There are Those Who Still Believe in Afrezza:
MannKind’s (MNKD) single product, Afrezza, was launched into the market during the last week of January 2015. Now, 5.3 years later, the product is generating the same level, or less, in total weekly prescription as seen in 2015.
For the week of October 23, 2015, the weekly prescription data reflected 421 new prescriptions. 206 refills for a cumulative total of 627 filled prescriptions. The weekly revenue created for this week was approximately $371,000.00
During the week ending May 1, 2020, the cumulative prescriptions filled were 649, or 3.5% greater than the accomplishment from 5 years of effort. But more telling is the realization when you look at the revenue generated in this cited week of 2015 ($371,000.00) and compare it to the May 1st data, the 3.5% growth in the actual number of prescriptions filled and the revenue generated was $1,190,000.00. This simply means the price of Afrezza has more than tripled in price. Even with this massive price increase being piled on the patients, other companies have been reducing the price of their insulin products. Yet, there are those who think they deserve to be making massive profits by owning MannKind’s stock.
Stone Age vs. Cutting Edge:
Each time a major drug company mentions a new drug in their pipeline, the feeding frenzy begins for those who wish to promote MannKind’s stock. The latest is Amgen (NASDAQ:AMGN) being ready to adopt the Technosphere platform. In the past, it was Bill Gates, Microsoft, and nearly every named pharmaceutical company that was ready for signing up for using the Technosphere platform.
This is not going to happen — in my opinion. The following discussion hopefully makes my point.
“With a new clearance from the FDA, smart inhaler developer Propeller Health is bringing its connected platform to AstraZeneca’s Symbicort to help digitize the treatment of asthma and chronic obstructive pulmonary disease (COPD).
Using small, electronic devices built to fit each company’s various inhalers and their generic equivalents, Propeller’s cloud-based system tracks medication usage through a smartphone app, which users can then use to help paint a clearer picture of disease control for their clinicians.
Alongside its previous collaborations with respiratory drug makers GlaxoSmithKline, Novartis, Orion and Boehringer Ingelheim, Propeller’s latest addition expands the reach to about 90% of inhaled medicines for asthma and COPD in the U.S.
Our partnership with AstraZeneca will give respiratory patients a tool to help manage their condition and increase their medication adherence, a critical factor in keeping people out of the hospital,” Propeller co-founder and CEO David Van Sickle.”
Propeller has a partnership with AptarGroup (ATR), the premier designer and manufacturer of inhalers. On the other hand, MannKind has been promising their new BluHale for more than a decade, which they tell you it will be used for training patients how to inhale their Afrezza doses. That’s it! Training a patient how to inhale. In their 4Q 2019 report, they spent considerable time promoting the plans and merits of their long promised BluHale. Now, in the latest Q1 2020 report, they seem to have forgotten they have BluHale in their plans for advancing the success of their marketing efforts.
When Retention Doesn’t Mean Retention:
“Couple things I will share with you before I go into details is, we have learned that patients dropped off Afrezza for two reasons, one was because of cost and two was because of efficacy. And there are other reasons they dropped out, but the two predominant reasons are based on these two factors.”
Investors have a public admission about the cost and efficacy of Afrezza being a problem. Now, 5+ years of trying to market the product, there are those who can’t understand why insurance companies aren’t willing to cover the cost for Afrezza.
“One thing I’ll share with you as we continue to improve formulary access, we will see less drop out to the cost, but the efficacy part is important one that you will hear from why we are talking about today. We need to continue to reinforce appropriate titration early on in treatment and as we solve that we will continue to see increase in retention of our patients. Since we have launched, we believe that continues to get better than it has been in the history.”
Four years later, MannKind is still trying to solve the titration issue with no solution in sight. Adding three times the normal dosage will not solve the problem. This only further identifies they have a problem they can’t resolve. So, why would insurance companies be willing to fund such a product?
