Early yesterday MannKind's Phase III data for Afrezza looked like a big hit with investors. Its share price soared on the headline news that the inhaled insulin--which boasts an easier administration designed to replace injected insulin--had posted positive Phase III data in another late-stage attempt at making a good impression on regulators. But after a second look at the trial results, analysts' enthusiasm--and MannKind's share price--waned.
By the end of the trading session MannKind's shares, which had swelled considerably in the leadup to a widely expected positive outcome, were up only a bit more than 10%. And by mid-morning today, even that modest gain had been erased.
Biotech shares rise and fall for all sorts of reasons, of course, including a sell-the-news trigger that can deflate a stock price even on promising outcomes. But a number of analysts commented that after MannKind's late afternoon review session there were some troubling questions that could continue to plague MannKind ($MNKD), which has already counted two FDA rejections for the therapy.
At the top of the charts you'll find some problems with how Afrezza compared to Novo Nordisk's ($NVO) NovoLog in reducing A1c, a key efficacy measure when you're proposing a new standard of care for a mass market, as well as a weak claim on hypoglycemia that could disrupt a marketing campaign. There was also a weight gain that could be hard to explain to payers.
Cowen's Simos Simeonidis had this take:
"We identified four areas of weakness in the data: 1) In AFFINITY 1, Dreamboat did worse than Novolog in % of patients achieving less than 7% or 6.5% A1c; the company did not discuss the exact numbers. 2) In addition, treatment with Dreamboat did not result in statistically significant improvement over Novolog in incidence of severe hypoglycemia. 3) In AFFINITY 2, there was a mean weight change difference against Afrezza of 3.5 pounds. 4) Finally, the mean fasting blood glucose level decrease in the Afrezza group was higher than in the placebo group, but was not statistically significant."
But Simeonidis doesn't expect any of this to prevent an approval.
"All in, however, we see these results more as issues that could be brought up against Afrezza during detailing from a competitor's standpoint, as opposed to issues that could keep Afrezza from being approved."
The problems that surfaced in Phase III, though, could have a big impact on MannKind's vow to finding a big partner to pick up the product. After investing $1.5 billion in the development of this drug, Al Mann's biotech is in no shape to commercialize a treatment/device like this to a mass market. And after Pfizer ($PFE), Eli Lilly ($LLY) and Novo Nordisk ($NVO) all dumped their own programs after washing their hands of inhaled insulin, questions about efficacy and safety could come back to haunt MannKind as it tries to keep an old, old promise to lasso a commercial partner.
A big marketing deal with a hefty upfront would go a long way to resolving some of these questions, notes The Motley Fool's Brian Orelli. But…
"If MannKind lands some podunk partner or the deal is completely back-ended with milestones with high sales targets, we can assume that drugmakers are still highly skeptical that there's a market for inhaled insulin."
Once again, longtime MannKind observers can take a seat and see how things develop.
- here's the Motley Fool story