MannKind's CFO Pfeffer Upbeat on Afresa's Future

Last Updated Nov 11, 2009 5:16 PM EST

MannKind Corp.'s announcement last month that no partnership deal was in the offing for its inhaled-insulin product Afresa this year has lead to widespread talk that this novel, investigational prandial drug therapy for diabetes care was dead-on-arrival. In a conference call with me on Wednesday, chief financial officer Matt Pfeffer vocally dispelled that notion and stressed that although uncertainty regarding Afresa's approval had made it difficult to secure a partnership deal pre-FDA review, the company remained optimistic on Afresa's commercial viability.

MannKind is seeking FDA approval of Afresa for the treatment of adults with type 1 or type 2-diabetes. Afresa is a drug-device combination product, consisting an ultra, rapid-acting insulin [an inhalation powder formulation] pre-metered into single unit dose cartridges and an inhaler.

BNET: Matt, could you provide color on any recent discussions held with the FDA -- and what is the status of Afresa's assigned Prescription Drug User Fee Act (PDUFA) date of January 16, 2010?
Matt Pfeffer: The FDA review seems to be proceeding routinely, and we haven't seen anything to give us concern that there might be a delay. We are cautiously optimistic that they [FDA] will meet or beat the PDUFA date, but of course there is no guarantee.

BNET: Given the known health events associated with use of Pfizer's [discontinued] inhaled-insulin product Exubera, such as higher risk of hypoglycemia and lung cancer in former smokers, there is recurring talk that Afresa is unlikely to get FDA approval without first being reviewed by the Endocrine and Metabolic Advisory Committee. Care to comment?
MP: We are not currently on the docket to appear before an FDA advisory committee scheduled to meet on December 15 -- and there is not currently another advisory meeting scheduled before our PDUFA date. Therefore, we do not anticipate a special Afresa advisory panel will need to be convened. But this is not unusual, as most products are [approved] without an advisory panel.

BNET: Afresa is a powder formulation that is inhaled into the lungs. These days, labeling guidelines are usually not enough to ensure that healthcare providers are properly monitoring benefit-risk scale to patients: can you provide an update an lung function safety issues and is a post-marketing Risk Evaluation and Mitigation Strategy (REMS) request by the FDA to be expected with Afresa approval?
MP: It would be very unusual for a REMS program not to be required, so we are expecting one and, in fact, have proposed one to the FDA. We do not expect this to be a major burden, as these days this can usually be accomplished electronically. We look forward to working with the FDA to assure the safety of patients.

BNET: Matt, my understanding is that a REMS protocol is usually finalized prior to the last meet with the FDA. Does this mean that MannKind already is aware of the details of the surveillance endpoints the FDA is looking for -- if so, could you elaborate?
MP: This is usually done just prior to approval, so it would be premature to comment with details prior to then.

BNET: Some confusion exists as to the length of time patients were prospectively followed while on Afresa therapy. In my opinion, this likely has to do with folks mixing up data points from different studies. Could you specifically address lung function safety concerns with long-term usage of Afresa?
MP: Our largest study was for two years, so we have thousands of patients with 2-year safety data and many beyond that, up to 4-5 years.

BNET: Could you paint in more detailed strokes the efficacy-safety profile of patients followed for at least four years?
MP: More than two hundred adult patients with type-2 diabetes who had completed past, randomized, phase 2 trials continued open-label therapy with Afresa as their exclusive insulin -- with the predefined study endpoints being changes in lung function and glycemic control. And, over four years, changes in lung functions were small and mean A1C levels remained steady [slight decline at end of year-four].

BNET: What about the cough I keep hearing about with Afresa-treated patients?
MP: Many of the patients did develop a mild cough, though it usually resolved on its own within a few days -- and less than three percent [in latest trial data presented] had to discontinue therapy because of it [cough].

BNET: Assuming a thumbs-up from the FDA come January, when would you expect to launch Afresa?
MP: Although we still are guiding to an early 2010 approval of Afresa, I caution that FDA approval of the drug does not mean we can go to market the next day or week: product labeling, marketing materials, other regulatory processes could add more than six months or more to launch.

