Mannkind: Overlooked Biotech With Excellent Prospects (Part II)

Part II: Pfizer’s (PFE) cancer announcement and its irrelevance to Mannkind’s (MNKD) future 

As I explained in detail in Part 1 of this series (see here if you missed it), Mannkind has a potential home run with Technosphere Insulin, their upcoming drug for diabetes. Technosphere Insulin is an inhaled insulin which is more convenient for patients and, more importantly, has significant medical advantages. It has lower rates of hypoglycemia (dangerously low levels of blood sugar) than conventional injected insulin, and promotes weight loss instead of the weight gain common with conventional insulin. 

However, Mannkind’s stock has been hit with a string of bad news, the latest being Pfizer’s announcement on April 9. On April 9, Pfizer announced that Exubera, Pfizer’s and Nektar’s (NKTR) inhaled insulin, had been found in clinical trials to have a higher rate of lung cancer than the control groups with conventional insulin. (Pfizer had already dropped Exubera in October 2007 due to its dismal failure in the marketplace. I will discuss why Exubera failed and why this doesn’t reflect poorly on Mannkind’s chances with Technosphere Insulin in Part 3 of this series.) Unsurprisingly, Mannkind’s stock dropped like a stone from $5.85 pre-announcement to an intra-day low of $1.86 on April 15, a drop of 68%. However, I believe that the market grossly overreacted to the news (which was not even about their product) and did not sufficiently put into perspective the implications of the announcement. 

Let’s first examine the details of Pfizer’s announcement. Pfizer announced that in their clinical trials, 6 out of 4,740 Exubera-using patients developed lung cancer vs. 1 out of 4,292 control-using patients. As Pfizer itself stated, the difference is too small (and the sample too limited) to be statistically significant. The FDA did not withdraw Exubera from the market. Pfizer simply added a warning to the label stating the above information. 

When we examine the statistics available to us more closely, the cancer warning falls apart entirely. 6 out of 4,740 is equivalent to a cancer rate of .127%. In controlled trials, Exubera had 5 cases in 3,900 patient-years, a rate of .128% (vs. 1 case in 3,100 patient-years for the control group, a rate of .025%). That rate is not much higher than the rate for lung cancer in the general population. The CDC put the incidence rate of lung cancer in 2004 (the latest year with available data) at .085% in men and .054% in women. In addition, the 6 Exubera patients were all former smokers. (I don't know the exact per-year rates of lung cancer for smokers, but the lifetime lung cancer rate is about 2x – 3x higher in smokers.) To make a long story short, the lung cancer incidence in Exubera patients was 100% totally normal, at or around the rate in the general population. The control group seems to have been simply lucky with an abnormally low rate. 

Many companies have been working on inhaled insulin. Aradigm & Novo Nordisk (NVO) have worked on Aerx, Alkermes (ALKS) & Eli Lilly (LLY) have worked on AIR, and Kos Pharmaceuticals (now part of Abbott Laboratories (ABT)) has worked on yet a different inhaled insulin. None of them have found any indication of increased lung cancer with their versions of inhaled insulin. Even if there was a real signal of lung cancer risk in Exubera (which there was not, by any means), that is no reason to jump to the conclusion that there is an across-the-board problem with inhaled insulin. I would point out that Exubera has been found to irritate the lungs of those who took it causing coughing, and worse, a decrease in lung function (i.e. the ability to breathe). Mannkind’s Technosphere Insulin does not have those problems. You can’t just lump all inhaled insulin into one basket. You have to look at the scientific data carefully and judge each product based on its merits, and you can bet that the FDA and its scientific advisers are sophisticated enough to do that. 

