Porter five forces analysis for Afrezza – part 2

 

This is the second part in this series. The first part covered the barriers to entry.

Force 2: Supplier Power – Low

Components

       The basic ingredients to the Afrezza (drug/inhaler device combo) are the FDKP (fumaryl diketopiperazine), insulin & plastic. The drug is basically FDKP+Monomeric Insulin. All these three are commodities. The inhaler itself has no moving parts and is breath activated. Mannkind owns the patents for FDKP, which is a proprietary compound. Mannkind has secured cheap insulin from Pfizer. In many of the Mannkind conference calls, you can hear the management saying that they have enough insulin for $10 billion dollar worth of sales and have an option to buy some more insulin for another $8 billion dollar of sales. The insulin that is used as an ingredient is recombinant human insulin.

Why does it matter if the ingredients are commodities? A simple answer is, given a fixed quality, the manufacturers of commodity products compete purely on the price. When they do that, the returns on their investment gets closer to their cost of capital. Given the fact that many manufacturers produce these raw materials, the prices of raw materials remain low.

Forward integration

       Dreamboat will be a use and throw inhaler. Mannkind will be establishing a long term relationship with the patients to provide supplies. This forward integration will give Mannkind good barriers to entry. One good example that I can think of is Polymedica. I owned this publicly traded company till it got bought out. They own the Liberty healthcare that provides diabetic supplies to the patients. All the patient has to do is to call them, Liberty takes care of billing medicare and handles the patients needs. A long term relationship with the patient helps the company fine tune their product.

 

Force 3: Degree of Rivalry – Low

The existing market for prandial insulin is essentially a duopoly (humalog & novolog). In many ways, Afrezza doesn’t compete with other rapid acting analogs due to its unique kinetics. The existing RAA’s took a while to dislodge the regular human insulin given during meal time. Now the advantages of existing RAA over RHI are very apparent. Afrezza is another technological leap from existing RAA’s. If Afrezza is approved, there will not be another product with such superior kinetics (that happens to be inhaled). The users of Afrezza will quickly learn the advantages (easier to take correctional doses, no need for accurate titration, virtually no hypos, less weight gain etc). The cost of Afrezza is matched with RAA.

Force 4: Buyer power – High

In most countries where the medical care is socialized, the buyer is a government organization that procures the product. Even in US, medicare has a lot of clout. The buyer power is very high and it works against the manufacturer.

The market grows and shrinks according to Medicare and insurance reimbursement policies, but policies to date have been favorable. To the extent the existing RAA’s are viewed as alternatives, the buying power increases even more.

The product differentiation reduces the buyer power. Mannkind is doing additional studies to show the superiority of Afrezza. If their efforts are successful, then the incremental costs the buyer incurs will be more than compensated by the benefits (reduction in long term complications, et al).

Afrezza also has some distinct advantages like better compliancy that reduces the buyer power.

Force 5: Threat of substitutes – Low

Switching costs

Unlike a pill, a device involves user training. One of the reasons for Exubera’s failure (Pfizer’s inhaled insulin) was the amount of time that the PCP/endocrinologist had to spend training the patient on how to use the Exubera inhaler. Such training increases the switching costs. Mannkind management seems to have learnt some important lessons from the Exubera debacle.

a) The dreamboat inhaler is made very user friendly, has no moving parts. There is very little training needed.

b) The inhaler itself is use and throw, which obviates the need for cleaning.

The challenges that Mannkind faces are in the following areas

1) Patient education - explaining that there is no lung damage (given the trial results)

2) Patient education - explaining that there is no need for complex meal titration. Many diabetes forum members cite this as an issue for Afrezza.

This concludes the Porter’s analysis.

----------------------------------------------------------------------------------------------

Drivers of the market size for Afrezza.

(borrowed from an MIT article for insulin pumps)

 

Q&A with an Afrezza trial participant

 

         I want to thank Sarah for graciously spending the time to answer my questions. She is an Afrezza trial participant (has type 1 diabetes). If you read her bio in juvenation.org (a forum run by JDRF), it says “I was taking 5 shots a day for the first year, on the pump for the next 5 years, and for the past 3 years, I have been in a clinical study for inhaled insulin. I absolutely love the inhaled insulin and am praying that it will get FDA approved.”

Here it goes

--------------------------------------------------------------------------------------

(note that the trial participant still refers the product as Afresa. The new name is Afrezza)

Q1) How long did you experience cough? did cough subside after a while?
    I only experienced cough for the first week or so, just trying to get used to the inhaler. I haven't really had any problems with it since then.

Q2) Did you face hypos when you were using the higher dosage?
   I definitely had hypos when I used the higher dosage-I only try to use it when I eat more than usual or have high blood sugars.

Q3) Was titration not required for Afresa? was it an issue?
   I've never heard anything about titration, so I don't think it was an issue for Afresa.

Q4) Did you have a good control of A1C after you started with Afresa?
    My A1C has always been in a pretty good range (in the 6's...sometimes in the 7's) up until recently. My endo discovered that the inhaled insulin was working fine, it was my injectable insulin (Lantus) that my body was not responding to. I'm working on trying to get my blood sugars back in range so my A1C's will be normal again!

Q5) what was one aspect that you loved about Afresa? and the one you hated most?
    I love the fact that Afresa is so easy to learn and use. It's also pretty discreet, and most people think it's just an asthma inhaler. I don't really like that the inhaled insulin has to be refrigerated.

Q6 )Will you use it if FDA approved afresa? please let me know
    I'll definitely use the Afresa once it's FDA approved-I can't wait!!

   --------------------------------------------------------------------------------------

I contacted Mannkind corp. on the refrigeration issue. Mannkind will try to get FDA to let powder out of fridge for a month but for now on approval the label may allow the powder to be out for a week. So this should not be a big issue

Feedback from Afrezza trial participant – part 2

 

Part 1 was posted a while back here.

You can read the original juvenation.org post in JDRF website (entire thread) here.

From Sarah (Afrezza trial participant), note that the old name as Afresa, it is now called Afrezza

I'm actually on a clinical study for this Afresa insulin and I absolutely LOVE it!!! Everyone that is on this clinical study seems to like it, and my doctor said that it is very close to being FDA approved. It is soooo easy to use and is very effective. I was on the Exubera inhaled insulin before the Afresa, before Exubera was pulled off the market. I was so upset when it was no longer available, and was so happy when offered a chance for me to participate in this clinical study. I have been using Afresa for over a year, and have no breathing problems or complications whatsoever.