Promises Made, Promises Broken
Hakan Edstrom, the CEO of MannKind, promised way back in 2015, when he promoted the idea MannKind was planning on entering the epinephrine market with their inhaled version for this life saving drug. Now, we know the FDA had major issues with their epinephrine plans and the lack of faith in their proper dosing requirements.
Investors can now look at the recent 1Q 2020 conference call results and note the following new shortcoming being experienced with the Technosphere platform:
“In terms of developing treatments for COVID-19, we evaluated four opportunities that I talked about recently. At this point, we decided not pursuing two of them, one because it’s likely an OTC product, that we won’t be able to move forward in our current capacity or FDA regulations. And the second one is, because it would probably 10 to 15 required cartridges on inhalation powder, three to four times a day, which just is not a feasible solution.
There are two other products that we remain under investigation. I’ll continue to watch the marketplace as this evolves and see whether or not we move them forward. As we said previously, we are not going to invest a lot of shareholder money on COVID-19. But we will seek outside partners and opportunities to fund opportunity – fund these opportunities we are happy to dedicate our personnel and our infrastructure around these.”
Afrezza has been on the market for more than 5 years; after spending $3 billion in developing the product, they have yet to figure out how to successfully dose the product on any consistent basis. For years, MannKind had promoted their plans to create a new epinephrine product only to find out last year the FDA had informed them there were issues with the inability for Technosphere delivering the life saving drug on any consistent basis. End of that effort.
Jump to 2020 and out of the blue sky, MannKind promotes they would be entering the COVID-19 market. Only now investors find out one of their candidates would need up to 15 cartridges of their DPI drug, three or four times a day. Once again, promises are foiled by the inability to dose their DPI with needed consistence. Leading MannKind to state – “which just is not a feasible solution.”
Spin and Then Give the Investors the Bad News:
“Thanks, Mike and good afternoon, very pleased to review our first quarter 2020 financial results which show another quarter of accelerating Afrezza net revenue, increasing Afrezza gross margin and improving cash burn. I will be discussing select financial highlights and MD&A contained in our 10-Q, which is filed with the SEC this afternoon.
Let us start with looking at revenues for the first quarter of 2020. Afrezza net revenue was a record $8 million versus $5.1 million for the corresponding first quarter of 2019. The 58% increase, was generated by volume growth from underlying the Afrezza prescriptions demand up 27% a favorable mix of cartridges, which I’ll dive into in the next slide.”
The CFO uses all these superlatives for their outstanding performance – “very pleased,” “accelerating Afrezza net revenue,” “increasing Afrezza gross margins,” “improving operating cash” – and then suddenly he tells investors, “urge you to read the condensed consolidated financial statements.”
First, the CFO extols the fantastic results and then directs the investors to dig out, on their own, the critical information embedded in their SEC filed consolidated financial statement. Why not freely and properly share critical information with shareholders in conjunction with all the good stuff they are willing to openly talk about?
This is the information MannKind wanted their investors digging out from the SEC filed financial information:
“Under the MidCap Credit Facility, an advance of $25.0 million will be available to us until June 30, 2021, subject to the satisfaction of certain milestone conditions associated with Afrezza net revenue and certain milestone conditions related to our collaboration with United Therapeutics. As described in Part 1, Item 2 of this Quarterly Report, it is unlikely that the milestone conditions for funding Tranche 3 related to Afrezza trailing net revenue will be achieved. In addition, the COVID-19 pandemic is expected to negatively impact Tre-t development activities being conducted by United Therapeutics. These factors make it unlikely that we will be able to satisfy the milestone conditions necessary for us to draw the remaining advance under the MidCap Credit Facility.”
MannKind has great legal counsel. But it appears MidCap and United Therapeutics (NASDAQ:UTHR) have better legal teams drawing up their legal and binding contracts. At least for contracts involving MannKind.
MannKind is facing many potential devastating issues in the near future. MidCap and United Therapeutics have dumped a full load of bad news on them and their investors.
