Friday, August 23, 2013

Why third time is the charm for MannKind and Afrezza

Disclaimer: I am not a certified analyst, I cannot predict the future, I do not have insider information and no one should ever listen to some random guy on the internet like me. You should always consult a financial adviser, do your own due diligence and never place money into biotech stocks that you cannot afford to lose. Fortunes are made and lost everyday in biotech, play it safe and be smart. I am just a paramedic, my word means nothing. I am Long MNKD, just restarted my position after the big drop. I expect the next few months to be volatile for the stock with technical analysis showing a potential for a further drop into the $4-$4.50 range. If the stock does tumble, I will happily add to my position.

Main thing I would like to point out, Type 2 diabetics account for nearly 90% of diabetics in the US. In 2007 the market for diabetes was listed at $116 billion in direct healthcare costs according to the CDC.

Adam Feuerstein published his much relished short take on $MNKD today via the Biotech Stock Mailbag: Short nip

Here is Adam's take on MannKind if you happen to have missed it.
Adam points out that the Afrezza data shows results are (courtesy of Adam Feurstein and the street):

1. Mediocre.

2. Incomplete.

3. "Positive" if one defines the term only as a drug that technically meets a study's primary endpoints but with data that are neither exciting nor groundbreaking. (See: Mediocre.)

4. Barely approvable, but only if 1) MannKind isn't hiding additional negative data, or 2) FDA doesn't give a crap and simply wants Al Mann to go away. (See: Incomplete.)

5. Insufficient to support MannKind's $1.7 billion market value. (Add in debt, options, warrants and restricted stock, MannKind's enterprise value is a voluminous $2.7 billion.)

Both Afrezza inhalers cause decreased lung function in patients. MannKind says the lower FEV1 is not clinically significant, but of course, this will be a safety issue only settled by FDA and/or an advisory panel. Some 30% of the patients using the Afrezza Dreamboat inhaler reported cough as an adverse event."

I left out some of the material because its a bit verbose but regardless I will still address it in the article.

AFREZZA-the actual results explained
First off Mr. AF (I'm tired of spelling his name) states that the data was mediocre because in the Affinity-1 study of Type 1 diabetics (study 171). Afrezza was numerically inferior to Novolog in terms of A1C reduction, the study's primary endpoint (-0.21% vs. -0.40% A1c reduction)

Lets clear some things up here, the term numeric is not interchangeable with STATISTICALLY SIGNIFICANT. The difference did not exceed the predetermined threshold of 0.40%, thereby establishing non-inferiority between Afrezza-Gen 2 and insulin group.

  • What exactly is this A1C and why is it so important?

Nerd talk (pathophysiology)

As defined by the ADA: Hemoglobin A1c is a measure of the degree to which hemoglobin is glycosylated in erythrocytes (red blood cells) and is expressed as a percentage of total hemoglobin concentration. It reflects the exposure of erythrocytes (red blood cells) to glucose (sugar) in an irreversible and time- and concentration-dependent manner. HbA1C (hemoglobin A1C) levels provide an indication of the average blood glucose concentration during the preceding 2-3 months, incorporating both pre- and postprandial glycemia ( before and after meals).

Analysis of several studies by the ADA has shown a strong correlation between A1c levels and Mean plasma glucose (MPG) of patients. Each 1% change in A1c corresponded to a change in MPG of 35 mg/dl. In type 1 diabetics bedtime and postlunch plasma glucose correlated most strongly with A1C levels.

The American Diabetes Association suggests an A1C of 7%, which is an average glucose level of 154 mg/dL.

A1C captures chronic hyperglycemia better than assessment of fasting blood glucose or 2-hour glucose tolerance test plasma glucose. The measurement of of A1C levels is equivalent to doing an absurd amount (100s to 1000's) of fasting glucose level tests and also captures postprandial glucose peaks. This makes A1c the most reliable measurement out of the three described above.