The inhaled insulin is absorbed very quickly, and does a great job of keeping blood sugars under control. I took 5 shots a day for the first year I was diabetic, and then I was on the insulin for 5 years and absolutely hated it. I have been using inhaled insulin since 2007 and wouldn't have it any other way. Hopefully, the FDA will approve it very soon so more people will have the opportunity to use it.

Afresa is used as a mealtime insulin, and it also used to treat hyperglycemia, to bring blood sugars down. It is a rapid-acting insulin, and seems to immediately cause blood sugars to decline if I inhale when my glucose is high, and covers the food I eat at mealtimes. It doesn't stay in your body like Lantus or Humalog, where 80% of the insulin stays for 10-12 hours after injection, causing hypoglycemia. It seems to keep my blood sugars consistent throughout the day, as it covers what you eat, not anything extra.

I take Lantus at night as a long-acting insulin is needed in conjunction with Afresa. I haven't had to have a c-petide test done. I am required to get a chest x-ray and pulmonary breathing test done every 6 months, just to monitor that there are no changes in my lungs or breathing patterns. The results come back the same every time-no change in either my chest x-ray or breathing test (and I hope it stays that way!)

I'm so glad that I"m a "guinea pig" for this new technology and it doesn't take long at all to learn how to use. I think I had the hang of it after 2 days.

The inhaled insulin has a more rapid absorption than subcutaneously administered insulin. It seems to have an immediate effect, whereas while I was taking shots or on the pump, it seemed to take longer to get my blood sugars back in range, or cover mealtimes.

I know alot of people weren't happy with the first inhaled insulin, Exubera, and I have to agree that Afresa is definitely more user-friendly, and the inhaler itself is MUCH smaller. Hopefully, the technology will just keep getting better, and we'll get closer to a cure...

The Afresa insulin actually comes in two different amounts: 1 mg and 3 mg. The 1 mg dose is equivalent to 3 units of insulin, and the 3 mg dose is equivalent to 8 units of insulin. The powdered insulin comes in prefilled cartridges that you put into the inhaler. I only use the 3 mg dose if my blood sugar is high or if I need more insulin to cover the meal I'm eating. I use the 1 mg dose most of the time to cover snacks or meals.

For example: I need about 6 units of insulin to cover my breakfast, so I inhale 2 of the 1 mg dose cartridges since that equals 6 units of insulin. To be honest, most of the time it's just an estimation game of how much insulin you'll need to inhale to cover your meals or blood sugar level. Afresa is intended to be used to replace short-acting insulin. I have to inject a 24-hour insulin to keep my blood sugars in check (like basal insulin with the pump). It's super easy to use Afresa and it works really quickly to lower my blood sugar or cover meals.

 

From Missiles to Pacemakers – Mr. Mann’s old interview

 

The link to the original LA times article (dated September 15, 1999|MARLA DICKERSON, Times Staff Writer) is here. It is easy to lose sight of the big picture when a typical shareholder is so much focused on the day to day gyrations of the stock market. (well, it is sometimes frustrating to see the stock riveted to $6, day in and day out)

I’ve pasted some portions of the Q&A with Alfred Mann to help us get the right perspective.

---------------------------------------------------------------------------------------------

Q: You are a physicist by training and you hold several patents. But a good scientist doesn't necessarily make a good businessperson. How did you go about transforming yourself?

A: The bottom line is that you must recognize your weaknesses and you must hire people who fill out those areas where you don't have the experience and talent. I've been very fortunate to pick good people. I think maybe my most valuable asset is my enthusiasm for doing something better. I never really tried to create financial success for myself or for the company so much as I tried to do a better job. I developed a belief that if you do the job very well, treat people fairly and charge for your efforts in a proper manner that the money comes.

Q: The bioscience field is littered with companies that didn't succeed. Is that simply the nature of your industry, given that many drugs and treatments won't pan out in clinical trials?

A: There are many good ideas out there that don't make it to market. When you're talking about biotech, that's a particularly risky path. You can't know with certainty whether a drug that worked in mice is going to work on people. So there is more risk in the pharmaceutical arena than in any other area.

But there are many great ideas in all facets of business that don't make it for a couple of reasons. The key, of course, is having enough capital. Capital is by far the most important ingredient for the success of a business, so that you can have the time to really bring the product to market successfully.

Leadership is also very important, in my view. If you are really trying to create a business where you are building off a team of people, you have to be able to lead that team, command their respect and, in the process, generate the commitment and loyalty it takes to make it a success.

Q: Given the steep odds of success, how do you determine which products to pursue?

A: We generally try to find an area that is underserved, typically one where the products aren't state of the art, perhaps because of lack of competition or lack of focus on the part of the people there. I've found that companies tend to get very smug about what they are doing. They only react to competitive pressures.

For example, there were many entrants into the insulin infusion business in the early days. When Mini-Med set about building an external insulin pump, we didn't try to set our standards based on what the competition was doing. After all, what the competition is doing today may not be what they'll be doing three years from now when your product comes to market.

So we brought out a product that was significantly better than what the others had, supported it with a good marketing and sales effort, and caught the competition off guard. They weren't prepared for this advance. They rushed products to market, had difficulties and ended up getting out of the business.

----------------------------------End of interview----------------------------------------------

On the big picture:

On product: Competitors have pulled the plug displaying a lemming like attitude; some have even commented that they entered the insulin market for strategic reasons (competitive pressures). Current RAA’s are more than 10 years old and it hasn’t caught up with advances in technology.

On leadership: No senior management of Mannkind corp has quit in the last 2 years, a period when we experienced delays in FDA, resubmission etc.

Mr. Mann’s approach has been to come up with disruptive technology and not a me-too drug. Wall street’s reaction has historically been tepid towards companies coming up with disruptive products, until it is self-evident.

Porter five forces analysis for Afrezza – part 1

 

       From WIKI, Michael Eugene Porter (born 1947) is the Bishop William Lawrence University Professor at Harvard Business School. He is a leading authority on company strategy and the competitiveness of nations and regions. Michael Porter’s work is recognized in many governments, corporations and academic circles globally. He chairs Harvard Business School's program dedicated for newly appointed CEOs of very large corporations. Porter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero.

       You can read more about Porter’s five forces in wiki. Afrezza is the flag ship product of Mannkind corp. Afrezza’s value can be better understood by applying the Porter’s five forces. This is one aspect of Afrezza that I’ve not yet addressed.  

      The article makes a bold assumption that Afrezza will succeed and take sizable market share in the prandial insulin market. 

