What makes Afrezza® Exempt?

What makes Afrezza® Exempt?

This past Friday MannKind (NASDAQ:MNKD) held their third quarter earnings call and as has become standard for the company there was plenty of bluster but little real news. The real question for MannKind is will Afrezza, which is awaiting FDA approval, somehow escape the ultra-conservative nature of the agency and receive an actual approval and not a complete response letter asking for even more data.

While the company did their best to address this issue during the call, their comments left Diabetic Investor wondering if they are actually paying attention to what’s going on in the real.  Perhaps their response would have been different had the news regarding Biodel (NASDAQ:BIOD), which came out yesterday, had been released before the call. Unlike Bydureon which is a long acting GLP-1, Biodel’s product Linjeta™ is a rapid acting insulin just like Afrezza, the main difference being Linjeta is injected and Afrezza is inhaled.

Even if we assume that Afrezza’s data is more robust than the data submitted for Linjeta, Diabetic Investor still believes this doesn’t mean that much. Amylin (NASDAQ:AMLN) submitted volumes of data for Bydureon and still the FDA asked for even more data. Diabetic Investor also believes that Afrezza faces greater hurdles than Linjeta based on the fact it’s inhaled rather than injected, this one fact alone brings with it a whole different set of issues. Afrezza not only has to clear the normal hurdles, whatever normal is these days, but has the additional set of issues surrounding its delivery system and method of action.

Considering the FDA is actively looking for reasons not to approve new diabetes treatments it’s difficult to imagine Afrezza being treated differently than Bydureon or Linjeta. As noted yesterday FDA approval risk has increased a 100 fold for diabetes drugs. Even before this rash of complete response letters Afrezza’s approval was by no means a foregone conclusion, Diabetic Investor has long believed the odds of approval were no better than 50/50 and sees these odds getting worse as more complete response letters are issued.

This new FDA environment is not only slowing the pace of new drug approvals (Diabetic Investor has seen glaciers move faster), it is also slowing investment activity. We can only imagine what the much hyped partnership discussions supposedly being held by MannKind must be like. As we noted previously whoever partners with MannKind would face enormous hurdles commercializing and marketing Afrezza. Given that no partnership has been announced Diabetic Investor suspects potential partners did their due diligence basically taking a wait and see attitude. Considering where things stand today, these potential partners must be wondering, like the rest of us, if we’ll ever see any new drugs approved for diabetes in the next century.

This lack of movement in the investment arena is not limited just to drug companies looking for money or partners but expands into device companies as well. Never know to be shy to being with, venture funds, private equity firms and potential partners, are placing greater demands on these companies who desperately need the money. As everyone knows the days of easy money are gone and the ultra-conservative FDA has given potential investors and/or partners even more leverage.

The truly sad part here is that without the money, many of these smaller companies cannot survive. While some deserve this fate, others do have innovative products which when fully developed would help patients better manage their diabetes; products that would actually be commercially viable too.

In just a few short months Diabetic Investor will be attending the JP Morgan Healthcare Conference in San Francisco, now home of the World Series Champion Giants. JP Morgan is the premier investment conference for health care companies and servers as a pretty good indicator of how the investment community views the prospects of companies both large and small. Always looking forward to this great conference Diabetic Investor is anxious to learn how these professional investors view this new world order at the FDA.

What’s becoming obvious here, to everyone but the FDA that is, is that the diabetes world already facing a host of challenges must deal with an uncertain regulatory environment which can change from moment to moment. If there is one thing that investors hate more than anything else it is uncertainty, they can deal with the uncertainties of drug and device development but have no way of dealing with an FDA that changes the rules of the game while the game is being played. The bottom line here is as investment grinds to a halt so does the pace of innovation. As Adam Smith noted; “Money, says the proverb, makes money. When you get a little, it is often easy to get more. The great difficulty is to get that little.”