In 1997 the ADA changed their criteria for diabetes diagnosis and established diabetic glycemic levels by means of their association with retinopathy, the most common and specific complication that occurs with diabetes. Studies showed that retinopathy increased with A1C levels around 6.5%. The results were confirmed in a follow up study with almost 30,000 patients internationally. The study showed that prevalent retinopathy started to increase in the A1C category of 6.5-7.0%. ADA also states that cardiovascular disease is the most frequent chronic complication of diabetes, with incidence rates that are 5 to 10 times higher with microvascular disease.

Postprandial glucose:  post(after)prandial(meal). PPG refers to plasma glucose concentrations after eating. The PPG is determined by carbohydrate absorption, insulin and glucagon secretion, and their coordinated effects on glucose metabolism in the liver and peripheral tissues.

In non diabetics, plasma glucose concentrations peak at approx 1 hour after the start of a meal, typically does not exceed 140 mg/dL (milligrams/deciliter) and return to preprandial (before eating) levels within 3 hours, the absorption of the ingested carbohydrates continues for at least 5 to 6 hours after the meal.

 Since patients with Type 1 diabetes have no endogenous (naturally occurring)  insulin secretion, everything is dependent on the amount, type and route of insulin administration. In general, a measurement of plasma glucose 2 hours after the start of a meal is practical for ADA and generally approximates the peak value in patients with diabetes and provides a reasonable assessment of postparandial hyperglycemia.

Increased postprandial glucose is associated with an increased risk of microvascular disease leading to cardiovascular disease, multi-organ failure and death.

Does targeting postprandial hyperglycemia improve overall glycemic control?

In a study of type 2 diabetic patients with secondary failure of sulfonylurea therapy, Feinglos et al. showed that improvement of postprandial hyperglycemia, using humalog at mealtime in combination with a sulfonylurea, not only reduced 2-h postprandial glucose excursions, but also reduced fasting glucose and A1C levels form 9.0% to 7.1% (p value of less than 0.0001). Subjects in the lispro group also benefited from significantly decreased total cholesterol and improved HDL cholesterol concentrations.

 A1C simply explained

If the explanation above did not help, lets try again. A1C is basically the body shooting a flare in the vast ocean of your body. Its a marker for how well you have been treating your disease and the this little marker can tell your doctor via blood work, how well you have managed your disease.
A1c levels >6.5% you start developing problems seeing and ultimately could end up blind.
Afrezza is also SUPERIOR in the sense that it provides improved postprandial glucose control. Continual use of Afrezza would mitigate, to an extent, the progression of microvascular disease in these patients along with possible decrease in total cholesterol and improved HDL cholesterol concentration.

What do the Afrezza clinical trials mean in regards to this A1c stuff?

Afrezza is a MEALTIME mononumeric insulin with an onset of 12-14 minutes absorbed via the lungs and travels into arterial circulation. Afrezza has a quick onset of actions and a short half life, by the time you are done eating (approx 1 hour) the insulin has done its job and cleared out. Afrezza is not a long acting insulin and does not take the place of regular basal insulin.

Here is a chart to compare different types of insulin:

As you can clearly see Afrezza not only has a quick onset but compared to the other insulin products has a much shorter duration of action. Levemir duration 14-16 hours and Novolog 4-5 hours.
So if any of the nerd talk made sense to you above, it would become quite evident that postprandial glucose levels have a lot to do with A1C levels and considering that Afrezza is a rapid onset mealtime insulin with a short duration of action, it can only do its job. The other reduction in A1c levels has to be attributed to basal insulin use.

In study 171 Afrezza shows statistical non inferiority, however; in Type 2 diabetics in Study 175,
mean A1c levels decreased by 0.82% (from baseline to week 24 of treatment) compared to a decrease of 0.42%. The predefined measure as I stated above was 0.40% and thus the difference between the two groups was a statistically significant p value of less than 0.0001, thereby establishing the SUPERIORITY of Afrezza over the comparator oral-therapy group.

