MannKind Corporation (MNKD): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
MannKind's fourth quarter 2013 net loss of $0.16 per share was narrower than the year-ago loss of $0.23 but wider than the Zacks Consensus Estimate of a loss of $0.14. We expect investor focus to remain on MannKind's lead candidate Afrezza. A final decision from the U.S. regulatory body is expected by Apr 15, 2014. Meanwhile, we remain concerned about the company's over dependence on Afrezza. MannKind has already received two complete response letters for Afrezza from the FDA. Further delay in approval or another setback related to this diabetes candidate will be catastrophic for the company. We see limited upside from current levels and retain our Neutral stance on the stock.

Overview:

Valencia, Calif.-based MannKind is a biopharmaceutical company focused on the discovery, development, and commercialization of drugs for diseases such as diabetes. The company's lead pipeline candidate Afrezza is an inhaled insulin for the treatment of type I or type II diabetes. In Jan 2011, MannKind had suffered a setback when the US Food and Drug Administration (FDA) issued a second complete response letter (CRL) for Afrezza. While issuing the CRL, the FDA asked the company to conduct two phase III trials (Affinity 1 and Affinity 2) with the next-generation inhaler.

Following the receipt of the second CRL, MannKind had trimmed its workforce by approximately 41% and cancelled its insulin supply deal with Merck's subsidiary, Organon. The headcount reduction coupled with the termination of the deal should bring down operating costs at MannKind.

In Oct 2013, the company resubmitted the New Drug Application (NDA) for the candidate based on positive results from the Affinity studies, reported in Aug, 2013. The NDA was later acknowledged by the U.S. regulatory authority, who considered the submission as a complete class 2 response to the last CRL.

Results from the first study (Affinity 1) revealed that non-inferior decreases in A1c levels were observed in Afrezza treated patients compared to the insulin aspart group. Afrezza was found to be well tolerated during the study.

Results from the second study (Affinity 2) revealed that the primary objective of superior reductions in A1c levels from baseline was observed in the Afrezza group compared to the comparator oral-therapy group. Moreover, more patients under the Afrezza group reached specified A1c target levels compared to those in the comparator oral-therapy group. The candidate was generally well tolerated in this study as well.

Afrezza utilizes MannKind's proprietary dry powder Technosphere formulation of insulin. It is inhaled deep into the lungs using the company's MedTone inhaler, a small, easy-to-use pulmonary delivery system. Once inside the lungs, the insulin is rapidly absorbed into the bloodstream. MannKind has developed Afrezza to produce a profile of insulin level in the bloodstream that approximates the insulin level normally seen in healthy individuals following the beginning of a meal, but absent in diabetic patients.

Apart from Afrezza the company does not have any significant candidate in its pipeline. In 2012, the company out-licensed two of its developing oncology programs.

In Jun 2009, MannKind acquired Pfizer's insulin factory at Frankfurt, Germany for $30 million. The deal involved the purchase of assets related to the production of bulk insulin, including the relevant property rights, production equipment, a quantity of bulk insulin and a license to manufacture bulk insulin for use in pulmonary delivery.

On Nov 13, 2012, MannKind signed a license agreement with Colby Pharmaceutical Company granting the latter exclusive rights to its early stage cancer programs. In Apr 2012, MannKind signed an exclusive agreement with Tolero Pharmaceuticals, enabling the latter to develop and market compounds from MannKind's novel BTK (Bruton's tyrosine kinase) program. The BTK program is focused on the development of treatments for hematological malignancies and inflammatory diseases. MannKind could receive up to $130 million in the form of upfront as well as milestone payments from the agreement.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CRL , MNKD

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