Post by mannmade on Jul 14, 2015 13:11:52 GMT -5
seekingalpha.com/article/3325015-mankinds-afrezza-an-expensive-failure?auth_param=21f01:1aqajpt:ef05e42df6b2e1eb4e31511586278b1b
Mankind's Afrezza: An Expensive Failure
Mankind (NASDAQ:MNKD) and its partner, Sanofi (NYSE:SNY), have developed a new inhaled mealtime insulin. It was FDA approved on June 27, 2014, and is already being prescribed by doctors to patients with diabetes. Since it is a mealtime insulin, it is fast in acting and also wears off quickly. The purpose of Afrezza is to supplement needles with an inhaled powder and to quickly lower glucose levels by co-administration with long-term insulin medications. Afrezza's unique attributes are what limits it and will prevent it from being the blockbuster shareholders believe it to be.
Afrezza is supposed to replace pills and needles used to prevent high glucose levels during meals. The reason people may switch to Afrezza from their usual medications is because there is no needle; it acts fast and wears off quickly. Mankind claims on the Afrezza website that the inhaled insulin is "rapid acting." Some of the bulls on Mankind will claim that Afrezza is faster acting than traditional insulin, but that is because an important distinction is rarely made. It is true that Afrezza is faster acting than long-term insulin and faster than other mealtime insulin. This means that people do not have to wait so long before eating their meals. But people never mention numbers. The truth is that Afrezza takes 12-15 minutes to begin working, while traditional injections require 20-30 minutes. This difference is not so big. People will not change their medication to cut down a 15-minute wait. There are many life threatening risks to switching or taking new medications. The Afrezza website purposely does not mention specific speed because they do not want to mislead people; Afrezza is not better than injections because of reaction speed.
When it comes to needles, Mankind believes that Afrezza is more attractive, and it is. People who are diagnosed with type two diabetes are much more willing to take an inhaled insulin over injections. No body wants to start sticking needles into their bodies every day. To people with type one diabetes, who have been taking injections their entire life, Afrezza is not a big deal because they are used to their methods. For newly diagnosed adults with type two diabetes Afrezza is a welcome gift. Although inhaled insulin is more attractive than needles, is it more attractive than pills? Afrezza has to compete with insulin pills and there is no reason to use one or the other. Another factor that is a problem is that most newly diagnosed patients are first perscribed once a day basal insulin injections. Only patients in more advanced stages of diabetes need mealtime insulin. Before patients even get there, doctors are already prescribing different medications, diets, and fitness regimens to counteract the advancement. Therefore Afrezza is for advanced stage diabetics, which doctors are making every effort to counteract, which limits Afrezza's patient base.
The very thing that makes Afrezza unique is a drawback. Afrezza has a very limited patient base because it is inhaled. Many patients can not use this medication because they need to have healthy lungs. Another even more serious drawback is that Afrezza can cause people to lose lung function. This is why after it is prescribed, patients are required to have their breathing monitored for up to 6 months to make sure no damage is caused. Though I will concede that there are side effects with every medication, but most medications don't require a patient's breathing to be tracked for six months in case of damage.