Force: “Barriers to Entry” : High

•FDA approval – FDA approval is a long and drawn out process taking 1-2 years. For inhaled insulin, completing the three phases of trials and additional studies can take anywhere between 4-7 years. Several competitors have quit the inhaled insulin market (Eli Lilly/Alkermes – Air insulin, Novo Nordisk/Aradigm – AERx, & lastly Pfizer/Nektar’s Exubera was pulled after the FDA approval). If Afrezza succeeds beyond anyone’s imagination, the competitors will kick start their programs. This may happen after 1-2 years of seeing Afrezza sales. Afrezza will have a lead of at least 5 years. 

•Brand/trust – If Afrezza establishes as the only game in the town for inhaled insulin, it’ll rapidly capture the mind share and market share. The Afrezza brand will build up quickly. Think of iPad. iPad created a niche and established itself as an undisputed leader. The version 2 of iPad will be far superior to those from Samsung, HP, DELL et al. Another example is Al Mann’s very own Minimed pump. Even after so many years, Medtronix (Minimed was sold to Medtronix) is still an undisputed leader in the insulin pump, controlling 60% of the market share. Note that there are lots of competitors in the insulin pump sector. If Minimed shareholders did well (100 times their original investment, no kidding), the Medtronix shareholders are doing great. The profit margins on their pump are in upwards of 60%.

The second is the trust factor. The best example I can give is Wrigley. Charlie Munger (Vice Chairman of Berkshire Hathaway & Warren Buffett’s sidekick) quoted in his book “Poor Charlie’s Almanac”

“If I go to some remote place, I may see Wrigley chewing gum alongside Glotz's chewing gum. Well, I know that Wrigley is a satisfactory product, whereas I don't know anything about Glotz's. So if one is 40 cents and the other is 30 cents, am I going to take something I don't know and put it in my mouth which is a pretty personal place, after all for a lousy dime?

So, in effect, Wrigley, simply by being so well known, has advantages of scale what you might call an informational advantage.”

If you are allowed to read only book in your life, I’ll let that be Poor Charlie’s Almanac. You can buy a copy from this link. All proceeds go to charity. Munger is a billionaire and doesn’t need your money.

It is interesting that the mouth (which is a personal place) is also used for inhaling the insulin. So if a diabetic is so accustomed to using a Dreamboat inhaler, why would he/she fiddle around with something different? Even if it is 20% cheaper? This is where the concept of mind share comes into place. Warren Buffett often quotes, “forget the market share, it is the mind share that counts”. Once Afrezza becomes common place, the brand and trust factor will create a moat. It is the moat that generates the value. I admire Richard Branson, and have read all his books. In one of his books he commented (paraphrasing), “I looked at the balance sheet of Coca Cola, it was crazy. All they have is the marketing expense. It costs a penny to make the cola”. He went on to start Virgin Cola. Last time I checked, not many are drinking Virgin Cola. As Buffett will say, Coke and Happiness go together, and it seems the decades of marketing has put a strong tattoo on the viewers mind about Coke and Happiness going together.

So what is a dream boat? It is nothing but a brand that has the commodity insulin, FDKP & some plastic, not to forget the IP patents and the manufacturing processes. I like a business that takes a commodity product and generates a product that has brand value. Historically, such companies have high ROI (think P&G’s Gillette, Coke, Pepsi). The returns of commodity companies without cost advantages have been abysmal.

In 2004, a team of neuroscientist conducted a new version of the Pepsi Challenge. Not only did participants had to indicate which cola they prefer, but they had to do this while their brain was scanned. Results showed that when subjects tasted samples of Pepsi and Coke with and without the brand’s label, they reported different preferences (McClure et al., 2004). Without labels, subjects evaluate both drinks similarly. When drinks were labeled, subjects report a stronger preference for Coke, and this effect was correlated with a stronger activity in the medial prefrontal cortex. This was due, according to the researchers to the effectiveness of Coke’s branding strategies. Somehow, Coke managed to trigger certain associations in our brain, and simply seeing their logo is enough to make a drink taste better. A similar effect was observed with costly wine bottles. Non-experts feels that the same bottle of wine with an expensive price tag is more appreciated than with a cheap one, and the expensive one elicit stronger activity in orbit frontal cortex (Plassmann et al, 2008). Again, an area important in emotional processing.

Again, Insulin is not consumed like Pepsi/Coke, but you can appreciate the importance of branding and mind share.

•Relationships w/ prescribers & HMOs for reimbursement & distribution.    

First, relationship with prescribers. Time is of the essence, in US, the primary care physicians are already time constrained. A simple and easy to use inhaler is preferred. Physicians don't get the reimbursement for training a patient on how to use the inhaler. If their staff is familiar with one inhaler, then the switching costs are high if a new inhaler comes to the market. You would see a lot of inertia to something new. If you get a competing inhaler that offers similar kinetics and experience, why would you bother changing the prescription? The inhaler is unlike a pill. If you get a better and cheaper pill, the switching costs are low. In case of an inhaler, the patient spends considerable time getting used to it and will resist something new.

It takes a while to get a product approved by HMO’s. They understand the price-value equation. In some cases, to get better volume discount, they may go with one preferred product. This is another example of the saying “An early bird catches the worm”. The first mover advantage will yield strong dividends, not to mention the advantages due to economies of scale in manufacturing, sales and distribution.

•Sales/service infrastructure

     There is not much to talk about as Dreamboat will be use and throw and wont involve direct sales and  
    service.

    In summary, one can make a strong argument that the barriers of entry are high.

    I’ll cover the other 4 forces (The intensity of competitive rivalry, The threat of substitute products or services, The bargaining power of customers (buyers), The bargaining power of suppliers) in subsequent articles.

Transcript of Morgan Stanley Global Healthcare Conference – Sep 13th 2010

(The transcript that I got was not of great quality, so please use your judgment. I tried to make a few corrections.)

MANAGEMENT DISCUSSION SECTION

Analyst, Morgan Stanley: 
Hi, we are excited to have Al Mann here today.  He is the Chairman and CEO of MannKind since 2003.  So first I'm going to ask him to give us a brief   overview about the company for us who does not know a lot about the company and then we will open it to Q&A.  Al? 

Alfred E. Mann, Chairman and Chief Executive Officer: 
Well, our goal at MannKind is really a diversified, fully integrated   biopharmaceutical company. [indiscernible] Our lead product is a new form, a   unique new type of insulin therapy that will I think have tremendous impact   on the diabetes problem.  In addition we have four cancer products, two of   them have been in the clinic, and they all look very, very exciting and we   have a number of other products in our delivery capability, in our  program, mostly hormones that are better delivered in spikes or drugs for which rapid   introduction into the system systemically would be advantageous.
Analyst, Morgan Stanley: 
Okay.  So first I want to talk about your inhaled insulin product.  So in its trials hemoglobin A1C in AFREZZA cohort were kind of non inferior to rapid analog at that.  And in trial 009 even that non inferiority was in question. So how can you say AFREZZA is -- can be better? 