In study 175 (type 2 diabetics), after 24 weeks of treatment, 37.7% of patients in the Afrezza group achieved A1C levels below 7.0% compared to ONLY 19% in the oral-therapy group (Indicating a p value of 0.0005) AND 15.9% of patients in the Afrezza group achieved A1C levels below 6.5% compared to ONLY 4.2% of patients receiving only oral therapy (representing a p value of 0.0021).  So Mr. AF, this is not only NUMERICALLY SIGNIFICANT but IT IS ALSO STATISTICALLY SIGNIFICANT .

  • The second part of Mr. Adam's argument is that the result are incomplete:
    • say it isn't so, a company announced PRELIMINARY Results  and they are not complete. The company has yet to announce the complete data of the phase 3 clinical studies and thus the term preliminary. 

  •  The Third point Mr. Adam raises is that the results are only positive if "a drug technically meets a study's primary endpoints but with data that are neither exciting or groundbreaking"

    • So the company meets its predefined primary endpoints and that is somehow bad. Hmmm let me think about this, the company basically got the results that they hypothesized they would get; but they did not get a pot of gold at the end of the rainbow and also did not spot a leprechaun. So some unexpected miracle did not occur and that is bad?
    • most clinicians that are coming out of school are being taught that they should start their type 2 diabetic patients on insulin earlier on in their treatment regiment to prevent insulin resistance and damage to beta cells and islets of langerhans. 
    • "The latest study of American adults (greater than 20 years of age) with diabetes revealed that ∼37% had A1C concentrations greater than 8%; 14% had concentrations greater than 10%. These findings support the results of a recent, unpublished survey of 100 primary care providers in which ∼58% of respondents indicated that they would not start pharmacological therapy until a patient’s A1C reached 8.0% or higher. This may explain why A1C levels in many patients are often well above the ADA target of less than 7%"

  • So here is a rough estimate of most primary care physicians giving their patients maxed out dosages of Type 2 drugs, which carry a laundry list of side effects like lactic acidosis, congestive heart failure, etc. The physicians do not want to deal with the problems of dosage adjustments, etc and patients don't want to be taking needle shots.
  • The DAWN (Diabetes Attitudes, Wishes, and Needs) Trail showed:

    •  that very few patients felt that taking insulin would help them better control their disease
    • Many patients thought starting insulin meant they had not followed treatment recommendations properly
    • Most clinicians delayed insulin until absolutely necessary
    • Patients perceived that injections are painful, even though perceived pain is much greater than the reality of the pain. Pt surveys shows 20-40% patients report pain with injections.
    • Patients perceived  insulin handling inconvenient because of having to store it in fridge

  • Biphasic insulin has less flexibility and is confusing for the patient and extra work for the doctor. You may not believe this but no all physicians become caretakers due to their inherent altruistic nature, most do the bare minimum (standard of care) until the protocols and guidelines change.
  • Obesity, insulin resistance,  and type 2 diabetes increase the risk for cancer and in fact certain Type 2 drugs also cause Pancreatitis and are being investigated by the FDA for causing pancreatic cancer. (see my previous article with sources posted)
  • So how exactly is a convenient, small little inhaler with adjustable dosages that does not have to be kept in a fridge, not even in the least bit exciting or groundbreaking? This would allow physicians to place their patients on a meal time insulin long before their A1c levels reach 8, at 6.5% these patients are experiencing onset of blindness, do you know the implications of 8%?

    • Mr. Adam's 4th point is that the drug is "barely approvable, but only if 1) MannKind isn't hiding additional negative data, or 2) FDA doesn't give a crap and simply wants Al Mann to go away. (See: Incomplete.) "
      • again I must point to the elephant in the room. The company has only released PRELIMINARY data and seriously you are basically implying that the FDA is like the hot ROCK STAR and AL Mann is some desperate groupie looking for an autograph. There is no way that is plausible scenario. Afrezza has plenty of its own merits to stand upon and that is just pure silliness that you would state that the FDA just wants AL Mann to stop nagging them and would approve the product because of that reason alone.

