AFREZZA WILL SUCCEED
1. AFREZZA WORKS AND WORKS WONDERFULLY
We know that Afrezza works and works wonderfully based on:
1.1 growing body of positive user
reviews (and
here);
1.2 growing body of medical journal and magazine
reports and coverage;
1.3 the various
tests conducted by users like Matt B. demonstrating how Afrezza works and how great it is working; and
1.4
comments and experiences of Afrezza prescribing physicians (also see
posts by docfrezza on this).
2. WHY AFREZZA RAMP UP HAS BEEN SLOW
2.1 There have been many discussions on this subject.
Insurance (formulary placement and prior authorization), spirometry test, and pricing were generally reorganized roadblocks. jpg also mentioned prescription guideline as another roadblock.
2.2 I think this Afrezza user also made some insightful
comments on this subject:
People with diabetes tend to be skeptical... For good reason... They've been the target of countless "miracle cures" "diets" and snake oils of all kinds for many years. They're also people who learned a very rigid way of thinking about how insulin works and how it must be dosed. When your life, day in and day out depends on thinking within a rigid box, it becomes very hard to think outside it for many people. It didn't help that the fda added additional warnings, and more strict prescribing guidelines, against the recommendations of its expert committee, which raised some alarm that it might be dangerous, although there was no evidence of this... The fda had blew it with a lot of drugs in not too distant past so is very very cautious in covering their a$$ nowadays. Also bear in mind that most people with diabetes don't even know about it yet.
It's a wonderful treatment, but it's not the only treatment. Other insulin are still effective, so the urgent "must have it" phenomenon that investors were counting on didn't materialize (this isn't viagra)--- it' will take a while to catch on. I will keep telling anyone who wants to listen how well it has worked for me. I think over time it will become more and more mainstream...
I think the overall "internet sensationalism" of afrezza has also probably made some people more skeptical about it than they otherwise would be too--- wanting to not get involved when it seems like a lot of hype.
My main concern at this point is that if it doesn't become a commercial success 1) it'd be a terrible shame, because it would not have the opportunity to tremendously improve the quality of life of millions of people, And 2) mostly, it won't be available to me.
Those two reasons are why I'll keep preaching about how awesome it is...
2.3 Additionally, personally, I think there is one more reason that our ramp up has been slow. I think at this moment, a small core group of prescribers have been writing most of the weekly prescriptions. These earlier adopters of Afrezza are in my view more updated, curious and adventurous group of physicians. We are waiting for other physicians to catch on. While I think eventually the other physicians will catch on, but since overall this group is more conservative, if they start to write Afrezza, they are starting small and slow.
3. AT SOME POINT, AFREZZA’S SALES WILL RAMP UP SUBSTANTIALLY
3.1 Let’s take a look at Minimed’s history and see if we can learn from there.
Pursuant to this
article (published in 1995),
“But a National Institutes of Health study published in September, 1993, in the New England Journal of Medicine found that tight control of blood sugars such as that achieved by very frequent injections of insulin--say four times a day--or infusion pumps can delay and slow progression of several of the most serious long-term complications of diabetes, such as blindness.
This was a watershed finding for the treatment of diabetes and for MiniMed, which provided the pumps used in the study. "It was a landmark study," said Dr. David Kayne, insulin pump director at the diabetes care center at Encino/Tarzana Regional Medical Center.
Physicians had long speculated that a continuous flow of the hormone insulin is healthier than injections of longer-acting insulin.”
3.2 There could be many such catalysts for Afrezza. A label improvement study, a designation of ultra-rapid insulin (therefore separate itself from the pack of RAAs), the pediatric study (and general adoption of Afrezza by the diabetic kids and their parents), increased awareness brought to public via celebrity endorsement, new advertising, major news piece. See discussion regarding this here.
4. MANNKIND CAN, BY ITSELF (IF NECESSARY), MAKE AFREZZA A SUCCESS
4.1 History shows that Al Mann can do it and has done it, multiple times.
Pursuant to this
article (published in 1995), “MiniMed, which has been selling the insulin pump since 1985, has long had trouble making money, in part due to large amounts spent on research into new systems of diabetes treatment. Yet, we also know that MiniMed was successfully sold to Medtronic in 2001.
Let’s take at a look at what kind of problem MiniMed faced.
Quoting the
article, “it's hard to conceive of a more difficult product to develop and market: The pumps must be virtually flawless because their users' health depends on their reliability. But their sales are complicated by their cost--about $4,000 per pump--doctors' skepticism, and the reluctance of diabetics themselves to change their lifestyles.”
“Granted, MiniMed's annual sales have almost tripled to $36.3 million in 1994 from $12.5 million in 1990, but in 1994, MiniMed lost $900,000, compared to a loss of $1.6 million in 1993. However, in the second quarter ending June 30 of this year, the company reported a profit of $101,000.”
So for Minimed, they started to sell insulin pump in 1985 and in 1990 (five years after launch), their sales were still at $12.5 million. Yet, we know that, in the end, Al succeeded in turning insulin pump into a viable option for diabetics.4.2 So we can see that there isn’t anything that is insurmountable with Afrezza. It just takes time, determination and patience.