Alfred E. Mann, Chairman and Chief Executive Officer: 
Well, I think you need to look at the signs, you can't really look in a   prandial insulin, it's only the HbA1c, because the problem is that with   current insulin the purchases is so long that it creates an excessive post   prandial hyperinsulinemia that leads to hypoglycemia.  So fast in glucose   levels are averaged as very high levels, well above what would be safe.  Over the long-term typically we see 170 to 210 milligrams a deciliter or even   higher.  And at those levels they mask the HbA1c -- because actually they are   the major determinant of HbA1c at that level.  You can't get a good A1c to   get the fasting level down to somewhat in a normal and their appraisal will   show superiority I believe.
Analyst, Morgan Stanley: 
I see.  There is also concern about the safety, so about lung function and also some cancer possibility they were accelerating cancer I guess, and how about -- what do you think about the safety of the products? 

Alfred E. Mann, Chairman and Chief Executive Officer: 
Well, we've done extensive pre-clinical studies over 50 trials in over 5000   patients, some of the patients have been on our therapy for over five-years.   At the end of the day we have seen absolutely no impact on lung tissue.   We've seen no increase in risk of cardiovascular problems or of cancer and   there have been no safety signals.  The FDA has  reasoned not a single safety   concern related to AFREZZA.  Now all that said, at the end of the day we really truly believe that AFREZZA is very safe, actually reduces the risk of   short-term, short-term safety because you don't have the extent of   hypoglycemia that you have with other drugs and we believe you'll be able to   get fasting levels down to a point where you get better A1cs to lower long   term safety concerns as well and we see no other issues evolve.  We have no safety signals of any kind. 

Analyst, Morgan Stanley: 
Okay.  Will you remind us when the PDUFA date is? 

Alfred E. Mann, Chairman and Chief Executive Officer: 
PDUFA date is December 29. 
  
Analyst, Morgan Stanley: 
And do you think the FDA will approve the drug? 

Alfred E. Mann, Chairman and Chief Executive Officer: 
I am very confident that the data is compelling and that the FDA will approve the drug.  I cannot say that they do it by December 29, because the agency is understaffed and over worked and there is - they've got lot on their plate and it's a fairly complex regulatory process for AFREZZA.  So whether they make it by December 29, I can't opine.

Q&A

<Q>: Okay. Is there any questions among the audience? Okay, and Al, I understand that you invested about $1 billion out of 1.5 billion, you've guided to the company as a whole. And I've never heard anything like that  before, so why -- what makes you feel so confident about the company? 

<A>: The first one is that I'd a lot of experience in diabetes, after all I was the founder and CEO of MiniMed for through -- its history through 2001 when we sold this company to Medtronic. But one thing I learned is I learned the deficiencies occur drugs and what that occur in insulin in particular and what you're seeing today is a global explosion of the epidemic of diabetes. There are about 300 million people in the world today and that's going to double over the next few decades. In the United States for example, the government is projecting that one out of every three young Americans is going to suffer from diabetes in his or her lifetime which is a huge market opportunity.
And today very few people reach normal glycemic control about -- only about a-third get even reasonably close to relax standards. [indiscernible] And the problem is that all of the drugs today are not adequately effective, there's a need for better therapy. In fact you might say that the rate of control to reduce glycemic variations is with insulin that's way the body does it and only because the current insulins have such serious deficiencies do you see all of these other drugs in Type 2 diabetes that are coming to market if you could only have a better -- a better insulin that didn't have all these problems, these other drugs probably wouldn't have much merit. So I see this as an enormous opportunity at Type 1 diabetes and late stage Type 2 it will be a prandial insulin, but I believe you are going to see significant use of this product in the earlier stage Type 2 as well.
<Q>: What is wrong with other insulin?

<A>: Well, the other insulins to make them stable, they are all[indiscernible] six molecules bound to a couple of zinc atoms and the body can't use the hexamer, it has to break it down into a monomer and that takes time. So that if you take a look at regular insulin it doesn't peak for two to three hours in the body and lasts for 9 to 12 hours. You digest a meal maybe more or less in three hours, you've got six to nine hours of excess of insulin and you've got to deal with that and that cause of type of glycemia to avoid hyperglycemia people are eating snacks all day long and the bodies liver is spoiling out glucose try to eat particularly going into coma. These are serious issues.

Now about 15 years ago, a couple of rapid acting analogs came to market and there you saw maybe peeking at about an hour and they last maybe 5 to 7hours, the best still too long. With AFREZZA for example, we peek in typically a little under 15 minutes and we are essentially gone in three hours the effect sort of peeks at roughly an hour and that's mimics what's the normal body needs, where body -- a healthy body processes glucose so that we believe we really provide an insulin that more nearly mimics with the normal pancreas does in the healthy person.
<Q>: There are still some skeptics about after the Exubera failure in the market and also about the acceptance of any inhaled insulin, so why do you believe AFREZZA will be successful and how successful?  

<A>: Well, first you can't compare AFREZZA to Exubera.  Exubera was an effort to create a product that turned out to be very inconvenient, very expensive, and had no clinical advantages that didn't present clinical benefits, our clinical results as good as what you can get today with existing injected   endpoints.  Is the only excuse what you didn't have to inject it?  That   doesn't play in this market and that's why it failed.  But with our products   we changed the clinical experience.  We create an insulin it's the first ultrafast acting insulin that is totally different the only thing we shared   is that we're insulin and that we deliver by inhalation because putting it   into the arterial system have some benefits in clinical effects.  It actually   tends to lower insulin resistance and so that's why we do it and is the   powder so we have to have a different way of delivering it in the lung is an   ideal surface because it's such an enormous surface and which you can deliver such a product.
<Q>: So I'm just trying to understand and so you were saying AFREZZA is very different from Exubera, so therefore?

<A - Alfred E. Mann, Chairman and Chief Executive Officer>:
Its fully different product.
<Q>: Therefore we cannot -- we just cannot compare?
<A - Alfred E. Mann, Chairman and Chief Executive Officer>:
Was like comparing a Golf Cart to a luxury sedan, I mean they're not the -- both tacky somewhere but they're different.
<Q>: Okay.  Do we have any questions?  Okay.  Can you tell us about partnerships when can we expect one partnership? 

