Part I: Inhaled Insulin, the wave of the future
This is the first part of a six-part series on Mannkind – an overlooked, unfollowed company whose stock has dropped rapidly to around $3 a share. After an extensive analysis, I believe we have here an uncommon opportunity to profit from the market’s ignorance.
Mannkind is a biotech company which is close to bringing to market their first product, inhaled insulin for diabetes (they expect to file for approval by the end of this year). Before delving into the details of their inhaled insulin and their drug pipeline, I will summarize in short the information from all their clinical trials and tests. In short: It works. A bit longer: It’s better, safer, and loads more convenient than conventional insulin.
Now, let’s dig beneath the surface. Inhalation as a method of delivering drugs has many attractive features, garnering interest from all sides of the drug industry. There have been many failed attempts at developing inhaled insulin, including Nektar Therapeutics & Pfizer (NYSE:PFE) (with Exubera), Aradigm (NASDAQ:ARDM) & Novo Nordisk (NYSE:NVO), and Alkermes (NASDAQ:ALKS) & Eli Lilly (NYSE:LLY). What are the benefits of inhalation that have attracted all this interest?
- Drugs that are proteins (such as insulin) cannot be given in pill form, because the digestive process would break them down. That leaves inhalation as an obvious route of delivery, bypassing the stomach. The other choice would be injections, but…
- Injections are painful and inconvenient. Perhaps most importantly, there is much stigma associated to the idea of injecting and patients balk at the prospect. Many patients simply refuse to take needed medications (or don’t take them as often as they should) because they’re only available by injection. Inhalation doesn’t involve any pain and is perfectly acceptable to patients – think asthma inhaler.
- The surface area of the deep lungs is huge – 140 square meters, the size of a tennis court. This gives plenty of space for the drug to be absorbed.
- The lung membrane in the deep lungs is ultra-thin – only one cell thick. This allows the drug to easily pass through the lung membrane into the bloodstream.
- Most importantly, inhalation through the lung gives you direct access to the bloodstream, so that the drug can start working right away. Pills have to first wend their way through the digestive process to be slowly absorbed into the bloodstream by the intestines. Injections, which are generally done into tissue, have to trickle their way into the bloodstream. Inhalation means instant access to the bloodstream.
With all these benefits, inhalation is a crowded field, with many companies vying to develop a good, working system for delivering drugs via inhalation. But this is not a trivial task. There are many hurdles and problems to overcome.
- You need a good inhalation device – not too bulky, easy to use, and easy to maintain. This is one of the many issues that sunk Exubera, Pfizer’s failed version of inhaled insulin. Their inhaler was quite bulky (commonly referred to as a “bong”), and needed a lot of maneuvering to take each puff (multiplied by how many puffs you needed). To top that, it had a “release valve” that needed to be replaced every two weeks.
- The drug has to be formulated into an inhalable form – either a powder or a liquid mist. It has to be made into particles of tiny size, even shape, and light weight so as to fly deep into the lungs. (Asthma inhalers don’t deliver their drug to the deep lungs and would not be sufficient for most drugs.) Often, it will be necessary to add other chemicals to the drug to make it into the desired form with good aerodynamics.
- Both the actual drug and the additional chemicals added for aerodynamics have to be easy on the lungs – no irritation, inflammation, or other unwanted side effects. Coughing is a common problem. The same drug can irritate the lungs in one formulation and be fine in a different form, with smaller particles or different added chemicals.
- The additional chemicals added to the drug to make it inhalable can’t get in the way of the drug’s effectiveness once it enters the bloodstream. Not always easy, especially if it takes time for the drug to separate itself from the other chemicals.
- The inhalable formulation can’t cause undesirable effects on the body. That means the added chemicals have to be safe for the body. You also don’t want any build-up of either the drug or the chemicals in the lungs or the body.
Enter Technosphere. Technosphere is a special particle developed by Mannkind (fumaryl diketopiperazine, for all those who care) that has attributes which make it perfect for what we’re looking for. It can be “loaded” with other drugs in a slightly acidic solution and dried into a fine powder. The particles are small (around 3 microns) and are aerodynamically shaped, flying deep into the lungs. When it lands on the lung membrane (with its neutral pH), it instantly liquefies, passing through the lung membrane into the bloodstream with ease. (It doesn’t use any “penetration enhancers” or other active method of passing through the lung membrane, which can damage the membrane and separate the tight junction between cells. It simply passes through the membrane in the natural way.) The drug does its work and the Technosphere particle passes out of the body as waste, entirely unmetabolized, with zero effect on the body’s processes. No build-up anywhere, not in the lungs nor in the body. The inhaler that Mannkind developed for Technosphere, the MedTone inhaler, is a small, palm-sized inhaler which is extremely easy to use.
The Technosphere system allows the drugs to enter the bloodstream very quickly, offering substantial advantages in the treatment of many diseases. A great example of this is the first drug developed with this system, Technosphere Insulin, which they plan to file with the FDA for approval by the end of this year. Technosphere Insulin is an inhaled form of insulin which cuts out the annoying and unwanted meal-time insulin injections common for diabetics. But its main advantage is the significant medical benefits achieved with Technosphere Insulin.
In a healthy person, the body makes enough insulin to keep the blood sugar levels in a safe range. When a person eats, threatening a rise in blood sugar, the body responds in two phases. In Phase 1, the body releases a sharp spike of insulin, which among other things signals the liver to stop releasing sugar into the blood.
In Phase 2, the body releases a steady (but lower) stream of insulin to keep the blood sugar in check throughout the digestion of the meal (usually around 3 hours). A diabetic has a malfunctioning system that does not properly release enough insulin, especially missing the Phase 1 spike. Although injected insulin can replace some of the needed insulin in the body, its slow & steady trickle into the bloodstream does not begin to approximate the Phase 1 spike of a healthy body.
Technosphere Insulin is a paradigm shift in the treatment of diabetes. Its extremely rapid entry into the bloodstream closely mimics the Phase 1 spike of a healthy body. By closely matching the natural physiology of the body, Technosphere Insulin greatly reduces the problems commonly associated with injected insulin – hypoglycemia (i.e. the blood sugar dropping to dangerously low levels) and weight gain. Because Technosphere Insulin enters the bloodstream quicker than conventional injected insulin, it only remains in the bloodstream while the meal is digested, reducing hypoglycemia. For similar reasons, Technosphere Insulin actually promotes weight loss, instead of the weight gain common with conventional insulin. And weight loss is a big deal – witness the runaway success of Byetta (from Amylin Pharmaceuticals and Eli Lilly) due mainly to its promotion of weight loss while treating diabetes.
In Part II, I will deal with Pfizer’s April 9 announcement and why it doesn’t affect Mannkind (although it caused the stock to drop precipitously to bargain-basement levels).
For my full report on Mannkind, see here.
Disclosure: Author bought MNKD at $2.95 and is considering buying more. Author has no position in any other stock mentioned.