    • Mr. Adams fifth point i won't get too much into right now, mostly because I am exhausted and I told Adam I would have a rebuttal for him tonight. Adam states that MNKD at $1.7 billion market cap is overvalued. 
      • According to the CDC :
        "The estimated economic cost of diabetes in 2007 was $174 billion. Of this amount, $116 billion was due to direct medical costs and $58 billion due to indirect costs such as lost workdays, restricted activity, and disability due to diabetes. People with diagnosed diabetes incur average expenditures of $11,744 per year, of which $6,649 is attributed to diabetes. People with diagnosed diabetes, on average, have medical expenditures that are approximately 2.3 times higher than what expenditures would be in the absence of diabetes. Approximately $1 of $5 health care dollars in the United States is spent caring for someone with diagnosed diabetes, while approximately $1 of $10 health care dollars is attributed to diabetes."
      • Whats 1% of 116 billion? and these are numbers from 2007. Take a look around, there are a lot more morbidly obese patients and millions more who are borderline diabetic and yet to be diagnosed.
    •  The patients had a transient cough and had no serious pulmonary issue. The Forced Expiratory volume in one second (FEV1) over 24 weeks was an insignificant 0.01 L in mean change.
      • The cough was reported by 30.5% of the Afrezza Gen-2 patients. The cough was predominately dry, intermittent, and usually occurred within 10 minutes of inhalation.
      • The incidence of cough was highest during the first week of the treatment period and diminished quickly thereafter per the PRELIMINARY DATA. 
    • Other positive things Mr. AF left out was:
      •  that on average patients in Study 171 (Type 1 Diabetes) patients LOST an average of 0.39 kg (0.858 lbs) compared to an average gain of 0.93 kg (2.046 lbs). That may not seem like much but that adds up every 24 weeks.
      • Significantly less hypoglycemia in study 171
      • Significant decrease in fasting blood glucose levels (decreased by 25.3 mg/dl) in study 171
      • "The main safety objective of this study was to compare changes in FEV1 (forced expiratory volume in one second) from randomization to week 24 between the AFREZZA-Gen2 and AFREZZA-MedTone groups. Over this period, there was an insignificant difference of 0.01 L in mean change in FEV1 between the two AFREZZA groups (p=0.5364). Over the same 24-week treatment period, the decrease in FEV1 seen in the AFREZZA-Gen2 group was slightly greater than that seen in the aspart group (0.03 L). After cessation of the treatment period, FEV1 values in both AFREZZA groups increased, so that by the follow-up visit at week 28 there were virtually no differences in FEV1 among the three treatment groups"

    It seems to me that Adam left out some key points to push his agenda, doesn't have a complete grasp of what A1c levels mean and Afrezza's role. In type 1 diabetic their basal insulin will play a much larger role in regulating A1c compared to the mealtime insulin. However, in type 2 diabetic patients, whom the PCP's don't place on Insulin until AFTER their A1C levels are ridiculously high (greater than 8%), there is a NUMERICAL and STATISTICAL advantage in using Afrezza. Keep in mind these patient count for nearly 90% of the diabetics in the US. Afrezza will be competing with Type 2 drugs like:
    • Metformin: can only be prescribed to patients with healthy kidneys. It is the safest among the laundry list of Type 2 drugs. Metformin can cause lactic acidosis in patients with impaired liver or kidney function.
    • Januvia- has been linked with an increased risk of pancreatic cancer and pancreatitis 
    • Byetta: The Institute for Safe Medication Practices found that GLP-1 receptor agonists, like Byetta, increase the chance of pancreatic cancer nearly 28 folds. The drugs in the GLP-1 class react to the body by increasing the pancreas’ insulin production as the receiving patient eats. Over time, this interaction will begin to cause asymptomatic pancreatitis, which increases the risk of, or causes, pancreatic cancer.

     This list goes on and on with the risks and side effects of Type 2 drugs and the FDA is finally doing a thorough review of these drugs after hundreds of plaintiffs have filed suit against big pharma. FDA   
    Adam would have you believe that the transient cough with no measurable decrease in pulmonary function along with a potentially serious IMAGINARY side effect, yet to be revealed will lead to Afrezza's failure and rejection by the FDA.