<A - Alfred E. Mann, Chairman and Chief Executive Officer>:
Well, we were very close to a partnership last year in October.  There was a question that   affected the economics that we couldn't really answer without getting some   more inputs from the FDA, since we're only a couple months from approval; it was decided to defer any further discussions.  So last year we got the -- what we thought what was going to be an imminent approval.  We had every   signal that was going to be.  But it turned out not to happen and then of course ended up with a complete response letter.  But one of the interesting and important conclusions of the complete response letter is that the FDA   raised not a single safety concern.  And what's happened since then we have   a fairly clear pathway to approval.  And so that's attracted a lot of people.   So we've had a lot of people talking to us on the partnership.  We had frankly more than we could handle we narrowed it down or it's just the narrow   down I should take to about six, who are still talking to us, and we want to   let them to reduce that to maybe three or four that's probably all we can   handle as we move into negotiations, so to try to compete the partnership.   Now that said the companies that we had been negotiating with last year probably could complete a deal with this in a matter of few weeks the others had been gone as far, so we take several months probably.  PDUFA is only 3.5 months away so which comes first I can’t tell you.  
<Q>: Okay.  Do you expect FDA to have panel?
<A - Alfred E. Mann, Chairman and Chief Executive Officer>: No.
<Q>: You don't.
<A - Alfred E. Mann, Chairman and Chief Executive Officer>: They've consistently said to us, they don't need a panel it doesn't mean they can't change their mind, but they've consistently said no panel.
<Q>: Okay.  And in your mind what do investors under appreciate about MannKind?
<A - Alfred E. Mann, Chairman and Chief Executive Officer>: What do they under appreciate?
<Q>: Yeah.
<A - Alfred E. Mann, Chairman and Chief Executive Officer>: This is a product addressing what is the greatest healthcare challenge today. [ph] It is a unique product that does -- that can produce superior results, we have to prove some of those yet because registration trials don't really show the product at its depth. [indiscernible] For example, when Humalog was approved, the FDA said it had no benefits clinically, but today everybody knows it does and that's because of the way registration trials are conducted.  But we show better performance in so many areas, for example, we have a very, just to give you an idea what I'm doing.  We have a very simple or discrete delivery system, person is just tied to meal don't even know what is doing and there it is with a little device like this, you don't really need to do complex meal titration in Type 2 diabetes is almost nothing to be titrated in Type 1, you need to have some concern there so you can -- you got to have some understanding of what you're eating but its not complex, no carb counting and all that is necessary.  We show lower hyperinsulinemia and most of hyperinsulinemia comes from times when we're not even in the system and the more you take of ours it doesn't seem to increase the hypoglycemia, we think most of the hypoglycemia is coming from the other drugs that are used in the therapy we have much lower increases the postprandial glucose levels and those rises are more and more being associated with cardiovascular and mega vascular risk, we actually see a lowering of  when we are not even in the system and the reason is because by delivering into the arterial system the experts are saying that the believe that we are lowering internal resistance and increasing sensitivity.  If you are going to do - if you are going to use a therapy where you don't have much risk of hyperglycemia and you don't need to do many titrates and don't need to do nearly as many finger sticks and those are very difficult and even painful and people hate them and they are very expensive and you don't need to do nearly as many with this.  You don't have weight gain with this, we say it is weight neutral and certainly we can say that - label will probably say less weight gain because people gain weight for other reasons than just taking insulin.  And if we could get people to lower fasting glucose which is safe when you do with us but not with the other drug, with the other insulin, we think we will be able to show significantly better A1Cs and most people should be getting near the normal range of A1C.  Those are some of the advantages and I don't think people understand all of that, they don't seem to understand what a lot of doctors do, and lot of patients do but we don't seem to find that in Wall Street.
<Q>: (Inaudible) companies.  So do you think you have companies that are looking to get into the insulin space or could this include incumbents already in the insulin space?
<A>: I am sorry, I didn't hear that.
<Q>: Okay.  I think it's on now.  I just want to come back to you earlier comments on partnering.  You said you have to ...
<A>: Partnering?
<Q>: [indiscernible].  I just wanted to get a sense as to - you are not going to name who these partners are.  But I want to get a sense of the type of companies that are having discussion with you.  Are we talking about companies that are looking to get into the insulin space or do they include discussions with companies that are essentially incumbents in the insulin space?
<A>: Well, we are not really very interested in companies who are in the insulin business.  The reason of course is because why would they want to cannibalize some of their key products.  I mean Novalog is the most important product for Novartis for example.  So they wouldn't be interested in promoting our products.  So they are not really good candidates.  But Sanofi-Aventis could use a rapid acting insulin, but on the other hand we think that AFREZZA will compete effectively against Lantus in earlier stage type-II diabetes.  So we have some reservations about those, but we feel that we should deal with someone who is in the diabetes market or at least in the metabolic and endocrine markets so that they have sales forces that are dealing with the physicians in the same areas as we -- in which we're interested. Yes, sir?
<Q>: How long can [inaudible] do they have the same level of excitement about the products that you have and the other question I had was what is plan B ?
<A>: [indiscernible].
<Q>: Okay. [ph] I guess a follow up to the previous question was, you know, you're not looking at incumbents, you're looking at some of the other guys but do they have the same level of excitement about a full wallet  that you share, do they actually share your excitement around AFREZZA or would we see some partnering deal actually happen only after approval from FDA, and secondly if approval doesn't happen for whatever reason what's plan B here, I mean how does one think about MannKind after that?
<A>: Well, first one you see that I lived with diabetes not the disease but with treating it for, you know, couple of decades and I think I've learned a lot about what is needed and when I see the technology and the effect, the clinical effect of this drug, I get very excited.  I seriously doubt many people share my enthusiasm, at least the leaders of some of the pharma companies, there is still and they like it and they are impressed, but I am pretty excited, because that's why I put in $925 million of my own money.  On the other hand, to the second part of your question, I think that the data for approval is compelling.  We have every indication from the FDA that they will approve it.  We don't know what the -- you can never be certain about the agency, but we are very confident that we will be approved.  We can't say exactly when.  We don't think that there is likelihood of --failure of approval is something that is likely to be considered.

<Q>: ?
<A>: Pardon?

