Getting worse not better
Yesterday Adam Feuerstein from TheStreet.com penned an excellent piece entitled “MannKind’s Afrezza Lags Behind Biggest Failure in Inhaled Insulin” which can be read at http://www.thestreet.com/story/13203821/1/mannkinds-afrezza-lags-behind-biggest-failure-in-inhaled-insulin.html?puc=yahoo&cm_ven=YAHOO
Basically what Adam noted was that Afrezza for all its hype and bravado is underperforming the last form of inhaled insulin, Exubera. A product which was one of the biggest and most costly failures for Pfizer (NYSE:PFE).
Well as it turns out things are actually worse than Adam thought as sources inside Sanofi (NYSE:SNY) have noted that there has been 0% growth in Afrezza prescriptions over the past 5 weeks and sales managers and not just sales reps are openly complaining about their inability to sell Afrezza. As one manager told Diabetic Investor; “No one wants this crap”. (We cleaned up this quote just a little)
Frankly Diabetic Investor isn’t surprised by any of this and actually expected things to turn out this way. Perhaps the surprise here is the damage left behind from Exubera. Diabetic Investor anticipated that Afrezza would face comparisons to Exubera but given that Afrezza has a far superior delivery system and is a much better insulin we thought this obstacle could be overcome. Yet it appears that Exubera left a very bad taste in mouths of physicians and this bad experience is hurting Afrezza.
The real question is how long will Sanofi (NYSE:SNY) remain committed to this product? Will they make the same mistake Pfizer did and continually allocate resources until it becomes so obvious this drug is a failure they are left with no choice but to abandon it? Or will they see the handwriting on the wall, which is getting bigger by the day, and cut their losses before Afrezza becomes a sinkhole draining valuable resources which could be allocated elsewhere?
New CEO Olivier Brandicourt has indicated that he will outline a new 5 year strategic plan in November when the company releases their third quarter results. A plan which we assume will outline what’s in store for the company’s struggling diabetes franchise.
Yet based on what Diabetic Investor is hearing we may not have to wait that long to get an indication of where the company is going in diabetes as sources inside the company expect cuts in sales head count as early as next month. Such a move would be the first step towards a complete overhaul of the franchise and overhaul we anticipate will include ending the partnership with MannKind (NASDAQ:MNKD).
The bottom line here is actually pretty simple even with cost cutting Afrezza is not profitable and the company would have to spend millions more even to have a chance at making it profitable. The way we see it the choice is obvious allocate resources to a drug like Toujeo which has a chance to be profitable and say hasta la vista to Afrezza.
Don’t worry this being the wacky world of diabetes Afrezza like the Terminator will be back. The major difference being the Terminator series has been a major money maker while Afrezza is box office flop.
Enjoy the 4th everyone.