Ahithophel Weissberger

Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

Aracer:
Having given a cursory glance to the pre-briefing background information that the FDA released (available at www.fda.gov/ohrms/dock...), I am not overly concerned that they intend to be any more strict than they already indicated with their February draft guidance (which Mannkind fulfills in full). The meeting is scheduled for Tuesday, July 1 and Wednesday, July 2, later this week. It is really fruitless to speculate endlessly on an outcome which will soon be known. We can wait until the end of the week, when the transcript of the meeting will be available. Then we will know for sure.

Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

"AW, I appreciate the time invested in your submissions. And I enjoyed your reasonable responses to the blogs." -- Daddy One

"Again I commend you on a fine series and admittedly you are one of the best to respond to "bloggers" concerns.Certainly many have been raised over your 6 part series. I have saved a chunk of money to commit to MNKD eventually this year but wanted to tell you "Thanks" for an enlightening series.The fact that you own shares and divulge this openly only confirms your entegrity/editorial Alpha compliance. I particularly like your quiet educated non-hostle demeanor!" -- Retired pharma

Thanks for the compliments and thanks for reading!

Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

"Exubera may be a inferior product, but does it really matter? They had the strength of PFE's Sales and Marketing department (traditionally the best and biggest one in Pharma) and still couldn't make it go." -- User 214792

Two points. First, I think it does matter that Exubera had no medical advantages. It matters a lot. Market it all you want, but doctors are going to be cautious when prescribing a new treatment that has no medical advantages. You say that people don't mind injecting. Technosphere Insulin's advantages go far beyond dropping the injections. I outlined this clearly in this article and elsewhere in the series.

Secondly, although Pfizer is well known as having a great marketing machine, it has been widely acknowledged that Pfizer did an extremely poor job of marketing Exubera. People (including Nektar Therapeutics who were the original developers of Exubera and who partnered with Pfizer) were blaming Pfizer for this from the beginning, not just post-mortem after Pfizer dropped it. Pfizer themselves admitted as much in candid moments. Pfizer dragged their feet for a year after FDA approval before starting to sell Exubera, took even more time before rolling it out to general practitioners, and didn't even start direct-to-consumer advertising till shortly before dropping it (this for a product who's ONLY advantage was patient convenience). Say what you want about Pfizer's vaunted marketing team, but here they dropped the ball. But at risk of repeating myself, the main point is that Technosphere Insulin has medical advantages. Forget that it's inhaled -- the point isn't to cut out the injections.

Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

R. J. Steffens:
"Thanks for your efforts, A.W. For this reader, you have provided a well written and interesting series of articles in an area I am very interested." -- R. J. Steffens

Thanks for the compliment. I enjoyed your comments and perspective as well.

Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

NEH:
"Going back to the author's point 2 - Humalog begins working in 5 minutes, and point 3 - Humalog runs its full course in 90 minutes." -- NEH

I think that you are confusing different metrics. Humalog STARTS acting reasonably quick, but I was discussing how quickly the insulin PEAKS (i.e. reaches maximum effectiveness). Humalog peaks between 30 minutes to 90 minutes after injection (usually more like 45 minutes to 60 minutes after injection). As for running its FULL course, it takes much more than 90 minutes for Humalog to run its full course -- it barely peaks by then. Humalog lingers in the body for some time and as much as 60% of its blood sugar lowering action can carry on past 3 hours from injection, when the meal is no longer being digested and the patient doesn't need it.

Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

Satrunator:
"Pfizer announced that there was a greater degree of lung cancer found in the clinical trials among those who took Technosphere Insulin, compared to those in the control group taking regular insulin. (Date: April 9, 2008). "
I think You meant "Exubera Insulin" instead of "Technosphere Insulin"! -- Saturnator

Thanks for catching that mistake! My fault. I emailed Seeking Alpha with the correction and hopefully it will be corrected soon.

Mannkind: Overlooked Biotech With Excellent Prospects (Part V)

AMitchle MD PhD:
"One of the most important and well-documented facts about the pharmacology of exenatide (Byetta) is that the drug restores first-phase insulin response. The author of this article flatly states that Byetta does NOT have this effect. Publishing an error of this magnitude calls into question the credibility of the entire piece." -- AMithchle MD PhD

Judging from the times of the posts, you must have missed my comment (the one right before yours) addressing this very point. I explained where I'm coming from to make the statement that I did. If I'm incorrect with what I said in that comment, please do respond and show me where I went wrong.