<Q>: ?
<A>: What do I think of the market? [ph] Well, we've done a number of or I shouldn't say done, we've had a number of market surveys done, the most significant among them was done last year.  It was done by a company called Biobid  which was recommended to by one of our partner candidates.  And they did a survey of 611 physicians, 203 in the United States and the other 408 in the five major countries of Europe and a major market I should say.  And they -- each physician was asked to bring in randomly selected records from his patients, his/her patients that to and forward records that half in type 1 and half in type 2.  They came to a meeting with a reviewer.  The reviewer and the doctor went through the records and the doctor would determine which patients he would recommend for this product. The number turned out to be 25% in the U.S. for both type 1 and type 2 in Europe, it was a little lower in Germany and it was higher in France, same in Italy, but the numbers were somewhere than excess of 25% of all of the patients that they were treating would have been recommended for this product. Now, when you are looking at the numbers of people involved 25% you can discount that by an enormous amount and here still see we have a multi billion dollar opportunity and I think the number will grow from there.

<Q>: Okay.  We are running out of time, so I am going to ask you the final question.  Can you just tell us briefly about your cancer program and do you plan to have additional clinical studies?

<A>: We have four cancer products in the queue.  Three of them are vaccines, two of them been in the clinic and they are only phase I trials, but the efficacy was really quite surprising.  We think they are very promising candidates.  There is a lot of interest today in cancer vaccines given what has happened with Dendreon, but we have off the shelf vaccines that are -- they are classified by cell type, but -- so there are several.  You can't just use it willy-nilly on any patient, but for different groups of patients the vaccines we have now are really directed to HER2 patients which comprise roughly 50% of Caucasians and different percentages of other heritage, but the fourth product is a multiple myeloma product.  It has some other applications as well.  And the Multiple Myeloma Society was so impressed with it that they even gave a profit company a $1 million to help to develop that product.  So those are coming along, but there is years away. On the delivery front, as I said earlier, by delivering a products rapidly into the arterial system and what would really be sort of spikes for our hormone, you can get much more physiologic effects than you get with other delivery technologies.  And there are other drugs that for example, suppose one of the two migraine drugs where it may take an hour to get into the blood if you inject it or something or if you take a pill and by taking a bio-technique, it might be the only matter of limit before you get an affect. So, there are a variety of things.  Those are still years away.  The only product that we have is really close some market is really AFREZZA and a couple of our cancer vaccines could make it to market in a few years, maybe three years and so, but that's about the size of our pipeline. Analyst, Morgan Stanley: Okay.  Well, thank you very much for speaking with us. Company Representative: Thank you.

Three articles that validate the importance of Afrezza

I came across this original article in the link. I never expected to read such a quality article in "THE HONG KONG MEDICAL DIARY", VOL.15 NO.6 JUNE 2010.

I extracted the three relevant articles and uploaded to scribd.  These will give you an idea as to why Afrezza makes sense.

1) Optimal Glycaemic Management: Is Reaching HbA1c Target Enough? 
This talks about why glycemic variability is more important than HbA1C


2) Post-prandial Hyperglycaemia & Cardiovascular Disease: An Endocrinologist's Perspective
In a not distant future, the society may realize how Afrezza's control of PPG will be good for the heart.

3) When to Start Insulin Treatment for Type 2 Diabetes Patients?
The title is self explanatory; I've written quite a few articles on this topic.

Click on full screen to view the document better. The link to the scribd is here.   Mdjunefullpage_optimal Glycaemic Mgmt

A review of Lancet article TI+Basal Vs Biaspart insulin in Type 2

 

         I finally got a copy of this lancet article “Prandial inhaled insulin plus basal insulin glargine versus twice daily biaspart insulin for type 2 diabetes: a multicentre randomised trial” - Lancet 2010; 375: 2244–53. This article had caused some controversy and detractors from Oppenheimer and Hapoalim quoted this article extensively in their updates.

        This article was written by Mannkind folks, the study was also funded by Mannkind. The clinical trials website has details of this study NCT00309244. I could find nothing that caused alarm bells to ring. Let me highlight some that I thought were interesting.

1) The primary endpoint was a comparison of change in glycosylated haemoglobin (HbA1c) from baseline to week 52 between treatment groups; the non-inferiority margin was 0·4%. Analysis was by per protocol for non-inferiority testing of the primary endpoint. The study met the primary end point.

Trial profile

Baseline

2) This is another data point as to why Afrezza is much better than Exubera. From the article “Insulin and fumaryl diketopiperazine are almost completely cleared from the
lungs of healthy individuals within 12 h of dosing. With Exubera inhaled insulin, the insulin concentration in epithelial lung fluid of patients with diabetes 12 h after the dose was about 8–9% of the concentration immediately after the dose. By comparison, 12 h after
healthy individuals were given 60 U Technosphere inhaled insulin, the lungs contained 0·3% of the insulin concentration and 0·4% of the fumaryl diketopiperazine concentration recorded at 30 min after inhalation.”

3) Though titration was allowed, there was no forced titrations done in the study.

4) Quick glance at results

      a) PPG: At week 52, AUC 0-360min was similar between treatment groups. This is to be expected as Afrezza is in and out fast, suppresses hepatic glucose output where as Biaspart lasts longer. Note that 1 hr & 2 hr PPG are better for Afrezza due to its unique PK. This behavior clearly favors Afrezza as the slope after 2h is gentler causing less hypos, and rapid suppression of PPG during first 2 h reduces glucose toxicity and beta cell death.

       b) Fasting glucose: Clearly favors Afrezza

          change in fasting plasma glucose from baseline (modified intention-to treat
population) during 52 weeks

     c) HbA1c : Afrezza is slightly inferior to Biaspart; statistically insignificant; This again goes back to the fact that forced titration was not done, Afrezza had lower glycemic variability (Biaspart showing higher highs and lower lows). Again this is nothing new for Afrezza.

Glycosylated haemoglobin (HbA1c) values (per-protocol population)

       d) Less weight gain ; Mean weight gain was signifi cantly lower with inhaled insulin plus insulin glargine 0·9 kg (SD 0·3, 95% CI 0·3–1·5) than with biaspart insulin 2·5 kg (0·3, 1·9–3·0), with a treatment difference of –1·6 kg (SD 0·4, 95% CI –2·4 to –0·7, p=0·0002).

         e) Quality of life: This favors Afrezza overwhelmingly and puts to rest any question (again) of patients being happy with Afrezza.

