MannKind Expands Its Pipeline with the Acquisition of QrumPh

[kite]

www.globenewswire.com/news-release/2020/12/07/2140672/0/en/MannKind-Expands-Its-Pipeline-with-the-Acquisition-of-QrumPharma-Inc.html

Lead investigational product (inhaled clofazimine) designated by the FDA as an orphan drug and qualified infectious disease product

MannKindDecember 07, 2020 09:20 ET
WESTLAKE VILLAGE, Calif., Dec. 07, 2020 (GLOBE NEWSWIRE) -- MannKind Corporation (Nasdaq: MNKD) today announced that it has acquired QrumPharma, Inc., a privately held pharmaceutical company developing inhalation treatments for severe chronic and recurrent pulmonary infections, including Nontuberculous Mycobacterial (NTM) lung disease.

“We have focused on building a stronger pipeline to treat unmet needs for orphan lung diseases, an area where we can leverage our experience and technology to create differentiated therapeutic products,” said Michael Castagna, Chief Executive Officer of MannKind. “This acquisition brings us a lead program that is expected to enter Phase 1 in late 2021. In addition, our combined capabilities have the potential to create a dry powder formulation that will enable patients suffering from NTM to have a much more positive treatment experience. We are also very excited to add the QrumPharma development team to our roster of talent, with their deep expertise of inhaled drug delivery.”

In connection with the acquisition, Thomas Hofmann, M.D., Ph.D. will transition from CEO of QrumPharma to Chief Scientific Officer of MannKind Corporation. Dr. Hofmann has over 20 years of experience in inhaled drug development for cystic fibrosis and anti-infectives, including two FDA-approved drugs. In 2015, Dr. Hofmann was the recipient of the Milton Graub Medical Recognition Award from the Cystic Fibrosis Foundation.

“My team and I are thrilled to be joining forces with the MannKind development team,” said Dr. Thomas Hofmann. “I look forward to leveraging MannKind’s best-in-class technology to bring new therapies to patients with orphan lung diseases.”

NTM lung disease is a serious chronic condition associated with a reduction of lung function and quality of life. It is estimated that 75,000-105,000 people in the U.S. were diagnosed in 2018 and the NTM population is growing 8% per year, with women, senior citizens and people with underlying lung conditions at greater risk. QrumPharma’s lead program (QRM-003) is focused on an inhaled, nebulized formulation of clofazimine, which would provide several clinical advantages over the current solid oral dosage form. The U.S. Food and Drug Administration has designated QRM-003 as both an orphan drug and a qualified infectious disease product (QIDP) for the treatment of pulmonary nontuberculous Mycobacterial infections.

MannKind purchased all of the outstanding capital stock of QrumPharma for consideration consisting of $3.5 million in cash and 3,067,179 shares of MannKind common stock, subject to adjustment for cash on hand, unpaid indebtedness, unpaid transaction expenses, net working capital, and other liabilities of QrumPharma. In addition, the selling stockholders of QrumPharma will be entitled to contingent payments in the event that products based on QrumPharma’s intellectual property generate net sales that exceed specified thresholds.

Locust Walk served as an advisor to MannKind.

[cretin11]

Initial market reaction seems positive.

We have a new Chief Scientific Officer.

[LongMNKD]

Phase 1 by end of 2021 still a long ways off

Hope this is the catalyst to push us above 3.20

[MnkdWASmyRtrmntPlan]

Wow, this was unexpected.

This is not as fast to the marketplace as I would have hoped, but it could be great for MNKD long term ... IF they can get it to market reasonably quickly.  If not, it could just be another huge distraction, which MNKD really doesn't need right now.

