ViewPoints: Focus switches to commercial outlook for MannKind's inhaled insulin Afrezza

It would appear that the determination of Alfred Mann – the founder and CEO of MannKind – has paid off. At the third time of asking, the company appears likely to gain FDA approval for its inhaled insulin Afrezza for the treatment of both type 1 and type 2 diabetes, following an overwhelmingly positive recommendation from an Advisory Committee panel on Tuesday.

The PDUFA date for Afrezza is April 15 and although a standard three- month delay is possible – given its close proximity to the AdCom meeting and the requirement to discuss labelling and other matters – approval now looks increasingly likely.

Given its previous rejections – not to mention a cautious view from the FDA in documents published ahead of the AdCom – few predicted that MannKind would achieve such an overwhelming success having presented their argument for approval to AdCom panellists on Tuesday.

Predicting the commercial success for Afrezza may be even more difficult. Pfizer's commercialised – but subsequently withdrawn – inhaled insulin Exubera casts a shadow over proceedings, while the injectable short acting insulins that Afrezza will compete against are heavily entrenched in the market.

Insight, Analysis & Opinion

Assuming the FDA follows the recommendation of Tuesday's AdCom and approves Afrezza, MannKind could do much worse than replicate the strategy that served it so well in convincing panelists when it looks to market the product. Two key points of argument were made; that Afrezza offers a meaningful alternative to injectable short acting insulins and that it provides a hypoglycaemic benefit.

In its pre-AdCom notes, the FDA provided a more sceptical view of Afrezza's hypoglycaemic benefit, suggesting it could be tied to the drug's modest efficacy versus injectable insulins in type 1 diabetes patients. In turn, panellists (and analysts in post-AdCom investor notes) agree that the efficacy profile of Afrezza is likely to prioritise its use among certain subgroups of diabetic patients; those "with needle phobia, limited dexterity, decreased eyesight and patients that may need insulin between meals" noted Bank of America Merrill Lynch's Steve Byrne. Among the type 2 diabetes population patients likely to benefit from Afrezza include those resistant or adverse to current insulins and older patients, adds Byrne. MannKind's product may also provide an easier conversion from patients who are switching from oral products to insulin.

Given the competitiveness of the diabetes market – with sales and marketing efforts noticeably intensifying due to an increased number of brands and payers taking a more proactive stance to control costs – a marketing partnership with a larger player is viewed as being integral to the future success of Afrezza.

Discussions with a number of potential candidates are reportedly ongoing, according to MannKind, but most analysts expect confirmation of FDA approval – likely to be either later this month or later this year – to act as the catalyst for a deal to be struck.

"For some time we have been more concerned about the commercial potential of Afrezza than whether or not the product could be approved" wrote JP Morgan's Cory Kasimov in a note to investors. Despite being recommended for approval on Tuesday, Kasimov suggests that the panel's discussions – specifically that Afrezza is not as effective as existing insulin therapies and may only be used in certain patient subgroups – may have actually curtailed its commercial opportunity.

Both the broader commercial opportunity for Afrezza and MannKind's ability to negotiate a favourable marketing deal will be dictated heavily by the label the drug receives should it gain FDA approval. In this context, the FDA's known stance on Afrezza's hyperglycaemic profile (it debated any advantage in its pre-AdCom briefing notes) and lingering concerns regarding any increased lung cancer risk tied to long term usage are relevant.

MannKind shares were up 80 percent when trading opened on Wednesday but the company's next catalyst is almost certain to either be neutral (a standard three-month delay) or negative (a complete response letter) remarks Ian Estepan, a senior portfolio manager at the Spectra Group.

Ruling out a full approval by mid- April, Estepan told FirstWord that it is highly unlikely that the FDA will rush through the labelling for a product that they deem to be inferior to existing products. While approval now appears more likely, a third rejection cannot be ruled out entirely, adds Estepan, who cites the FDA's decision not to approve Tresiba (despite a positive AdCom vote) as a precedent where the regulator's decision was driven by a combination of issue with the submitted product and the availability of existing therapies.

FirstWord will be polling US-based endocrinologists next week to ascertain a physician view on how Afrezza is likely to be used should it gain FDA approval.

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