From the SF-36 QoL and insulin treatment questionnaires, diabetes worries decreased significantly from baseline in the group on inhaled insulin plus insulin glargine
(p=0·0083) but not in the biaspart insulin group; the between-group difference was not significant (p=0·1825). Attitudes towards insulin therapy, treatment satisfaction,
and treatment preference significantly improved from baseline in both treatment groups (p<0·0001), with no signifi cant between-group difference (p=0·5276). No between-group differences (p=0·2452) or within-group differences (p=0·1105) were recorded in any SF-36 component scales at week 45. Initiation of inhaled insulin plus insulin glargine was not associated with deterioration in overall physical quality of life or quality of life related to mental health, and we recorded significant improvements in diabetes worries, attitudes toward insulin therapy, treatment satisfaction, and treatment preference. These findings suggest that patients accepted treatment with inhaled insulin.

      f) FEV/FCV/DLco  (nothing new)

Between patients on inhaled insulin plus insulin glargine and those on biaspart insulin, mean changes from baseline to week 52 were similar for FEV1 (–0·13 L [SD 0·22] vs –0·09 L [0·2], p=0·2173), forced vital capacity (–0·12 L [SD 0·25] vs –0·09 L [0·22],
p=0·5265), and DLCO (–0·80 mL/min per mm Hg [SD 2·45] vs –1·11 mL/min per mm Hg [2·51], p=0·0946).

    g) Antibodies (same old)

Insulin antibody concentrations increased in both groups at week 14 and continued to increase until they reached a plateau, with a slight decline, at about 10 months. The size of the increase was greater in patients treated with inhaled insulin plus insulin glargine. Insulin antibody concentrations were not correlated with changes in key clinical parameters such as HbA1c, fasting plasma glucose, insulin dose, hypoglycaemia, or pulmonary function tests.

Serious Adverse events and Adverse events

Let us cover this in greater detail. I just want to put all the facts out so that this article should not be seen cherry picking all the good points of Afrezza.

This comment in the article helps keep things in perspective as far as AE’s are concerned.

For all patients with type 2 diabetes who had been treated for up to 2 years, the integrated summary of safety of the Technosphere inhaled insulin development
programme, reported to the US Food and Drug Administration, recorded infections in 30% (537/1795) of those on inhaled insulin and 32% (435/1345) of those receiving a comparator. Furthermore, upper-respiratory tract infections were recorded in 8% (151/1795) of patients on inhaled insulin and 10% (131/1345) of those in comparator groups. No differences were shown in the occurrence of cancer, cardiovascular events, or cerebro-vascular events between groups.

SAE (click image to enlarge if it appears too small)

From webappendix of the Lancet article; Cough and throat irritation accounts for a big portion.

VI. Study Drug-Related Adverse Events* System Organ Class/Preferred Term	Inhaled Insulin Plus Insulin Glargine (n=323) n (%)	Biaspart Insulin (n=331) n (%)
Any treatment-emergent adverse event	179 (55·4)	170 (51·4)
Blood and lymphatic system disorders	1 (0·3)	0 (0·0)
Lymphadenopathy	1 (0·3)	0 (0·0)
Cardiac disorders	0 (0·0)	1 (0·3)
Tachycardia	0 (0·0)	1 (0·3)
Eye disorders	0 (0·0)	2 (0·6)
Diabetic retinopathy	0 (0·0)	1 (0·3)
Scleritis	0 (0·0)	1 (0·3)
Gastrointestinal disorders	6 (1·9)	2 (0·6)
Diarrhoea	0 (0·0)	1 (0·3)
Nausea	2 (0·6)	1 (0·3)
Gastrooesophageal reflux disease	1 (0·3)	0 (0·0)
Abdominal discomfort	1 (0·3)	0 (0·0)
Hypoaesthesia oral	1 (0·3)	0 (0·0)
Lip ulceration	1 (0·3)	0 (0·0)
Stomach discomfort	1 (0·3)	0 (0·0)
General disorders and administration site conditions	10 (3·1)	6 (1·8)
Malaise	6 (1·9)	6 (1·8)
Fatigue	1 (0·3)	0 (0·0)
Asthenia	3 (0·9)	0 (0·0)
Hepatobiliary disorder	0 (0·0)	1 (0·3)
Hepatic steatosis	0 (0·0)	1 (0·3)
Immune system disorder	1 (0·3)	0 (0·0)
Drug hypersensitivity	1 (0·3)	0 (0·0)
Infections and infestations	16 (5·0)	2 (0·6)
Upper respiratory tract infection	5 (1·5)	0 (0·0)
Influenza	1 (0·3)	0 (0·0)
Bronchitis	6 (1·9)	0 (0·0)
Urinary tract infection	0 (0·0)	2 (0·6)
Pharyngitis	4 (1·2)	0 (0·0)
Sinusitis	1 (0·3)	0 (0·0)
Viral infection	1 (0·3)	0 (0·0)
Tinea cruris	0 (0·0)	1 (0·3)
Injury, poisoning and procedural complications	0 (0·0)	2 (0·6)
Fall	0 (0·0)	1 (0·3)
Road traffic accident	0 (0·0)	1 (0·3)
Investigations	7 (2·2)	4 (1·2)
Blood creatine phosphokinase increased	2 (0·6)	0 (0·0)
Pulmonary function test decreased	4 (1·2)	0 (0·0)
Weight increased	1 (0·3)	3 (0·9)
Blood lactate dehydrogenase increased	1 (0·3)	0 (0·0)
Neutrophil count decreased	0 (0·0)	1 (0·3)
Red blood cell count decreased	0 (0·0)	1 (0·3)
Carcinoembryonic antigen increased	1 (0·3)	0 (0·0)
Eosinophil count increased	1 (0·3)	0 (0·0)
Forced expiratory volume decreased	1 (0·3)	0 (0·0)
Lymphocyte count increased	0 (0·0)	1 (0·3)
White blood cell count decreased	0 (0·0)	1 (0·3)
Metabolism and nutrition disorders	101 (31·3)	165 (49·8)
Hypoglycaemia	99 (30·7)	163 (49·2)
Hyperglycaemia	2 (0·6)	2 (0·6)
Hypoglycaemic seizure	1 (0·3)	0 (0·0)
Hypercholesterolaemia	1 (0·3)	1 (0·3)
Increased appetite	0 (0·0)	1 (0·3)
Overweight	0 (0·0)	1 (0·3)
Musculoskeletal and connective tissue disorders	3 (0·9)	2 (0·6)
Arthralgia	1 (0·3)	1 (0·3)
Muscle cramp	2 (0·6)	0 (0·0)
Myalgia	0 (0·0)	1 (0·3)
Rhabdomyolysis	1 (0·3)	0 (0·0)
Neoplasms benign, malignant and unspecified (including cysts and polyps)	1 (0·3)	0 (0·0)
Lung neoplasm	1 (0·3)	0 (0·0)
Nervous system disorders	10 (3·1)	4 (1·2)
Headache	5 (1·5)	0 (0·0)
Dizziness	2 (0·6)	0 (0·0)
Syncope	0 (0·0)	1 (0·3)
Loss of consciousness	1 (0·3)	3 (0·9)
Diabetic neuropathy	1 (0·3)	0 (0·0)
Burning sensation	1 (0·3)	0 (0·0)
Sinus headache	1 (0·3)	0 (0·0)
Psychiatric disorder	1 (0·3)	0 (0·0)
Psychotic disorder	1 (0·3)	0 (0·0)
Renal/urinary disorder	1 (0·3)	2 (0·6)
Glycosuria	1 (0·3)	2 (0·6)
Respiratory, thoracic, and mediastinal disorders	103 (31·9)	0 (0·0)
Cough	88 (27·2)	0 (0·0)
Throat irritation	10 (3·1)	0 (0·0)
Pharyngolaryngeal pain	6 (1·9)	0 (0·0)
Dyspnoea	4 (1·2)	0 (0·0)
Rhinorrhoea	3 (0·9)	0 (0·0)
Hoarseness	2 (0·6)	0 (0·0)
Productive cough	2 (0·6)	0 (0·0)
Wheezing	2 (0·6)	0 (0·0)
Bronchial hyperactivity	2 (0·6)	0 (0·0)
Dry throat	2 (0·6)	0 (0·0)
Lung disorder	2 (0·6)	0 (0·0)
Abnormal chest sound	1 (0·3)	0 (0·0)
Asthma	1 (0·3)	0 (0·0)
Bronchospasm	1 (0·3)	0 (0·0)
Dysphonia	1 (0·3)	0 (0·0)
Interstitial lung disease	1 (0·3)	0 (0·0)
Laryngospasm	1 (0·3)	0 (0·0)
Rhonchi	1 (0·3)	0 (0·0)
Throat tightness	1 (0·3)	0 (0·0)
Skin and subcutaneous tissue disorders	4 (1·2)	3 (0·9)
Pruritus generalised	1 (0·3)	0 (0·0)
Cold sweat	1 (0·3)	2 (0·6)
Angioneurotic oedema	1 (0·3)	0 (0·0)
Rash macular	1 (0·3)	0 (0·0)
Dermatitis atopic	0 (0·0)	1 (0·3)
Vascular disorder	1 (0·3)	0 (0·0)
Flushing	1 (0·3)	0 (0·0)