UT has been a saviour to MNKD because they have brought us multiple desperately needed $12.5m payments.  But in the end, MNKD will only collect royalties (which, don't get me wrong, are wonderful, because they are collected with feet on the desk - i.e., money for nothin). But, by owning this company, they will be performing the entire corporate responsibilities of marketing, sales, distribution, etc., like with Afrezza. So, although they do collect ALL the profits, they also have to perform ALL the corporate work. Perhaps Qrum have some personnel with experience in these other corporate facets and some plans already drawn up, which might help some, but I kinda doubt that.  It seems that this will create another HUGE amount of work, which is the opposite of what an already cash-strapped company like MNKD needs right now.  What MNKD needs right now is to get to breakeven so they can stop diluting the damn company already.  Then, they can start building for the future.

So, we diluted about another $9m in stock (3m shares x $3/share) to buy this company, then have to stretch MNKD even thinner to get another start-up business going. IMHO, we could have really used another partnership like UT than another product like Afrezza.  If this product takes anywhere near as long as Afrezza to get to market, then this is the last thing we need right now.

[hellodolly]

Great news and exciting to see the depth of the pipeline growing. Wall Street likes looking forward and this adds depth to the pipeline. As far as Orphan Drug Designation, don't forget the incentives:

Financial
Tax incentives: The Orphan Drug Tax Credit (ODTC): sponsors who have orphan designation can collect tax credits for expenses incurred after the issue of the designation for U.S. clinical trial costs on the orphan indication.
User fee: Orphan drugs and products are exempt from the usual new drug application or “user” fees charged by the FDA.

Regulatory benefits
The Rare Pediatric Disease Priority Review Voucher Program says that a sponsor who receives approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. A fast-track procedure for the FDA to evaluate registration files. Eligible to receive regulatory assistance and guidance from the FDA in the design of an overall drug development plan.

Clinical development benefits
Orphan Product Grant program provides funding for clinical testing of new therapies to treat and/or diagnose rare diseases that lower the cost of drug development.

Marketing benefits
Market exclusivity: 7 years of marketing exclusivity upon FDA approval of a specific orphan drug for a specific indication. The market exclusivity for a new chemical entity in the United States is typically five years after FDA approval; for orphan drugs, the FDA will not award market authorization for a generic drug for the rare disease for seven years post-approval; this incentive is superior to traditional IP patent protection and a substantial incentive.
The availability of orphan drugs to patients before being granted marketing approval is possible. In some cases of compassionate use, a Treatment Investigational New Drug (t-IND) may be obtained under specific conditions such as
The drug must be intended for the treatment of a serious or life-threatening disease. No alternative drug or treatment must be available. The product must be in the process of clinical trials and an active phase of marketing approval.


Medical device
The Humanitarian Use Device (HUD) program designates medical devices that are intended to benefit patients in the treatment or diagnosis of a disease or condition that affects or is manifested in not more than 8,000 individuals in the United States per year as eligible for Humanitarian Device Exemption. [1][2][3]

Source: credevo.com/articles/2019/12/15/rare-diseases-regulatory-incentives-for-development-of-orphan-drugs-us-europe/

[matt]

I have said for a long time that MNKD needs to have its own drugs in the pipeline so this is a very positive step.  TS delivery is an interesting technology but the economic benefits of any new drug accrue mainly to the holder of the patent on the drug, not the delivery system.  There have been many companies founded to commercialize drug delivery technologies that never made it because despite all the research the spoils went to the owner of the molecule, not the delivery system.  That is why TS delivery for generic drugs is never going to be a big profit driver and why all those compound remain unpartnered.

There are more companies out there with novel drugs that have potential for treating respiratory diseases, and most of the past market leaders in this segment (notably Pfizer) have abandoned respiratory drugs altogether.  This may be the change of focus that this company has needed for a long time.

[uvula]

How many employees does Qrum have? Mnkd spent $3M plus $9M in stock plus a bunch of extra salaries.

If Matt likes it I guess I'm okay with it too.

[Clement]

from their website (for kicks and giggles):

pronounced 'quorum pharma'

The name Qrumpharma is derived from quorum sensing, in which colonies of bacteria can work together to be more successful than an individual.

