MannKind: Out With The New And In With The Old Game-Plan For Success

| About: MannKind Corporation (MNKD)

Summary

I will share my new plans for providing prescription updates.

I will share information relating to MannKind's new game-plan for turning around the company.

I will share my opinion and supporting data relating to their strategy to develop outdated drugs.

I will offering information that relates to why social media isn't a good marketing strategy for medical products used for human applications.

MannKind Reverses This Process==Out With the New and In With the Old

Where We Stand Now:

2015 has ended and now we are seeing 2016 beginning to unfold. For those invested in MannKind's(NASDAQ:MNKD) stock they certainly saw much uncertainty and even some foolishness during the recently concluded year. Where many thought 2015 was the year for retail investors finally receiving some return on their investment. In reality they saw over the 12 months, their investment in MannKind's stock losing 72% of its value by December 31st, 2015.

As the New Year began with some thinking the 'foolishness' was over, in short order we found out on January 5th, Sanofi (NYSE:SNY) opted to cancel their partnership with MannKind. There are many now debating whether it was MannKind's decision, or if Sanofi was the one who made this decision. If investors had been paying attention to this possibility they would have seen Sanofi's CEO broadcasting the eventually of this happening, many months ago. The fact is, Sanofi decided to stop their efforts after investing multi-millions of dollars where they were getting a $0.05 return on each dollar they were investing.

With my effort, and other pundits, we pointed out patients getting their initial prescription; they were opting out from getting it refilled. In my recent SA article I stated for my readers-"However, looking at the actual numbers obtained for this week we see 206 actual refills, or 63% less than normal for a 90 day supply of Afrezza." It appears I was not exactly on the money with my efforts to track the actual drop out rate. Sanofi subsequently to their cancellation notification issued a statement showing refills were actually down by 65%. Going forward, I will attempt to improve my tracking results for my readers. Missing by 2% isn't acceptable!

With this goal in mind, I'm beginning the New Year with data from the first week of 2016, where the full impact of the cancellation hadn't sunk-in for investors, or the medical community. Going forward, I will not issue a weekly update; rather I will do a monthly update reflecting a month's data for New Prescriptions, Refills, and Total Rxs for Afrezza. In all honesty, I was finding it difficult identifying new information to comment on, other than the weekly data for prescriptions.

New Game Plan for Success:

On January 12th, 2016, Matthew Pfeffer, the newly minted CEO presented at the J.P. Morgan annual healthcare conference, in San Francisco. I readily admit, Pfeffer came over as being more energetic and forceful than from his prior efforts as the spokesperson for MannKind.

After listening live to his presentation, and having read several times the transcript for this presentation, I've developed some critical thoughts about what was stated by Pfeffer. I now believe that it would have been better if Pfeffer and his fellow associate not having rushed into such a conference without giving more time to digest and formulate a game plan for moving the company forward.

Pfeffer fully admits that going forward they have major cash restraints where they have an urgency for resolving their cash needs. So my opinion is really a case of whether his comments, and those of associate, Dr. Ray Urbanski, added to a resolution of needs or merely made it more difficult to create a solvency game plan for MannKind.

The new CEO made these comments as a central part of how he plans to solve the awareness issue for doctors and potential patients:

"And the good news is we've pretty much largely learned what is the key things that have caused that. We need to get that information out there. Get the patients and as importantly the doctors and the caregivers trained in what the differences with the product are, how to use it correctly and how to get these advantages.

One of the ways we can get maximum benefit from this with minimal dollars outlaid, which is an important thing is in the social media. Some of you may be aware we now have a MannKind Twitter account and we have some of these through the course of today, we just activated this morning, a huge number of followers."

If Pfeffer thinks in the future, drugs and other medical products will be sold through social media, and more specifically through Twitter accounts, this is truly a pipedream or a disruptive paradigm shift in how medical products will be marketed.

It seems that only a few months ago, in conjunction with the 2015 ADA conference, Pfeffer made flourishing statements about his newly obtained Twitter account. He mentioned the massive attention that Afrezza had achieved via this social media outlet. As we begin 2016, we all know the euphoria about the massive social media attention Afrezza was achieving really turned out to be a colossal failure.

