more dedicated, focused, and targeted sales force, and it has the 100% backing of the CEO and full resources of the company.

Mannkind recently presented 6 posters at the American Diabetes Association (ADA)'s (article) latest meeting in June of 2016. The big takeaway from the day was that Afrezza demonstrated a faster onset of action and a shorter duration than rapid-acting insulin analogs in patients with diabetes mellitus including a 25-35 minute faster onset of action than Lispro with a 2-3 hour shorter duration.

The reason this new data is relevant to the upcoming relaunch is that it differentiates Afrezza from all other meal time insulin on the market, not just because Mannkind says it appears so, but because it is now backed by hard scientific data that doctors and patients can quote. This new scientific data can be used in physician presentations and in patient interactions especially in regard to anyone concerned with hypoglycemia.

Raymond Urbanski MD, PhD, and Chief Medical Officer of Mannkind said at the ADA meeting that Afrezza properly used can help lower the potential for hypoglycemic episodes following meals. Recent studies show that there were around 100,000 hospital visits a year for hypoglycemia between 2007-2011 with a cost of around $600 million. Afrezza can now be promoted to patients concerned with hypoglycemia in ways Sanofi never could because the studies had not been done and the data collected which support the ADA presentations' findings.

Another key difference is in the sales force that Mannkind will use to promote Afrezza compared to the one that Sanofi used last year. Sanofi used its wide base of established sales representatives to push Afrezza along with a whole portfolio of other products including its insulin giant Lantus and its follow-up Toujeo. The best way to view how Afreeza's sales went is to look at a graph of Mannkind's stock price action over the last year or year and a half. Afrezza's slow ramp up and flattish poor sales over the last year have wrecked havoc on Mannkind's stock price as the drug represents Mannkind's future as a company going forward.

Now that Mannkind has undertaken the commercialization and marketing of Afrezza, it has implemented a new plan of action going forward. A lot of skeptics say that if Sanofi's established sales force couldn't do it what chance will Mannkind's sales force have? I would argue that almost any change in approach has the potential to achieve better results means Afrezza's sales under Sanofi were not only just bad but embarrassing to all involved.

Mannkind has build its commercial organization from the ground up over the second quarter from its leader in Mike Castagna to his VP's and the projected 60-70 person sales force set to hit the field at the end of June according to its latest conference call. This small and mobile sales organization has one and only one objective, which is to sell Mannkind's branded inhaled insulin Afrezza. That's it. Sell Afrezza or, most likely, be looking for a new job in a year.

This small professional force will initially be focused on target physicians (endocrinologists and high prescribers) with the goal of rapidly building prescription count while breaking down barriers to use and retaining current users. They will be armed with new educational materials (from ADA), a new spirometry solution, and a new and more comprehensive sample program.

This brings me to a final key difference between Sanofi's launch and Mannkind's upcoming launch, which is the full backing of the CEO and the company's resources. When Sanofi first acquired the rights to Afrezza, its CEO was Chris Viehbacher who proceeded to be abruptly fired and replaced by new CEO Olivier Brandicourt a little before Afrezza's initial launch. The former CEO was seen to be a driving force behind Sanofi's acquisition of Afrezza and the question then came up would the new CEO have the same view of Afrezza especially when he and the company had ties to Exubera (a failed inhaled insulin from 2006) (article). Maybe it was just better for the new CEO and the company if Afrezza either succeeded on its own with minimal publicity or went away quietly if sales never materialized and the failure put on the shoulders of the former CEO.

However, Afrezza is now under the control of Mannkind's CEO Matthew Pfeffer and has the company's full war chest of resources dedicated to its success over the next year. At the end of Q1, Mannkind had $27.7 million in cash and cash equivalents along with $30.1 million left it could borrow on its amended Mann Group loan agreement. It also has a $50 million ATM facility it can use at its discretion, although the company would like to see some stock appreciation before selling shares on the open market. It also had a recent stock and warrant offering that raised $47.5 million. That gives Mannkind around $155.3 million in funds to move forward with since the beginning of Q2 with a cash burn rate of about $10.5 million over the first part of the year. Afrezza's commercial organization is expected to cost between $20-$22 million over the course of the year with the ramp up of sales activities of $10-$12 million a month over the rest of the year according to company projections at its last conference call. This cash cushion gives Mannkind into next year to turn sales around into profitability before things get tight.

Things are looking a little grim for Mannkind, but the company has a plan in action and appears to be ready for the relaunch of Afrezza next month. Mannkind has to successfully and profitably start selling Afrezza over the back half of 2016 or its limited resources will be exhausted in the first half of next year. The success of the company's Technosphere technology and its pipeline of other candidates all depend on Afrezza as right now as there is money for little else besides growing sales.

Conclusion:

With Mannkind set to relaunch Afrezza in July, 2016 as its own branded product, the company will encounter obstacles just as Sanofi did last year. However, I think that the company's focused, dedicated, and targeted sales force armed with excellent new study findings from the ADA meeting, and the full support of the company's CEO and resources give it a fighting chance to raise sales of Afrezza rapidly over the back half of the year and maintain prescriptions going forward.

Disclosure: I am/we are 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.