There is a difference between type one and type two diabetes and it makes a huge difference in who uses Afrezza. People with type one diabetes are more likely to use Afrezza because they are tired of all the injections they have used over the years. This is unlikely though because as mentioned before, there is a risk involved with changing medications especially when you have those that work fine. Afrezza's largest patient base will be those with type two diabetes because they do not have a set regimen or they do not want to use injections. A 2012 census declared that 29.1 million Americans have diabetes. Only 1.25 million of these people have type one diabetes. Some doctors say that patients with type one diabetes are most likely going to be the people who use Afrezza. This is a pretty small market for a drug that is supposed to be a blockbuster. On the other hand, other doctors say Afrezza was made for people with type two diabetes who do not want to deal with needles. The only problem with this is that smokers are 30%-40% more likely to be diagnosed with type two diabetes than non-smokers. Many patients with type two diabetes are not allowed to use Afrezza. Earlier I mentioned that smokers are forbidden from using Afrezza. This is probably because instead of being absorbed it will get stuck in a smoker's lungs due to the side effects of smoking. The reason many people have diabetes is because of smoking. A study on women showed that for every non-smoker woman diagnosed with type two diabetes, 1.42 women who smoke 25 or more cigarettes a day were also diagnosed. This means that ~59% of women with diabetes smoked or still do smoke 25 or more cigarettes a day. The numbers for men are even higher since 20.5% of American adult males smoke compared to 15.3% American adult women. This means that out of ~29 million patients diagnosed with type two diabetes, at least ~17 million patients are smokers. This is being conservative. This leaves ~12 million Americans who might be allowed to use Afrezza. If you want to say that European sales will be better, than you might want to think again. Europeans are the biggest smokers and drinkers in the world. Out of 900 million Europeans 15 years and older, 27% smoke cigarettes according to the World Health Organization.
After considering who is able to take Afrezza, one must consider the other factors that will get a patient to make the switch from his other medications. There are people who will be willing to take Afrezza. There are doctors who will recommend it. The question is, will it be significant enough to at least meet the high expectations?
Sanofi has been marketing a once a day injection insulin called Latnus, which has netted the company close to $7.4 billion since its release is 2000. It is one of the most widely used insulin products in the world. This past year the patent ran out and now generics are flying off the shelves everywhere. The only way to compete now is to make a better version. This came in the form of Toujeo, a longer lasting once a day injection with a slower insulin release that stays stable for 24 hours and can stay in a patient's system for up to 36 hours.Then Novo Nordisk (NYSE:NVO) made its own version called Flextouch. Both Toujeo and Flextouch are similar in efficacy and even look a like. These medication also by the way cannot be used with other insulin medications. Therefore to use Afrezza a patient would have to abandon the most widely used insulin in the world to find a new insulin brand and then also pay for Afrezza. There are two points to be made here. The first is generic competition is a fear for Mankind and that Mankind's partnership with Sanofi was never focused on Afrezza.
Many articles have been written about Afrezza being the same as Pfizer's (NYSE:PFE) Exubera, the first inhaled insulin that was pulled from the market a year after being released. Just check Mankind's Seeking Alpha page and you will find numerous articles comparing them; there are positive and negative ones. The fact is that if Pfizer can make inhaled insulin in 2006 and then Mankind can make inhaled insulin in 2014 than anyone can make it. I do not see a real patent here. If Afrezza starts doing well in the markets, you can be sure that Novo Nordisk will have a generic circulating through Europe that same year.
It is strange that Sanofi would partner up with Mankind if it could possibly take away from Toujeo sales. The reason Sanofi partnered with Mankind was probably to use it as a safety net. What if Afrezza was truly superior to Toujeo and inhaled meal time insulin started flooding the market? Then people would abandon Sanofi's medication because the two are not compatible. Now it is more clear that Afrezza will not do well in the market. Is it really more practical to inhale Afrezza three times a day than to inject yourself with Toujeo once every 24+ hours? Not at all. Toujeo is the clear winner here and Sanofi can now proceed with advancing its basal insulin products.
Quick Recap:
The reason meal time insulin is important is because glucose levels are higher during meals. Therefore some people supplement their insulin medications with Afrezza or other meal time insulin. Most type two diabetes patients do not need this unless they are in advanced stages. Also glucose levels can be managed with exercise and diet. Afrezza is also very limited because smokers are not able to use it and many diabetes patients are heavy smokers. Lastly single injection insulin is slowly released throughout the day so high glucose levels during meals will gradually lower as more insulin is slowly released by the medication injected that morning.
Is Afrezza effective? Yes. Will it make its way into he market? It already has. Will it be profitable? It's possible. Will it meet expectations? No way.