If social media really is the answer when not wanting to spend any money on marketing and where Pfeffer states the following things are needed, never forget the inherent limitations social media marketing offers medical products:

1) Get information out to patients, doctors, and caregivers.

2) How to use Afrezza correctly and how to get the benefits with minimal dollars outlaid.

By incorporating Twitter as the solution, let me remind those who chafed at the limited DTC advertisements where they took exception to the voluminous amount of ad space used to convey safety warnings, etc., as opposed to touting the merits of Afrezza. Before, I get to my point, it might have been best that Pfeffer not use this method of enticement for his shareholders without mentioning the limitation imposed on the likes of Twitter being used to sell Afrezza to the public.

The FDA has clear guidelines on how social media can be used in marketing a drug or medical product. The following highlights precisely the reasons that expecting to solve one's marketing dilemma with a Twitter account has its limitations. For a more complete discussion on this issue, one can check this link:

The message should have a comparable balance of risk and benefit, regardless of character space constraints: The benefit should be accurate, not misleading and factual, risk should be part of each communication, and symbols (such as &), punctuation marks and scientific abbreviations can be used to help reduce space constraints.
The primary link should be provided for more complete information about risk: The primary link destination should provide comprehensive risk information about the product. The secondary link and destination can be considered along with the primary link. In addition, links should indicate topic of destination (for example, nofocus.com/risk). The destination page should have the brand and established name together with dosage form/quantitative ingredient information (logo lockup).
A decision to not use a platform due to lack of balanced content should be considered if balance cannot be achieved: The complexity of the indication and side effects should be considered and the most serious risks should be included as a baseline.

Three Simple Steps to Create an FDA Approved Tweet:
Following careful consideration of the aforementioned points, creating short-form messaging on platforms like Twitter can still be intimidating. As an example of creating this type of short-form messaging, we've broken down the requirements to help create a 140-character-limit tweet that is in accordance with FDA guidelines in three simple steps:

1) Include the Benefit Information: Start by typing in the benefits of the product keeping in mind that symbols can be used to help with character constraints.
2) Communicate Risk: Next, include information about the most serious risk of the product, along with a direct hyperlink to a more complete list of risk information.
3) Add the Name: Finally, add in the full FDA approved product name.

For MannKind investors who complained about the print media ads mostly containing warnings, and not promoting Afrezza, how will they respond when they see Afrezza being promoted with 140-characters per tweet. Tweets where they have to comply with the litany of things outlined above?

Finally, if you think the above will be an onerous task, the FDA doesn't stop with the above. They also require the following:

"Our second guidance provided recommendation to companies that choose to correct third-party information related to their own prescriptions and medical devices. This draft guidance provides FDA's recommendations on the correction of misinformation from independent third parties on the internet and through social media sites. For example, we recommend that any corrections should address all misinformation in a clearly defined portion of a forum on the internet or social media, whether the misinformation is positive or negative."

Let me remind those who think social media is the salvation for MannKind, last year it was reported about 3,000 Sanofi representatives were calling on physicians. The largest diabetic conference (ADA) was held where claims were made that Afrezza had a massive appeal from the attending physicians and various social media outlets. Many promoters of the stock claimed that upon launch, TV news and other social media outlets would be filled with free coverage for Afrezza. And later, we had DTC ads in magazines directed to the diabetic community. And finally a large number of Afrezza advocates creating blogs, and other social media endeavors where MannKind management touted their efforts as them "getting out their story for Afrezza". However, a simple Google search showed a dismal number of individuals searching for more information about Afrezza. So much for social media being successful for MannKind in 2015.

Maybe times have changed, but once again time isn't a luxury that MannKind can wait, as they clearly point out those new sources of monetary funding are needed---NOW!

The Redux, of the Redux, of the Redux for Technosphere©:

There is so much claimed about this technology, I have opted to clear up some of the misinformation. I previously wrote an article here on SA, where I pointed out that inhalers are nothing new as they have been used by drug companies for many decades. The inhaler market has therefore become a commodity product with most major pharmaceutical companies having their own in-house manufacturing capability for inhalers using their internally developed products.