Mannkind has stated categorically that they have not found any more lung cancer in Technosphere Insulin-using patients than that in the general population. In their May 5^th conference call, Mannkind said that up till then they have had 4,849 patients in 25 completed and 7 ongoing trials, 2,684 which used Technosphere Insulin and 2,165 which were controls. In patient-years, they have so far had 2,182 patient-years using Technosphere Insulin and 1,708 patient-years using controls. In all that, they have found 1 case of lung cancer, plus 1 case of lung involvement in metastatic colorectal cancer. A metastatic cancer is one in which the tumor has spread from its primary site in the body to another site. This patient was found to have colorectal cancer which then spread to the lung, and clearly does not reflect at all on the lung cancer risk with Technosphere Insulin. One case (who was a former smoker, by the way) out of 2,182 patient-years comes out to a cancer rate of .046%, lower than that normally found in the general population. 

In addition, Technosphere Insulin has gone through carcinogenicity studies (unlike Exubera, which did not). These involved a 2-year study in rats which inhaled either Technosphere Insulin or the Technosphere particles alone for 2 years. Standard carcinogenic studies generally involve 2 species. For the second species, Mannkind did a 6-month study in transgenic mice (mice genetically engineered so as to be more susceptible to cancer), in which they were injected with Technosphere Insulin or Technosphere particles alone. In both studies, no carcinogenic effect at all was found. 

From where I’m standing, everything points in the same direction. Mannkind’s stock has dropped on superficial comparison of Technosphere Insulin with Exubera, without carefully studying the issues and the underlying scientific data. I believe that this gives us a rare chance to buy an underappreciated biotech company with an upcoming blockbuster drug on the cheap. 

In Part 3, I will discuss why Exubera failed miserably in the marketplace, even before Pfizer’s announcement, and why Mannkind’s Technosphere Insulin is a different animal altogether. 

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.

Comments

[NextImCloneSeeker]

Wow...are you insane? MNKD has 1 product, the FDA will never approve this drug with the Exubera data. Do you realize just one case of Lung Cancer, whether related to TI or not, and MNKD goes belly up (That's assuming it gets approved).

Best Case scenario, the FDA is going to require it go through 2 more years of PIII. Why in God's earth would you look at this company? Look at Durect, Generex, or even Pranda. There are so many better deals out there that do NOT face the same huge obstacles. This is coming from a licensed RPh.

[Tom B]

I agree with NextImcloneseeker; you're "nuts". This FDA is absurdly obstructionist. Even if Mannkind's product really IS safe and effective, it will be held back for years and years.

[Ahithophel Weissberger]

With thousands of people in multiple trials, it would be a small miracle if NOONE got lung cancer. That is just not the way the FDA works. They have scientific advisers who look at the data, something I suspect that you did not do very thoroughly. If you would look at the transcripts of FDA advisory committee meetings and at the data of similar approved drugs, you would quickly find that they DO approve drugs that have a case of lung cancer or two. They even approve drugs that have more lung cancer than normal in their trials, as long as it is not so much more as to be clear that the drug is causing it. Even now, the FDA never pulled Exubera off the market. They simply added a warning to the label, as I specifically mentioned in the article. I suggest reading the FDA guidance for diabetes treatments that was released in February -- it has a special section on inhaled insulin.

Guys, do your due diligence -- don't just shoot from the hip.

[MDPharmaGuru]

So lets see...they are essentially the only one in this arena left
as all others have failed miserabley in the clinic or commercially

So far they have been stating for about a yr they are "looking" for a partner to co-promote etc

the big question is... what is the unmet medical need being addressed with an inhaled insulin? there are mutiple oral dosage forms which are infintely more convenient, OK i grant you its probably more convenient than a injection, but so far
GPs and Endos have not embraced its potential and the KOS/TLs messaginng has not been very well recieved...

I think overall vegas-like risky,,,,

[ertsfan]

Interesting article. Do you have any info on the other drugs mentioned (Aerx, AIR, and Kos' candidate)?

[scutchen]

"the big question is... what is the unmet medical need being addressed with an inhaled insulin?"

TI is not just an inhaled insulin like Exubra. It delivers monometric insulin which mimics the pancreas and provides instantaneous short term response as opposed to hexametric insulin (oral or inhaled or injected) which supplies slow acting long term response. TI will be used to provide instantaneous response to meals so that injected or oral hexametric insulin used to control background glucose levels can be aimed at a much lower target glucose level. This eliminates the need to maintain an artificially high glucose background level just to help with instantaneous impacts of meal events.