If you have any more questions on my article, please feel free to ask them.

Mannkind: Overlooked Biotech With Excellent Prospects (Part V)

User 213006:
"Your claims about Byetta are patently false. Here's on example: take a look at the label. RESTORING first phase insulin response is in the label." -- User 213006

You are correct that on page 2 of the Byetta prescribing information, it states that Byetta restores the Phase 1 insulin spike, with an accompanying chart from a study as a source. (For all those who want to read it themselves, Byetta's prescribing information can be found at pi.lilly.com/us/byetta...)

However, if you look at it carefully, you will see that the chart and caption describe giving Byetta at a constant level through an IV tube and then adding glucose through an IV tube. This is not the way Byetta is actually taken by patients. Patients inject themselves twice a day, within 60 minutes before their morning and evening meal. On page 3 of the prescribing information, it says that the average time for Byetta to peak in the blood is 2.1 hours after injecting. That makes the information on page 2 about Byetta through IV irrelevant to the use of Byetta in real life. We have to see what the sudies from the actual clinical trials, where the patients were taking Byetta normally, show about the Phase 1 insulin spike.

I have located one such study for you. It can be found at care.diabetesjournals.... The part that interests us now is on Page 4 Chart C. This chart shows the insulin levels on the last week of the trial. The patients took Byetta at 0 minutes, ate the standardized meal at about 15 minutes, and had their insulin levels monitored for around 3 hours. As you can see by eyeballing the chart, there is nothing resembling the Phase 1 insulin spike. Instead, insulin levels rise steadily until it peaks around 1 hour after injection, which is just about the same as the peak for conventional injected insulin. The healthy body which DOES have a Phase 1 insulin spike, peaks its insulin levels within 10 minutes.

I've been sifting through more medical journals to see if I can find more information on the topic and have come up blank so far. But as of now, I don't think that I made a mistake.

If you have any more questions on my article, please feel free to ask them.

Mannkind: Overlooked Biotech With Excellent Prospects (Part V)

Mr. BSG
"Now that was a well written, logical article. Thanks."

Thanks for the compliment.

Mannkind: Overlooked Biotech With Excellent Prospects (Part V)

Jose Mcintrye:
"But the fact remains this is inhaling a growth factor and experts are going to worry, no matter what the data shows. ... How do they go about changing perceptions? Am I missing the forest for the trees or are you?" -- Jose Mcintrye

I understand you to mean that even with FDA approval, they will have trouble getting doctors on their side to prescribe it. You are absolutely right that this will be an uphill battle for Mannkind, no doubt about it. If their only selling point for Technosphere Insulin was convenience, I would call it a lost cause. But it DOES have major medical advantages, as I covered in Part 1 and Part 3. There will be early adopters and there will be those who take a wait-and-see approach. There most likely will be some patients who will persuade their doctors to prescribe it for them. It will surely start off more slowly than it would have otherwise, but I think it will build up.

Mannkind definitely has to spend time, energy, and money educating the doctors, explaining the science, and diffrentiating themselves from the other products. Mannkind is quite aware of that -- they have said as much and that's what they're planning to do. They're not neophytes. If I could just point out one more thing. When Pfizer's cancer announcement came out, none of the medical sites that were part of the clinical trials for Technosphere Insulin chose to drop out. These are the doctors who have the most intimate knowledge of the product. They were presented with the safety information and issues and made the reasoned choice to continue. With sufficient education, I think that Mannkind CAN win over the opinion leaders and front-line doctors.

Mannkind: Overlooked Biotech With Excellent Prospects (Part IV)

V.P.:
"However, management has already burned $1.1 billion in develpoing TI. ... Tell me, how soon do you think the management can earn the $1.1 billion burnt in TI's development so far?" -- V.P.