Let me give Al Mann great credit for being an innovator in the development of products that have been shown as being beneficial for mankind. Al Mann fully deserves being recognized for his innovations and his philanthropy. But Technosphere© isn't something he can take credit for inventing.

Technosphere© was created by Dr. Solomon Steiner where he formed a company, Pharmaceutical Discovery, in 1991. Today, Dr. Steiner is the leader at Perosphere, a company located in Danbury, Connecticut. Dr. Solomon was motivated to develop Technosphere© and the Medtone© inhaler when he learned a family member had been diagnosed as a diabetic. Al Mann purchased Pharmaceutical Discovery in 2001, and in 2003 MannKind was formed with Technosphere© and the Medtone© inhaler being the foundational products.

My point in providing this history is that one should note, Technosphere© and the accompanying inhaler has been recognized and known in the drug development industry for what will be 25 years in February, 2016. So for 25 years, drug companies have known about the technology. It is also a well known fact from reading MannKind's public documents; they have attempted to sign partnership deals with other companies utilizing this 25 year old inhalation system. Twenty five years trying to sell this product with no takers willing to invest any money reveals a very telling truth about what the industry thinks about Technosphere©.

Last year with great fanfare MannKind's executives returned to the same efforts previously announced as for what their goals were with this dated product. Now a year later, and the disastrous news that Sanofi had cancelled their partnership for the only drug that Technosphere had been used, the new CEO has extended out further the time line for any benefit coming from using Technosphere©. The new enticement features using the names of other drugs that 'might' be developed for dosing via inhalation. But now we have a new dynamic coming into play where it can be exemplified by what Dr. Urbanski stated at the J.P. Morgan conference:

"The last slide, the last one of our clinical development candidates is Epinephrine for Anaphylaxis. I think the one point I want to raise here is this can be an incredibly short timeline. No real clinical studies would be required. Obviously you cannot do a clinical study in the Anaphylactic setting. So that would be e-study and some human factor studies would probably suffice. So we're looking at this opportunity as again one of our priority ones."

Epinephrine:

Anaphylaxis is a serious, life-threatening allergic reaction. The most common anaphylactic reactions are to foods, insect stings, medications and latex. This is a condition that needs immediate attention as the situation can be life-threatening. But I'm not so sure that the FDA will opt giving MannKind an 'incredibly short timeline' for them approving epinephrine being dosed with an inhaled delivery system.

Epinephrine has a long history in the medical community. In fact this drug is produced by the body and we lay people refer to it as adrenalin, as it's produced in our adrenal glands.

Extracts of the adrenal gland were first obtained by a Polish physiologist, Napoleon Cybulski, when he first identified it as a product of the adrenal gland, in 1895.The very next year, 1896; William Bates discovered its usage in his ophthalmologist practice when doing eye surgeries. Japanese chemist Jokichi Takamine discovered adrenaline in 1900. In 1901, Takamine successfully isolated and purified the hormone from the adrenal glands of sheep and oxen. Finally in 1904, adrenaline was first synthesized in the laboratory by Friedrich Stolz and Henry Drysdale Dakin.

In fact, epinephrine has been dosed in humans for many decades; however, the most common dosing is with various injector pens for those suffering anaphylaxis episodes. But it also has been dosed by inhalation. One example is the well-known drug Primatene-Mist , but the drug was removed from the market due to the propellant being a fluorocarbon.

But if Dr. Urbanski doesn't look at the dosing of epinephrine being an issue with the FDA, let me remind him of the roadblocks thrown up for Armstrong Pharmaceuticals, a company owned by AmphaStar, the company that MannKind purchases their insulin supply. In 2014, the FDA rejected their NDA for an inhaled form of epinephrine. Now going on two years, one can check AmphaStar's website and see the only epinephrine medication they market is an injected form of the drug.

The American College of Asthma, Allergy, and Immunology; the American Association of Respiratory Care; the American Thoracic Society; and the National Association for the Medical Direction of Respiratory Care have all expressed their position on not wanted OTC asthma inhalers being part of treatment guidelines for asthma. Their position is simply because they do not feel that epinephrine products are safe for the treatment of asthma. Epinephrine treats the symptom of various diseases like asthma or reactions to food allergies, but it doesn't address any aspect of curing the patient's condition. There is much data collected where individuals actually mask the severity of their condition by over-using their inhalers. As shown by the position of the critical medical associations, they don't necessarily want more inhaled drugs that only give temporary relief but also exacerbate and hide the underlying disease when overly used by patients.