Discontinuations (mostly cough related)

Of patients randomly allocated to treatment, 191 (28%) withdrew from the study, with a greater number in those on inhaled insulin plus insulin glargine (32%) than on biaspart insulin (24%; ). In the safety population, the proportion of patients discontinuing because of adverse events was higher with inhaled insulin plus insulin glargine (29 [9%]) than with biaspart insulin (12 [4%]; ), mainly as a result of treatment-emergent adverse events affecting the respiratory tract, which accounted for 19 (58%) discontinuations on inhaled insulin plus insulin glargine. The most common respiratory event leading to discontinuation in patients on inhaled insulin plus insulin glargine was cough (6 [2%]). Hyperglycaemia led to two discontinuations from inhaled insulin plus insulin glargine and none from biaspart insulin, whereas hypoglycaemia led to no discontinuations from inhaled insulin plus insulin glargine and three from biaspart insulin. Of patients randomly allocated to treatment, four (1%) on inhaled insulin plus insulin glargine died (haemorrhagic stroke, myocardial infarction, sepsis, and worsening ischaemic heart disease), compared with one (<1%) on biaspart insulin (cardiac arrest). No deaths were judged to be related to the study drug in either group.  

Bottom line:

    Most likely the label for Afrezza will restrict patients with lung issues from taking Afrezza. A good 1-3% may quit Afrezza due to cough issues. The benefits outweigh the risks.

PS

the article states "* A study drug-related adverse event is defined as an adverse event that is caused by a study medication.". All the events shown are study drug-related.

On cough, the article says "In the safety population, 103 patients (32%) treated with inhaled insulin plus insulin glargine reported cough compared with 14 (4%) receiving biaspart insulin. 142 events of cough were reported in patients on inhaled insulin plus insulin glargine, and most were characterised as intermittent (91 [64%]) or as a single defined episode (48 [34%]). Furthermore, most of these cough events occurred within 10 min of insulin inhalation (109 [77%]) and were non-productive (127 [89%]), and most coughing episodes were reported during the first week of treatment (41 [29%]) and declined to about two (1%) per week by week 6."

Another point

"Some patients had more than one event; preferred terms are summarised as per the Medical Dictionary for Regulatory Activities (version 7.1) and are independent of one another, so patients can be listed in more than one category. †The total number of cough episodes in the adverse event database was different from the total number of cough episodes in the cough database because the cough case report form page recorded every episode of cough in a given day to allow for the analysis of frequency, whereas the adverse event page recorded only a single event of cough for a given date."

Much ado about nothing – Mannkind’s seaside financing, PDUFA & partnership

There has been a lot of misunderstanding both on main street and analyst community regarding Mannkind’s seaside financing and partnership. I’m giving my 2 cents to help clarify some of these.

#	The misinformed	The correct interpretation
1	The seaside severely dilutes the existing shareholders	Nothing could be further from the truth: a) Seaside financing is spread over 26 periods, and takes advantage of the rising stock price (as news of partnership, approval and sales come in) b) Seaside financing could be terminated any time; if Mannkind gets sufficient cash, the deal can be ended. c) Even if both the seaside deal and Bank of America convertibles are executed at $6.5, the dilution is around 24%. d) Cash from these financings will cover all cash burn and Mannkind is in a better position to negotiate the deal with the partner.
2	FDA is having second thoughts	a) The simple fact is that FDA has not asked for new trials. b) There is a clear path to approval.
3	Partners are dragging their feet	Mannkind’s management was so close to signing a partner last time. This time, the management is keeping a tight lid on the talks. What has changed? In fact, the uncertainties have been removed this time.
4	Afrezza is another Exubera	This has been beaten to a pulp, Again 1) Afrezza has different kinetics 2) Afrezza has significant performance advantages compared to RAA and even compared to lantus for early Type 2 3) The registration studies have not demonstrated superiority of Afrezza, as FDA looks at a drug from a different angle. When Humalog was approved (it was way expensive compared to RHI), the only advantage it had was that it didn’t have to be injected an hour before a meal. 4. Multiple market surveys done by independent companies attest to Afrezza's potential