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STOCK SPOTLIGHT

MannKind is seeking approval for diabetes inhaler system by spring

Drug developer MannKind is trying to revolutionize the treatment of diabetes with Afrezza, an inhaled form of insulin powder. It would eliminate the need for most injections.

By Ronald D. White

7:54 PM PST, December 8, 2013

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MannKind Corp. in Valencia is attempting to revolutionize the treatment of Type 1 and Type 2 diabetes with its first product: an inhaled form of insulin powder called Afrezza that would eliminate the need for most injections.

The company hopes to get federal approval for the Afrezza inhaler system by spring. The company's future and that of its 246 employees are riding on that goal.

The dream of an inhaled form of insulin treatment dates from the 1920s, when doctors and researchers worried that diabetes patients wouldn't want to subject themselves to regular injections.

Pharmaceutical giant Pfizer Inc. tried in 2006 to market its version but gave up about a year later after sales failed to meet expectations.

But MannKind investors are betting that the founder and guiding force, billionaire Alfred E. Mann, may have a good chance to succeed — even at age 88.

Mann is an aerospace and biomedical entrepreneur who founded 17 companies over six decades. As chairman and chief executive, Mann owns 40% of MannKind and hasn't been stingy with his funds when the company has needed infusions of cash.

Mann's former companies have developed solar cells for spacecraft, cardiac pacemakers for heart patients, insulin pumps for diabetics and cochlear implants for the deaf. Mann also helped back the company that created the world's first bionic eye for the blind.

To bolster MannKind in 2001, he rolled together two of his firms — CTL Immunotherapies Corp. and AlleCure Corp. — with a third, the Pharmaceutical Discovery Co. He then moved MannKind's headquarters from Sylmar to AlleCure's offices in Valencia.

MannKind went public in July 2004, raising $91.8 million.

The latest

After completing phase-three clinical trials, the company is at a crucial juncture. In late October, the Food and Drug Administration said it had received MannKind's new drug application for Afrezza.

As a powder that is inhaled, Afrezza would eliminate the need for most insulin injections. The drug-device combination product consists of Afrezza inhalation powder in a single-use dose cartridge.

The FDA told the company in January 2011 that it needed to see more proof of efficacy and safety of the powder using an improved version of the inhaler.

"The FDA asked for two new studies to be done, one in Type 1 and one in Type 2," diabetes, Matthew Pfeffer, the company's finance chief, told investors in a conference call Wednesday.

Mann appears confident Afrezza will succeed. "The clinical trial program has been extremely extensive and has already shown important, better benefits with Afrezza," he told a group of Wall Street investors recently.

Accomplishments

Past efforts at creating insulin inhalers have been hampered by bulky devices and difficulty in getting the correct dose of insulin.

One delivery system, developed by a rival, was so big that an analyst joked that it would be sure to ruin any first date and wreck the chances of a second if it were pulled out and used.

MannKind said it has solved both problems by developing more reliable dosing and by making an unobtrusive inhaler.

The doses are delivered through a small inhaler that removes some of the stigma attached to using such a device in public, giving customers what Pfeffer called a "whistle-sized" inhaler that could be hidden in a user's palm.

Challenges

MannKind isn't generating much revenue as it goes through the research and development stages with Afrezza. That worries some observers.

Although getting FDA approval is certainly at the top of the company's list of challenges, it's not the only one.

Wall Street analysts have said repeatedly that MannKind also would need a partner to help it market, sell and deliver the product. Analysts and investors are hoping that partner would be a large, established pharmaceutical company.

MannKind officials said that they are actively considering partnerships but aren't divulging much else.

"We are very much involved in the process right now, and we have retained an advisor to help us with the process to manage it more effectively," Pfeffer said.

Analyst views

Analysts are mixed on whether to recommend the stock to investors.

Piper Jaffray analyst Joshua E. Schimmer talked about 2014 being "an exciting year" for MannKind.

The SmallCap Network of investment analysts said: "It's been a long and dramatic journey for Afrezza.... But there's a light at the end of the tunnel."

But Zacks Investment Research said the company was too dependent on Afrezza, warning that "any setback related to the diabetes candidate will be catastrophic."

Of nine analysts who follow MannKind, one rated the stock as a strong buy. Four others said investors should consider buying it. Three more, including Piper Jaffray, recommended holding the stock. One, Zacks, recommended selling the stock.

ron.white@latimes.com