The current injected forms of epinephrine have proven to be cost effective and fast acting when it comes to treating a patient for their anaphylactic events. Should MannKind proceed with their attempts to get FDA approval, they would be entering a market already crowded where companies have a history and a cost effective product. As with Afrezza, the creation of a dry powder formulation would erode the ability for MannKind's product being cost effective. Pfeffer and Dr. Urbanski, surely know the history of Afrezza and the pricing issue they are facing.

Assume that MannKind moves ahead with this project. Let me ask one simple question? Anaphylaxis events need quick remediation and often a follow-up check by their attending physician. If you experience a sudden attack and you go into anaphylaxis shock, would you want the EMTs, your friend, or work associates having epinephrine available as an EpiPen injector, or where you will have the inhaled form of epinephrine. Remember, anaphylaxis shock can render you into an unconscious state. With the Epi-pen the dose can be given directly through your clothing---as quick as one pulls the protecting cover from the injector. With an inhaler you would have to load the dosage and then possibly be placing the inhaler in the mouth of an unconscious patient. Which would you choose to carry with you, at all times, if you suffer from this condition? Never forget! With Afrezza, MannKind is admitting that it has been a hard task trying to train physicians and diabetic patients how to use their inhaler. What is different with having to use an inhaler when volumes of data collected shows that non-compliance with using inhalers is a major problem? Never forget, the MannKind's CEO just informed the public at the J. P. Morgan conference they need a massive awareness effort in place for physicians and patients knowing how to use their inhaled product. Do you really think when the EMTs pull up and observe the patient having an allergic reaction and going into anaphylactic shock they are going to pause and ponder if they should use an Epi-Pen or divert to loading an inhaler and stick the device into a semi-conscious person's mouth?

Vancomycin:

And in conclusion allow me to mention one other drug that is on the MannKind list for potential application for Technosphere© development. The drug is vancomycin. What is it with MannKind wanting to use all these drugs with ancient history for use in the treatment of diseases? Vancomycin was first introduced into the market in 1954. As expected the drug is now a generic where the wholesale cost for an intravenous dose is about $1.70 to $6.00 USD. It is also available in pills for oral delivery.

The American Society of Microbiology issued a very extensive report in 2000, dealing with Vancomycin resistance. I will excerpt a small portion of the report; however, I would recommend all interested parties reading the entirety of the report. Upon reading the full report, consider it was written 15 years ago, so imagine what level of resistance vancomycin now find's itself on the list of antibiotics where the infection catalyst has developed immunity to the drug. Surely, Dr. Urbanski is well aware of the rapid mutation ability and immunity from antibiotics having the ability to treat patients with any degree of efficacy. Merely look at the CDCs effort each year where they need to develop new flu vaccines due to the mutations outdating the efficacy shown for the previous year's vaccine. What we need are new classes of antibiotics, not old drugs being delivered via inhalers. Especially when you consider that previously vancomycin was dosed by inhalation.

"Vancomycin use has been reported consistently as a risk factor for colonization and infection with VRE, and may increase the possibility of the emergence of vancomycin-resistantS. aureus or S. epidermidis. Encouraging the appropriate use of oral and parenteral vancomycin is an important component of HICPAC recommendations. In an effort to bring about more prudent use of antibiotics, HICPAC emphasizes the importance of education of medical staff and students about the situations in which the use of vancomycin is considered appropriate. It also gives a long list of situations in which vancomycin use should be discouraged."