When it Rains, it Pours on MannKind Shareholders:
MannKind’s shareholders must face the reality for what lies ahead for them. The earliest binary event is happening within the next three weeks. On July 1st, 2020, United Therapeutics is scheduled to launch Remunity, a treprostinil based drug that provides PAH patients with the ultimate delivery system. Investors should not forget. Al Mann, the creator of MannKind, made his fortune based on his MiniMed continuous delivery system. Only Mann then turns around and squanders a large portion of his assets with the Technosphere platform and Afrezza.
Al Mann and the current CEO have publicly admitted there is a major issue related to the inability to dose a patient with the Technosphere platform’s DPI drug. Now, more than 5 years into marketing Afrezza, their potential solution is a product name BluHale. A product that has been in development for more than a decade and is only designed to train a patient how to inhale properly.
If a patient can’t get the proper dosage based on the Technosphere platform, logic would indicate the same issue would arise with Tre-t being dosed by the same delivery system.
The following is the excitement demonstrated by United Therapeutics CEO related to the pending launch of their state-of-the-art continuous pump delivery for Remunity.
“We are super ‘pumped’ about launching Remunity by Independence Day,” said Dr. Martine Rothblatt, Chairman and Chief Executive Officer of United Therapeutics. “Remunity will provide more free time to live their beautiful lives. The system provides a wider array of notifications, alerts, and alarms than current pumps. Most amazing, the acoustic volume sensing technology and solid-state actuator of Remunity system enables it to control Remodulin flow rates without the use of a motor. To me, because of so few moving parts, it is like the Tesla of parenteral pumps!”
Considering that apparently United Therapeutics has decided upon dragging their feet on expediting the clinical trials for Tre-t, note what is the drug being dosed by the new Remunity continuous pump system, Remodulin, a major trespostinil product currently generating revenue for United. Investors must remember that a dry powder product cannot be delivered by a pump system. What would be the incentive for United bearing the cost for creating the most expensive version of trespostinil – Tre-t. Especially, when it was revealed during the 4Q 2019 financial report conference call that Tre-t had a major potential disaster on their hands because of the lack of stability issue. The FDA has a history of not approving a drug having stability issues for the ingredients.
And then there are the results for the MannKind funded trial to confirm the time in range that a diabetic has control of his glycemic levels. These result were published in the American Diabetes Associations June journal.
Summary: The study failed to achieve its primary endpoint of significant increase of time spent in glycemic control range.
The second MannKind funded trial was designed to compare inhaled insulin (Afrezza) with regular injectable insulin. This also was reported in the June Journal of the American Diabetes Association.
Results: It takes upwards of 2.5 times as much inhaled insulin to provide the comparable results found with injectable insulin.
Two MannKind-funded clinical trials and they both failed to deliver the primary data they were seeking.
- Afrezza has been marketed for 5+ years and weekly prescriptions are the same as generated back in 2015.
- MannKind has promised developing other drugs through their pipeline only to discover this hasn’t happened. Now, the potential Tre-t product has shown a major risk factor that will impact FDA approval.
- The Receptor Life Science partnership has turned into a complete flop.
- The Sanofi (NASDAQ:SNY) partnership was a disaster.
- The current United Therapeutics partnership has encountered major delays and uncertainties.
- The Phase I Tre-t clinical trial is up in the air, when it should have been finished in April.
- MannKind is now revealing they don’t expect milestone payments they desperately need for survival.
- Now, MannKind has confirmed that the claim that Afrezza keeps a user longer in the proper level of glycemic control is not the case.
- Furthermore, MannKind has confirmed what I have been stating for more than 5 years. Afrezza is the most expensive insulin product on the market and users must use more insulin for the same benefit they can get from regular injectable insulin.
It is my sincere hope and desire that by some means Afrezza can remain available for those patients who need options in treating their medical condition. The same applies for Tre-t. Any new drug that is FDA approved, patients needing options should have it available.
I don’t have one penny invested in MannKind’s stock – that being long or short.
Good luck with your future investing decisions!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.