[Ahithophel Weissberger]

Ertsfan:
Aerx (from Novo Nordisk) and Air (from Eli Lilly) were both dropped from development by Novo Nordisk and Eli Lilly earlier this year. As I said at the end of the article, I am planning to discuss some of the differences between Exubera and Technosphere Insulin in Part 3, the next installment of this series. Kos's inhaled insulin (now under the wings of Abbott Laboartories is very early in development (still in middle of Phase 2). Although I don't know much about it (they never released too much information about it), it doesn't have a chance of reaching the market for AT LEAST another 4 years.

As for the cancer rate in these other inhaled insulins, there has not been any signal of cancer in them. Abbott Laboratories published a press release saying that there was no increas in lung cancer and Aradigm (who co-developed Aerx with Novo Nordisk) also let out a press release that there was no lung cancer with Aerx.

[Ahithophel Weissberger]

Ertsfan:
I posted the previous comment too quickly. I meant to say that most of what I will say about Exubera in the coming article will apply equally to Aerx and Air.

Scutchen:
You are absolutely correct. I see that you have done your research on Mannkind.

Just to transalate what Scutchen said into plain English for the non-medical audience: Injected insulin normally forms into hexamers (six insulin molecules bonded together). The body has to break this down into dimers (two insulin molecules bonded together) and finally into monomers (individual insulin molecules). Only monomeric insulin has the effect on blood sugar that diabetics need. So regular injected insulin takes much longer to start working, with even the "rapid-acting&quo... insulins peaking in aroung 45 minutes to an hour. Technosphere Insulin, on the other hand, can be delivered to the body in monomeric form (the way the pancreas does) due to the unique design of the Technosphere particle. Thus, Technosphere Insulin peaks extremely quickly -- in around 12 to 14 minutes, similar to the fast Phase 1 spike of the natural body.

Because it mimics the natural process of the healthy body, Technosphere Insulin reduces many of the problems of using injected insulin. There is less occurrence of hypoglycemia (low blood sugar) which is caused by the insulin lasting in the bloodstream for too much time, after the meal is already digested. There is also weight loss, instead of weight gain. I discussed this a bit in Part 1 and intend to get back to it again in Part 3 (although I left out much of the exact science behind it). I want to stress that this isn't just "theoretical"... benefits that "ought" to happen. The reduction in hypoglycemia and the weight effect has been found in ALL their clinical trials so far.

As Scutchen pointed out, this also makes it possible to bring the diabetic's round-the-clock blood sugar levels down to a normal range without fearing that the mealtime insulin will cause hypoglycemia. As of now, this fear causes doctors to manage the blood sugar levels of their patients at abnormally high levels which raises the risks of diabetic complications considerably. In fact, Mannkind has a ongoing study (Study 117) to show this exact issue.

[scutchen]

Thanks for the kind words, AW. I figured I might be Bogarting your 3rd article.

For disclosure's sake, I'm an engineer, not a med professional. But I have been following MNKD's TI technical details. I bought in in the mid-low 2's and am holding at least through the results of the class 3 trials in the Fall. If the trials are successful, I plan to be in for the long term. I'm not trying to make money this Summer.

I figure it is an easy bet. Even if MKND goes under, I'll be OK. But if the trials go well and they return to looking for a partner, I think there could be a lot of upside. I think it is worth the risk, especially given Mann's willingness to put money in if needed and his track record of success. Other than failure in the trials, I think the biggest risk is the ability of the company or its ultimate partner to make the case to the feds and the medical community about how revolutionary this could be.

Also, the whole Technosphere delivery vehicle is something really new. It liquifies on the lung surface leaving just the cargo, and all of the components are removed intact in the urine, so there is no accumulation or conversion in the body. MNKD is already working on a cancer cargo and a migrane cargo.

[ertsfan]

Thanks for your quick response. I'll look forward to reading your future articles.