That is an interesting question, but it is only relevant to whether it was worth it for Mannkind to have invested the $1.1 billion that it did back then. That is not the question on the table now and it is not really a relevant question for an investor who is considering buying MNKD now. Mannkind's market cap is right now $290 million. If you buy a share in Mannkind NOW, you are buying this company (with a drug that I believe will definitely pass FDA inspection and probably do well in the marketplace) for a fraction of its worth. Ask yourself: If Technosphere Insulin IS successful, will Mannkind deserve to be worth only $290 million? That is the only relevant question when it comes to valuating MNKD the stock (in addition, of course, to whether you think Technosphere Insulin will be succesfull or not). We don't care whether the original investors make back their money with enough profit to make it worth it.

Mannkind: Overlooked Biotech With Excellent Prospects (Part IV)

Retired pharma:
"Does Mr. Mann really want to establish his own Sales Force..because that is a huge/expensive undertaking. Let me give you some numbers. Best Reps who know this Market plus perks are making $150,000 per year ... times 1000 reps equals a startup cost=$150M" -- Retired pharma

Well, I don't think that they are planning to launch a full 1,000 strong sales force for the reason that you outlined so forcefully. I think that their plans are more along the lines of establishing a smaller side-by-side sales force, perhaps only to endocrinologists, perhaps only to opinion leaders. Obviously, I am not privy to their innermost strategy sessions and presumably nothing can possibly be set in stone until they have a firm commitment with a partner and a mutual plan is decided on. That said, your suggestions definitely make plenty of sense and I trust that Mannkind's executives are weighing their options carefully -- they're not neophytes, you know.

Let me quote some pertinent lines from one of their quarterly conference calls.

"In order to facilitate the launch of Technosphere Insulin we plan to create a decision infrastructure support group to educate the broad medical community and make the transition easier and smoother. We are already developing our science supporting launch program. We are also implementing a program of scientific publications and we are launching medical education and opinion leader outreach programs." -- Alfred Mann, founder and CEO of Mannkind

That quote is directly drom their fourth quarter (of 2007) conference call held on March 4, 2008. A transcript can be found at seekingalpha.com/artic...

Mannkind: Overlooked Biotech With Excellent Prospects (Part IV)

"That $350 Million has to be paid back and the only option MNKD will ever have is to issue stock." -- Mr. BSG

Well, that is certainly true according to your reading that the FDA will not approve it (at least not right away) and that they will have trouble finding a partner.

However, I believe that the FDA WILL approve TI within a year of filing and that they WILL be able to find a partner. In that case, they may very well not need to sell stock at all. (And even if they wanted to, presumably the stock would significantly rise in those events and the dilution would be much less than your projections.)

You are certainly entitled to your analysis that this won't happen, and in the same token I am entitled to my analysis that this will most likely happen.

Mannkind: Overlooked Biotech With Excellent Prospects (Part IV)

"$100 mil a Q, 3 Q's left in the year is $300 Mil...they only have $269Mil. They will be out of cash BEFORE the end of this year." -- Mr. BSG

As mentioned in the article, besides the $269 million in cash on hand, Mannkind also has a $350 million line of credit available from Al Mann, their CEO, on very favorable terms. That line of credit has not been drawn on at all as of now. Together that totals $619 million available to Mannkind before they have to start raising more money. Mannkind has repeatedly said that they have enough money to last them until the end of 2009 before they need more money (either through partnerships or through financing).

Mannkind: Overlooked Biotech With Excellent Prospects (Part IV)

"With a burn rate of $100 Mil a Q, this cash will be gone by year end 2008" -- Mr. BSG

As I mentioned before, Mannkind has stated numerous times that although they certainly will not be making profits for the next while, which is to be expected, they expect the cash burn rate to decline (from the present rate of $100 million per quarter) after the next quarter or two. Please permit me to repeat my response to your skepticism about this statement of mine, in case you missed it in my comments on my previous articles.

I will quote some sections from their recent quarterly conference calls.

"As I said on our last call in November, we anticipate our cash burn could increase significantly over the next two to three quarters and would then decline." -- Richard Ansderson, CFO of Mannkind

That quote is from their 4th quarter (of 2007) conference call, held on March 4, 2008. A transcript can be found at seekingalpha.com/artic...

"We anticipate our cash burn may increase further over the next one to two quarters and should then decline." -- Matthew Pfeffer, CFO of Mannkind

That quote is from their 1st quarter conference call, held on May 5, 2008. A transcript can be found at seekingalpha.com/artic...