Going forward with a Real Game Plan or Merely in a Delay Game:

Please allow me the opportunity to delineate a few of the impediments that MannKind could face if they move forward with their efforts to create an inhaled version of vancomycin:

  1. After 62 years of use for treating patients, the drug faces a massive build-up in resistant to the drug.
  2. The drug is available in generic form where the wholesale prices for IV dosing would place MannKind's inhaled version at a great cost disadvantage. Converting vancomycin to a powder formulation is much great than a liquid form of the drug.
  3. The medical community wants fast acting drugs that address serious medical conditions. Due to immunity build up for antibiotics, now such drugs are dosed in a combination delivery with other drugs. The first thing a patient has happen when they are admitted into a hospital is the insertion of a catheter. This is done for delivering needed medications, etc. Inhaled drugs don't provide systemic delivery that is as fast as IV dosing offers. IV delivery is and will probably remain the quickest way to get systemic delivery of medications. MannKind investors are confusing issues, where they are thinking that inhaled delivery offers things other than the avoidance of needles. So why would a hospital opt to dose vancomycin with an inhaler while dosing the other combination drugs with the IV delivery.
  4. Better yet, with hospitals trying to hold down cost, why incur the extra expense for MannKind's inhalers. Hasn't MannKind learned anything about third party payers refusing coverage for drugs that don't offer any better efficacy than what are already standard care practices?
  5. MannKind executives need to understand and learn from their Afrezza experience. They surely know that dosing through the lungs requires a greater amount of the dry powder formulation than the standard pill or solution based delivery methods. IV dosing provides an immediate delivery into the circulatory system, where delivery through the lungs is a hit or miss proposition for the drug being spread out over the entire lung where it then can be introduced into the circulatory system. Maybe MannKind executives need a refresher course on the unique aspects of the human respiratory system and the circulatory system. Merely opting to place another system into the way we deliver drugs that merely places the drug into the needed circulatory system doesn't make up for the addition cost and delay in delivering such drugs to the desired needs area. Especially when the only benefit is merely addressing needle phobia with their inhaled drugs.
  6. Nearly all medications expose the patient to a variety of side-effects, whether delivered by pill, IV or in the case of MannKind's only delivery method, inhalation. Why would a physician opt to dose a drug with an inhaler, therefore, adding additional side effects that will now involve the patient's lungs? Whether epinephrine or vancomycin, the patient needs immediate relief, so why expose the patients to additional side-effects and the additional cost associated with the inhaled product? Patients in the hospital needing massive doses of an antibiotic don't need the extra coughing and throat irritations incurred by inhaling a drug that can be dosed fast and directly into the circulatory system.

History is my bane, so if there is any doubt about merely taking old medicines and creating a dry powder formulation for delivery through one's lungs, consider these facts:

1) Two inhaled insulin products having received FDA approval, where in both cases major international drug companies have opted out of making it part of their product line. Add into this equation the numerous other major drug development companies (Lilly, Novo Nordisk) who decided on stopping their development of inhaled insulin products.

2) Alexza (NASDAQ:ALXA) obtained FDA approval for an old psychotic drug, and last year they announced they had stop production because it wasn't cost competitive nor proved more efficacy than what was already in the market place.

3) Allergan (NYSE:AGN) has an old migraine drug that is designed to be dosed as an inhaled version. The FDA has rejected their drug three times. Allegan no longer talks about when the FDA will give them approval, if ever.

4) Previously in this article I cite the rejection the FDA has given AmphaStar for their inhaled formulation of a drug that now MannKind is talking about as being their solution to garnering revenue. What is different for MannKind's approach to this drug?

Is anyone seeing a pattern for inhaled medications? Isn't it appearing that such inhaled products, merely using dated generic drugs, aren't becoming the panacea that drug companies are seeking? More expensive and no more efficacious that older products appears to becoming a massive waste of product development funding.

I merely offer my comments and opinion as food for thought! For MannKind stating their need for more money is it prudent to go public with their contention they can successfully market Afrezza with a social media effort. Why would you be telling 'potential' partnership executives that their sales team isn't needed to sell Afrezza? But considering MannKind admits they need more training provided--what are they going to do for addressing this issue? Team up with Phoenix University and their internet based teaching portals? How is that working out for all of these internet institutions providing instruction and lessons when it comes down to training customers? But I'm sure all these issues don't apply to MannKind!

It has always been my sincere hope and wish that Afrezza remains available for those patients that need options for treating their medical condition. This is still my position!

Good luck with your investing decisions!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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