MannKind – Is the ride about to come to an end?
Regular readers of Diabetic Investor know that we’re not that optimistic that Afresa®, the inhaled insulin from MannKind (NASDAQ:MNKD), will succeed in the marketplace. While we have outlined the numerous reasons why we feel this way it appears the investment community remains convinced that Afresa will succeed were so many others have failed. MannKind’s stock has been on meteoric rise since the beginning of March, rising almost 250%.
While it’s true that Afresa is now awaiting approval at the FDA and there is a niche market for inhaled insulin, it does not fully explain the reason for such optimism. The company still has no partner a critical element if Afresa has any chance at all at being successful in the marketplace. The company insists they are talking with several potential partners but they have saying this for some time and still no deal appears imminent.
It’s also difficult to gauge just who would partner with MannKind. Pfizer (NYSE:PFE), Novo Nordisk (NYSE:NVO), Sanofi-Aventis (NYSE:SNY), Lilly (NYSE:LLY) and Abbott (NYSE:ABT) have all abandoned their respective inhaled insulin projects.
What makes this run in MannKind so strange is investors are not only ignoring just how difficult it will be for MannKind even if they find a partner but the realities of the marketplace. From its inception the target market for inhaled insulin has been type 2 patients who were not under good control. This is the same market targeted by liraglutide from Novo Nordisk and Byetta LAR from Amylin (NASDAQ:AMLN). While these two therapies are both delivered by injection they offer several advantages over Afresa. Besides producing solid control both liraglutide and Byetta LAR have the additional benefit of weight lose and low incidence of hypoglycemia.
Given that all three drugs are now before the FDA awaiting approval its possible all three could come to the market within months of each other. This would present an interesting set of options for physicians and their type 2 patients. Of the three, Diabetic Investor believes Byetta LAR stands the best chance to gain the lion share of prescriptions.
The fact is Afresa cannot succeed by targeting type 1 patients already on insulin therapy. While it’s possible a small percentage would convert from insulin injections to inhaled Diabetic Investor sees this as a very small percentage. MannKind will insist that Afresa is actually better than its injectable competitors and there is some clinical data to support such a claim. However, Diabetic Investor does not see this performance advantage being large enough to get physicians to switch existing patients.
This is not to say that Afresa will fail as Exubera did, rather the market conditions have changed and not in Afresa’s favor.
Still investors seem to have short memories and continue to believe that inhaled insulin can be a major success. This hardly surprises Diabetic Investor as investors often ignore the realities of the market when it comes to inhaled insulin. They did so when Exubera came to the market and are doing so again with MannKind. As the old saying goes fool me once shame on you, fool me twice shame on me.