[figglebird]

Reprtedly 18 - I would guess 4-6 come over

Dec 7, 2020 10:44:39 GMT -5 uvula said:

How many employees does Qrum have? Mnkd spent $3M plus $9M in stock plus a bunch of extra salaries.

If Matt likes it I guess I'm okay with it too.

[cjm18]

Minimal dilution to acquire human capital (expertise) and expand the pipeline. 3m out of 235m outstanding is nothing. Great long run. Neutral short run. What’s the sales of this drug?

[longliner]

I still believe MNKD was the Liquidia offer. Someone wants consolidation in the inhaled space.

[Clement]

more kicks and giggles from their website:

www.doylestownbikeworks.com/team/news/our-sponsor-qrumpharma-works-to-tackle-covid-19
QrumPharma Works to Tackle Covid-19

[mango]

Fantastic news!

We will now have two new pipeline candidates initiating Phase 1 next year.

👉 Inhaled Sumatriptan Phase 1 in 2021 for acute migraine

👉 Inhaled clofazimine Phase 1 in 2021 for Nontuberculous Mycobacterial lung disease

On top of that, we have acquired a Chief Scientific Officer: Thomas Hofmann, M.D., Ph.D. Dr. Hofmann has over 20 years of experience in inhaled drug development for cystic fibrosis and anti-infectives, including two FDA-approved drugs. In 2015, Dr. Hofmann was the recipient of the Milton Graub Medical Recognition Award from the Cystic Fibrosis Foundation.

[MnkdWASmyRtrmntPlan]

Dec 7, 2020 10:26:24 GMT -5 matt said:

I have said for a long time that MNKD needs to have its own drugs in the pipeline so this is a very positive step.  TS delivery is an interesting technology but the economic benefits of any new drug accrue mainly to the holder of the patent on the drug, not the delivery system.  There have been many companies founded to commercialize drug delivery technologies that never made it because despite all the research the spoils went to the owner of the molecule, not the delivery system.  That is why TS delivery for generic drugs is never going to be a big profit driver and why all those compound remain unpartnered.

There are more companies out there with novel drugs that have potential for treating respiratory diseases, and most of the past market leaders in this segment (notably Pfizer) have abandoned respiratory drugs altogether.  This may be the change of focus that this company has needed for a long time.

Matt, I do agree that it is a good long-term asset for MNKD, and I also believe what you say about MNKD having its own drug is all true.  But, my take is that there is a time and a place for everything, and if this product takes another 20 years to get to market like Afrezza did, then this is not what I want to see right now. 

18 more MNKD employees. Oh boy, more mouths to feed.

I still believe MNKD is a great stock that someday will take off overnight like Jack's beanstalk, but at this point in time, it is still a seedling that has yet to pop it's head above ground ... after 20 years!!!  If I were 20 or 30 years old right now, this purchase would not phase me.  Even if it does delay MNKD another 20 years from becoming profitable, in the end, as a stockholder, I will become wealthy beyond my dreams when MNKD finally grabs that golden goose and runs away with it.  But again, we are now talking about that happening "in another 20 years (i.e., after 40 years)".   Breakeven just seems too elusive for MNKD.

Unfortunately, I am not 20, or even 30, or even 50.  My horizon is not that long.  I want to see breakeven NOW!!! (well, ok, SOON!!!), which is why I would have rather seen another partner like UT (cha-ching = $$$ NOW!!!) than another Afrezza (chug-a-long = more dilutions and delays!!!). 

If you keep adding and adding to your pipe line, eventually, it may become a pipe dream.

It's almost noon, and MNKD shareprice is almost exactly at Friday's close ($2.95), so apparently the market doesn't see this as a great boon, either.

I think that the only thing that will really make MNKD's SP take off now is reaching breakeven. 

[rfogel]

I would be more interested if Mannkind had shown any movement at all in its current "pipeline." That just seems to sit there day in day out with no progress whatsoever. Moreover, developing this new drug presumably will take hundreds of millions of dollars. Do they really want to take on that responsibility at this point?