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MannKind soars after Afrezza scores a big win, but commercial questions linger

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MannKind's Afrezza is delivered through a proprietary inhaler called Dreamboat.--Courtesy of MannKind

A group of FDA advisers voted resoundingly in favor of MannKind's ($MNKD) inhaled insulin, and the company's shares more than doubled after hours as its long-delayed drug makes a third run at an approval.

The FDA's Endocrinologic and Metabolic Drugs Advisory Committee found in favor of MannKind's Afrezza in both its proposed indications, voting 13-1 with one abstention that its benefits outweighed its risks in Type 1 diabetes and splitting 14-0-1 on the same question for Type 2 patients. The FDA is not beholden to follow the recommendations of its advisers, though it often does, and the agency has set an April 15 decision date for the drug.

The panel's vote presents a rosier view of Afrezza than that of FDA reviewers, who expressed concern over the drug's risks of bronchial spasms and declining lung function and cast doubts on its efficacy in Type 1 diabetes in briefing documents released last week. MannKind's shares--which were halted during the panel discussion--had slipped nearly 23% since then.

Agency advisers noted the same safety risks as FDA staff and recommended postapproval studies to keep tabs on Afrezza's risk-benefit profile, but only one member believed the dangers outweighed the drug's potential benefits.

MannKind's shares rose by more than 130% in evening trading after the Tuesday vote, reaching a four-year high of around $9.50 before settling down to open at $7.76 on Wednesday.

MannKind CEO Al Mann

Now, assuming MannKind's panel success translates into FDA approval, the biotech's next hurdle will be a commercial one. The Afrezza thesis is that the dry-powder formulation of insulin can contend with market-leading injectables from the likes of Novo Nordisk ($NVO) and Eli Lilly ($LLY), and while MannKind's drug proved noninferior to traditional diabetes treatment in its late-stage trials, many analysts wonder whether it shows enough promise to unseat well-tolerated, commercially established mainstays.

Underscoring those commercial concerns, analysts for JP Morgan kept MannKind on a neutral rating even as investors pushed the stock to new highs..

Peak sales estimates for the drug vary widely, and EvaluatePharma pegs the consensus at roughly $600 million a year by 2018.

No matter what Afrezza's market potential turns out to be, the positive panel vote is an indisputable victory for founder Al Mann and his biotech, which has spent upward of $2 billion on the now-7-year effort to get the drug approved, enduring rejections in 2010 and 2011.

In a statement, Mann said he and his company "appreciate the thoroughness" of the panel's review.

"We look forward to working with the FDA as they complete their evaluation of Afrezza," Mann said. "Diabetes is a major health problem in the United States, and we are committed to bring Afrezza to the many patients who might benefit from this novel product."

- read MannKind's release

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