The next few days will be very crucial for MannKind (MNKD). The US Food and Drug Administration (FDA) is expected to decide on the company’s lead product candidate Afresa, which is an inhaled insulin for the treatment of type I and type II diabetes, within January 16, 2010.
We believe that Afresa offers distinct advantages over traditional needle-based insulin therapy, which currently dominates the market. The key advantage is the convenience of an inhaled delivery. However, the path to approval is not easy since many large pharmaceutical companies in the past have made unsuccessful attempts to bring such a product into the market.
Back in 2006, Pfizer’s (PFE) Exubera was the first FDA approved inhaled insulin which later on failed miserably. Pfizer witnessed another major blow with the occurrence of lung cancer in some patients who were taking Exubera. While the number of cases was too few to conclusively link Exubera to the development of lung cancer, the results still cast a looming shadow on the future of other inhaled insulin candidates like Afresa.
Following the failure of Exubera, other players like Novo Nordisk (NVO) and Eli Lilly (LLY) discontinued their inhaled insulin programs, citing the lack of confidence regarding prospects for an inhaled insulin product.
With no product on the market and no revenues, we are very concerned about MannKind’s financial position. Additionally, any request from the FDA for further clinical trials on Afresa would result in a significant increase in the company’s operating expenses. In such a situation, the company might have to tap the financial markets for additional funds.
Meanwhile, although MannKind was seeking a suitable partner for Afresa, in October the company stated that it will not be able to enter into a deal before the FDA decision. We have a Neutral recommendation on the stock.
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