MannKind Gets Ready to Exhale By MLV & Co. March 26
Mar 30, 2014 17:34:25 GMT -5
StevieRay and babaoriley like this
Post by indigodaisy on Mar 30, 2014 17:34:25 GMT -5
I found this article on Barron's and it was before the BD came. Sorry if someone posted already, however I don't recall seeing it. Pay close attention to the third to last paragraph. It eased my mind a bit.
MannKind Gets Ready to Exhale by MLV & Co. March 26
Next Tuesday, April 1, MannKind's (ticker: MNKD) Afrezza will go before a Food and Drug Administration Advisory Committee, with the briefing documents expected to come out Friday.
A read of the FDA's briefing doc will be critical in assessing the Agency's initial view of Afrezza [inhalable insulin therapy] a priori, and the market's interpretation will result in stock volatility. From a 30,000-foot view, despite controversies around the clinical data and longer term safety, we assign a 90% chance of an overall positive vote on safety and efficacy (i.e., approval). Clearly, a positive Advisory Committee meeting (AdCom) would represent a significant derisking event, and we'd expect the stock to move higher, especially given a current 39% short interest.
The first of three potential binary events comes Friday. Friday's release of briefing documents will likely be a significant catalyst for the stock. The shares will trade freely, and we're expecting volatility; as for the actual AdCom next week, in keeping with what we've seen in the past, we'd expect trading in the stock to be halted for the entire day (assumes that the AdCom concludes near or at the market's close).
We are confident in a positive AdCom outcome. This is based on: 1) our current comfort with the totality of data from the two sets of Phase III trials run by MannKind for Afrezza; 2) prior precedent with the positive September 2005 AdCom for Pfizer's (PFE) Exubera, the first and only inhaled insulin to go before an AdCom; and 3) an overall view that the main reason the AdCom is being held in the first place is simple conservatism by new division head at FDA, given the high-profile nature of Afrezza.
Recall that in our previous note dated Jan. 10, we reviewed the September 2005 AdCom for Exubera. We believe the FDA will be focused on similar topics (sufficient evidence of safety and efficacy), but also in particular for Afrezza, the comparability of the older and newer inhaler devices.
Given our history covering AdComs since 2001, we'd like to remind that more often than not, the briefing docs read much harsher than the AdComs turn out to actually be. We don't have statistics, but generally speaking, our experience suggests that briefing docs often can have a much bigger bark than bite. Recall it's the job of the FDA reviewer to be critical and to identify potential red flags for the AdCom members to review.
We had a chance to speak with management on Wednesday, which confirmed that it had not yet been notified by FDA on any decision to extend the current April 15 Prescription Drug User Fee Act (PDUFA) date. Given the proximity, we believe it's highly likely the FDA will extend the PDUFA by three months, but our view is that given the near four-year delay that MannKind has experienced following the first two complete response letters (CRLs) for Afrezza, another few months won't really matter. Ultimately, how smoothly (or not) the AdCom goes will likely play a large role.
Our current price target is based on an Afrezza-driven discounted cash flow taken out to 2025, using a 12% discount rate and 5% terminal growth.
-- Graig C. Suvannavejh
MannKind Gets Ready to Exhale by MLV & Co. March 26
Next Tuesday, April 1, MannKind's (ticker: MNKD) Afrezza will go before a Food and Drug Administration Advisory Committee, with the briefing documents expected to come out Friday.
A read of the FDA's briefing doc will be critical in assessing the Agency's initial view of Afrezza [inhalable insulin therapy] a priori, and the market's interpretation will result in stock volatility. From a 30,000-foot view, despite controversies around the clinical data and longer term safety, we assign a 90% chance of an overall positive vote on safety and efficacy (i.e., approval). Clearly, a positive Advisory Committee meeting (AdCom) would represent a significant derisking event, and we'd expect the stock to move higher, especially given a current 39% short interest.
The first of three potential binary events comes Friday. Friday's release of briefing documents will likely be a significant catalyst for the stock. The shares will trade freely, and we're expecting volatility; as for the actual AdCom next week, in keeping with what we've seen in the past, we'd expect trading in the stock to be halted for the entire day (assumes that the AdCom concludes near or at the market's close).
We are confident in a positive AdCom outcome. This is based on: 1) our current comfort with the totality of data from the two sets of Phase III trials run by MannKind for Afrezza; 2) prior precedent with the positive September 2005 AdCom for Pfizer's (PFE) Exubera, the first and only inhaled insulin to go before an AdCom; and 3) an overall view that the main reason the AdCom is being held in the first place is simple conservatism by new division head at FDA, given the high-profile nature of Afrezza.
Recall that in our previous note dated Jan. 10, we reviewed the September 2005 AdCom for Exubera. We believe the FDA will be focused on similar topics (sufficient evidence of safety and efficacy), but also in particular for Afrezza, the comparability of the older and newer inhaler devices.
Given our history covering AdComs since 2001, we'd like to remind that more often than not, the briefing docs read much harsher than the AdComs turn out to actually be. We don't have statistics, but generally speaking, our experience suggests that briefing docs often can have a much bigger bark than bite. Recall it's the job of the FDA reviewer to be critical and to identify potential red flags for the AdCom members to review.
We had a chance to speak with management on Wednesday, which confirmed that it had not yet been notified by FDA on any decision to extend the current April 15 Prescription Drug User Fee Act (PDUFA) date. Given the proximity, we believe it's highly likely the FDA will extend the PDUFA by three months, but our view is that given the near four-year delay that MannKind has experienced following the first two complete response letters (CRLs) for Afrezza, another few months won't really matter. Ultimately, how smoothly (or not) the AdCom goes will likely play a large role.
Our current price target is based on an Afrezza-driven discounted cash flow taken out to 2025, using a 12% discount rate and 5% terminal growth.
-- Graig C. Suvannavejh