[Kronosvxxxiii]

I must say, I've followed this company and this person (Al Mann) for some time and all I can say is that this drug is in a class by itself, as is the company's founder. The protesters seem to protest entirely too loud and often repeat ad nauseum, the same dis-proven arguments as if they never took the time to read the rebuttals. As a result, I have trouble believing that there are no alterior motives with many of those that "dost protest too loudly". It only makes me believe that someone out there truly KNOWS what a revolutionary drug delivery system (read: MULTIPLE PRODUCTS) Mannkind is on the verge of proving to the FDA and to the world. I will buy more shares with each and every paycheck until the stock crosses back above 10. BTW: If it is anyone's corporate motive to discredit this company so their technology can be bought on the cheap; forget it. Al Mann has far too much integrity (and money) to bother with such NON-SENSE.

[benjamin_bear]

Can we really dismiss the lung cancer risk so quickly? The two points raised are (1) the incidence of lung cancer in trials is similar to the general population (G.P.) (2) the number of cancer events in the study population was not large enough to prove a statistical, much less causal, relationship

The question is whether the general population (G.P.) an accurate comparison. I would expect the study group (including the placebo group) to skew younger than the G.P., where the incidence of lung cancer is lower. Hence, the incidence of lung cancer in the study groups may be elevated when adjusted for age.

The rate of [former] smokers in the study group compared to the general population hasn't been clarified. It may be different but I would expect smokers to be represented roughly equally between the drug and placebo study arms. Having 5 times the incidence of an adverse event, even a rare event should be a concern. There are a number of ways the FDA could respond to this (approvable letter, restrictive language on label, etc.) particularly with a relatively new modality of administration (‘deep lung’). The most positive point to consider here is that Exubera was approved so to the extent that Mannkind’s approval process parallels with Pfizer, this bodes well.

Ultimately, the biggest variable may be the level of market acceptance post-FDA approval. Will competitors be able to out-market them? Will doctors be hesitant to try the product? (medical advantages alone do not win the market)

[Ahithophel Weissberger]

Benjamin_bear:
You bring up many valid points. As I said in the article, I am working with the "statistics available to us" -- Pfizer did not open up their vaults to let me see all the raw data up closel. Your points are real, but it was Pfizer and the FDA who said that the results were not statistically significant, and they DID see all the raw data. The FDA still did not withdraw the drug from the market. I just think that we have to take the announcement in perspective and not to blow it up out of porportion (which I don't suggest you to be doing). The main point is that it was a weak signal in Exubera and no signal at all was found in the other inhaled insulins being developed, and particularly in Mannkind's own Technosphere Insulin. I do, however, believe that the FDA will want Mannkind to conduct long-term studies after going to market, which is not unusual and does not overly harm Mannkind's present position.

Of course you are right that the most important thing is whether doctors and patients will be willing to try it. I'm sure some won't and I imagine some will. I think that education and marketing can do a lot in this area. And between you and me, I think that if the FDA approves it and they find a partner, the stock would rise substantially on that news alone, even before seeing whether the market accepts it.

[Ahithophel Weissberger]

Benjamin_bear:
You bring up many valid points. As I said in the article, I am working with the "statistics available to us" -- Pfizer did not open up their vaults to let me see all the raw data up closel. Your points are real, but it was Pfizer and the FDA who said that the results were not statistically significant, and they DID see all the raw data. The FDA still did not withdraw the drug from the market. I just think that we have to take the announcement in perspective and not to blow it up out of porportion (which I don't suggest you to be doing). The main point is that it was a weak signal in Exubera and no signal at all was found in the other inhaled insulins being developed, and particularly in Mannkind's own Technosphere Insulin. I do, however, believe that the FDA will want Mannkind to conduct long-term studies after going to market, which is not unusual and does not overly harm Mannkind's present position.

Of course you are right that the most important thing is whether doctors and patients will be willing to try it. I'm sure some won't and I imagine some will. I think that education and marketing can do a lot in this area. And between you and me, I think that if the FDA approves it and they find a partner, the stock would rise substantially on that news alone, even before seeing whether the market accepts it.