4.3 And on the financing side of Mannkind, even though it has not already lined up with $300 million plus cash as I would like to see, the situation is far from what the shorts have claimed to be. Below are some of my conservative and rough estimates on what Mannkind can do on the financing side.
Even if Mannkind uses the rest of the ATM ($37.5 million left as of now) to raise some money at close to the current PPS, they probably needs to sell around 15 or even 20 million shares. That kind of dilution is acceptable. That means, with the ATM proceeds and the Israel proceeds, they can buy two quarters of time.
If they can announce any kind of TS partnership arrangement within the next quarter or so, as Hakan remarked, the PPS will probably go up to some degree. They can then sell some additional shares to raise another $50 million or so (probably by selling another 15 to 20 million shares).
If there is indeed a $25 million milestone for Sanofi insulin certification, that will bridge Mannkind for another quarter. Based on Hakan's remark, there is some type development milestone that could come in either later this year or early 2016.
During this period of time, we probably will have some time period of upward movement of PPS, realistically to $3.5 or higher. Mannkind should take advantage and raise some money. If they can sell another 30 million shares at around $3.5, that will help.
So all these proceeds will be able to support Mannkind for two years, by selling a totally of 78/80 million share. That will bring the total outstanding shares to around 500 million. That's acceptable.
I believe in two years' time, Afrezza will have some sales (conservatively $100 + million a year run rate) that will be able to at least contribute to the bottom-line of Mannkind (if not break even, then reducing the cash burn say by half, so that Mannkind needs an additional $50/60 million a year to support its operation).
Also I believe in two years' time, Sanofi (or another big pharma) will be able to recognize Afrezza's (and the TS technology's) value (as further discussed below).
5. SANOFI HAS NO REASON TO GIVE UP AFREZZA
5.1 If Sanofi, being the partner responsible for all the marketing and sales of Afrezza, has not been informed or impressed with the positive feedbacks from the patients and physicians as I outlined in Item 1 above, I would be surprised.
Additionally, if Matt B's
videos on Lantus, Toujeo and Tresiba are accurate (which I believe are), Sanofi will lose market share of Lantus/Toujeo to Tresiba. So Sanofi will gradually realize that the only thing can save them (on the diabetic drugs front) is Afrezza (that's also the position taken by Keith Markey in their latest analyst report on Mannkind, see copied excerpt below).
5.2 The latest Griffin
report explains the situation as follows:
“Will Sanofi return Afrezza to MannKind? We doubt it. The company has a diabetes franchise in which Lantus is the dominant product and it is facing upcoming competition from biosimilars. The follow-on product, Toujeo, does not appear capable of protecting the franchise from the competition, which will begin in the United States in mid-December 2016 under an agreement between Sanofi and Lilly. As a result, Sanofi recently revised its expectations for its diabetes franchise sales to reflect a steeper decline in Lantus’s market share. Afrezza is an insulin therapy with no peers that should be able eventually to reinvigorate Sanofi’s sales growth. But it will require better support than it’s had thus far. Without Afrezza, Sanofi has little else to offer diabetics in the foreseeable future, in our opinion.”
5.3 The fact that Sanofi chose to use Afrezza in this 500 person
study involving Alirocumab (Efficacy and Safety of Alirocumab Versus Placebo on Top of Maximally Tolerated Lipid Lowering Therapy in Patients With Hypercholesterolemia Who Have Type 1 or Type 2 Diabetes and Are Treated With Insulin) also indicates that Sanofi has long term plan in place for Afrezza.
5.4 The fact that Sanofi is starting to send out direct mail to targeted recipients also indicates that Sanofi is slowly gearing up its marketing efforts on Afrezza. See this
post regarding this.
5.5 As for the 8,000 patient safety study that FDA has mandated, I understand Sanofi’s taking time to negotiate with FDA. I recall reading some books (can’t recall exactly, but most likely, Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients is one of those books), which basically say that the big pharmas always try to delay the post-approval studies. And a lot of times, they delay to start such studies until the patent expires and there is no need to do such studies anymore.
So even though the current deadline for Sanofi to start the 8,000 is by March/April 2016 (if I recall correctly), I wouldn’t be surprised that in March/April 2016, Sanofi successfully negotiates with FDA to postpone such timeline by six months or one year, followed by further postponements.
6. OTHER BIG PHARMAS WILL BE INTERESTED IN AFREZZA AND THE TS TECHNOLOGY.
6.1 Pursuant to this
site and this
site, it appears Novolog will lose its patent in 2017. If that is true, it appears there actually is not such a big conflict between Afrezza and Novo’s RAA business. Given Matt B's
videos demonstrating how well Tresiba + Afrezza works, it won’t surprise us if Novo shows interest in Afrezza at some point.
6.2 Of course, other big pharmas could also be of interest of picking up Afrezza and the TS technology.
If it is not Afrezza, we will also know. 