BNET: Is it premature to talk about the next-generation device, called "DreamBoat," and is it possible that this inhaler device could be launched simultaneously with the approval of Afresa?
MP: If I may correct you -- Dreamboat is the designated internal name of the project. This smaller inhaler is intended to improve upon the current Afresa "MedTone Inhaler" in terms of size/convenience and [importantly] would be less costly and more reliable.

BNET: Could you elaborate?
MP: Less costly both in the actual cost of the inhaler (it is smaller and has many fewer parts) and in the cost of the ingredients used in the product -- in that it would require about a third less units of insulin to get the same plasma concentration currently required of each dose with MedTone. This is primarily because the new device does a better job of delivering the drug to the deep lung where it has effect, rather than wasting the powder by leaving it in the cartridge or getting it stuck in the [patient's] throat.

BNET: What's the anticipated launch date for the next-generation device? Also, would an amended NDA [with Afresa] be necessary?
MP: We are hopeful that one bioequivalence study will be enough to satisfy the FDA, as the requirements are fairly standardized and straightforward. We expect we could file a supplemental NDA -- assuming no new delays with Afresa -- in January. That said, we are still awaiting necessary feedback on our proposed study design.

BNET: To clarify -- does MannKind plan to launch with the Afresa MedTone device -- then switch patients over to Dreamboat -- or whatever you end up calling Afresa's successor?
MP: Our strong preference -- and intention -- is to wait and launch with the new "Dreamboat" inhaler. If things go as we hope, this will not cause any appreciable delay, and we believe that the advantages to the new inhaler are sufficient to justify this.

BNET: With the advent of injectable pens and smaller needle gauge sizes, some health care administrators would say that it is not such a big impediment anymore [compliance] for diabetics to inject insulin. As such, where does Afresa, or its successor device, stand with managed care -- relative to say injectable insulins -- especially when so many so many cheap versions of insulin (short & long-acting) are readable available for type I diabetics and generic sulfonylureas and metformin are around as first-line agents for type II diabetics?
MP: Unlike previously inhaled insulins, our product does not require a significant price premium over existing rapid acting analogs. This will be important in making sure it is reimbursable. Plus, when you add in our safety and other advantages, we think we have a compelling case to make to reimbursement agencies. In fact, we have met with quite a large number of them in preliminary discussions and walked away confident that we would start out in tier-3, with a move into tier 2 [most likely] pretty quickly for most payers.

BNET: Rumor has it that MannKind has resumed talks with Big Pharma. Would any deal include distribution terms for both Afresa and its successor inhaler? In addition, would MannKind be receptive to any overtures of a buyout from a deeper-pocketed company -- say an Eli Lilly or Pfizer -- looking to expand its own diabetes franchise?
MP: I cannot comment on specific deal discussions, but it is safe to assume that any such deal would include the new inhaler. And while I cannot identify particular parties we have spoken to, the vast majority have been global pharma companies.

MannKind's detractors argue that even if Afresa wins FDA approval, incessant doubts with Pfizer's inhaled-insulin Exubera is proof-positive that chronic administration of insulin through the lungs will limit the drug's prospects. However, as rebutted by Matt Pfeffer in my interview, the PDUFA is progressing according to plan, with no indication from the FDA of any extraordinary issues about its efficacy and safety. In my opinion, the debate on Afresa's commercial success would likely be resolved, too, upon the announcement of a definitive partnership deal [given the likely marketing reach of its partner].

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  • David Phillips

    David Phillips has more than 25 years' experience on Wall Street, first as a financial consultant and then as an equity analyst for several investment banking firms. He sifts through SEC filings for his blog The 10Q Detective, looking for financial statement soft spots, such as depreciation policies, warranty reserves and restructuring charges. He has been widely quoted in outlets such as BusinessWeek, The International Herald Tribune, Investor's Business Daily, Kiplinger's Personal Finance, and The Wall Street Journal.

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