There was some good news for MannKind Corporation’s (MNKD) lead pipeline candidate, Afrezza, when the US Food and Drug Administration (FDA) rescheduled its end-of-review meeting with the company to discuss the candidate.
A few days ago, the FDA cancelled the meeting, originally scheduled for April 15, 2011, fearing a potential federal government shutdown in the US. The US regulatory body will now hold the meeting on May 4, 2011.
Mannkind has been looking forward to a meeting with the FDA ever since the US regulatory body issued a complete response letter (CRL) in January 2011, for Afrezza. Afrezza is an inhaled insulin for adults suffering from type I or type II diabetes.
Afrezza utilizes MannKind’s proprietary dry powder Technosphere formulation of insulin. It is inhaled deep into the lungs using the company’s MedTone inhaler, a small, easy-to-use pulmonary delivery system.
The latest CRL is the second CRL issued for Afrezza. The first CRL was issued in March 2010 due to insufficiency of data. MannKind resubmitted the new drug application (NDA) in July 2010, following the review of which the second CRL was issued.
While issuing the second CRL, the US regulatory authority asked for additional information besides asking MannKind to conduct more trials. The FDA asked MannKind to conduct two phase III trials with the next-generation inhaler. One trial should be earmarked for patients with type I diabetes and the other for type II diabetes patients.
Furthermore, at least one trial should include a treatment group using the MedTone inhaler. Additionally, the FDA said that there should be a minimum of twelve weeks of relatively stable insulin dosing at the end of the treatment period, post adequate titration of Afrezza.
The regulatory body has also asked for additional information on the performance characteristics, usage, handling, shipment and storage of Afrezza. An update of safety information on Afrezza as well as information on labeling changes has also been sought. MannKind intends to seek clarifications on the matters raised in the CRL in the end-of-review meeting next month.
The requirement of additional trials will push up MannKind’s research and development expenses. Management believes that the current cash balance will last till the end of 2011. Consequently, it will have to tap the capital market to raise additional resources.
We note that MannKind has been taking steps to trim its costs, following the receipt of the second CRL. MannKind slashed its work force by approximately 41% and cancelled its insulin supply deal with Merck’s (MRK) subsidiary, Organon.
Our Recommendation
We prefer to remain on the sidelines until there is more visibility on the approval process for Afrezza. Consequently, we have a Neutral stance on MannKind in the long-run. Our long-term view on the stock is supported by the Zacks #3 Rank (Hold rating) carried by MannKind in the short-run.
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