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.
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
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
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