    In the past complete response letter from the FDA, main concerns were the need to evaluate bio-equivalency between Medtone and Dreamboat inhaler and any potential pulmonary issues. I think Afrezza is bound to be approved. There are no valid concerns that shorts can present outside of imaginary bad data that doesn't exist and hasn't existed in the past clinical trails, remember this is the 3rd time MNKD will be filing an NDA.

    Also, the fact that DEERFIELD agreed that the data was positive and is continuing to finance MNKD, recent purchase of convertible notes worth approx 40 million; it gives me a glimmer of confidence. On July 1, 2013, the company entered into a Facility Agreement with Deerfield, under which Deerfield will buy up to four equal tranches of Convertible Notes for total $160 million.

    I do believe that there will be an open label study requested by the FDA for the long term implications of inhaled insulin after approval but that is to be expected. If the FDA did not ask for such a study, that would be a cause for serious concern. Considering MNKD has had no significant adverse pulmonary effects in these multiple trials they have conducted, I don't see a cause for concern.
    Adam is a very smart fellow, he has made tons of accurate calls on a plenty of cancer biotech stocks along with some others This stock however is not a cancer stock and is the exception in my opinion to his usual dead on analysis.

    STORY Time:

    I always get asked why I choose to be a paramedic rather than doing something else that makes more money, this is one of the stories why:
    When I first became a paramedic, we got an emergency 911 call and on the call notes our dispatcher noted that there was female pt in her 30s unconscious and there was a child on the line calling it in. We ran priority to the address (lights/sirens) we got to the house right behind the fire department. If you are not aware, FD responds to emergency medical calls as well as fire calls. We grabbed our equipment and walked into the front door of the house. There was a young lady on the floor, drenched in sweat and unconscious.
    The fire department guys checked her sugar real quick and told me it was reading low on their glucometer, indicating it was below 10 mg/dl. Normal blood glucose is between 80-120 mg/dl. I asked if there was an adult in the house and the FD guys pointed at two little kids. There was one boy who was approx 7 or 8 years of age and his younger brother who was about 4 or 5 yrs old.
    The older brother told me that his mother is an insulin dependent diabetic, hasn't ate all day. Apparently she was a single mom, worked all day, came home took her insulin shot and was making dinner when the younger brother broke something in the living room and made a mess so she started cleaning it up.
    At this point I am getting my stuff ready to start the IV and the patient is breathing very shallow, so we place her on O2 via Non rebreather to help oxygenate her better. The older brother is standing a few feet away from his mother, who is laying on the living room floor. He has his arm wrapped tight around his little brother who is hysterical and crying. I still can't forget the look on this kids face, complete stillness with tears flowing while holding his brother tight. The FD guys are amazing and trying the best they can to get the younger kid to stop being so upset but its not working. I get an IV started and start pushing Dextrose 50%. As soon as I get done pushing it, I look up at the kids.
    The older brother is still standing there poised in his facial expression but unable to control the copious amounts of tears that keep flowing, while hugging tight onto his younger brother to keep him from running over to the mom. A minute or so goes by and we are all sitting there waiting for the D50 to kick and he looks me right in the eyes, his face and lips literally twitching as he says the words "Is she dead?". At that moment my heart damn near fell out of my chest and I got teary eyed. I told him of course not and to come over next to their mother, so when she wakes up, the first thing she sees is her little angels.

    They came running over and starting just pulling on her arms, shaking her, trying to get her to wake up. Then suddenly she opens her eyes, takes the oxygen mask off and says Hi to her kids. The kids were so sweet, they just start hugging the patient and kept crying. I was still kneeling down cleaning up the mess i made after stepping back from the patient. All of the sudden I hear these fast little footsteps heading my way and BAM i was on the ground, tackle hugged by two little kids who were so thankful that we had saved their mother.

    My partner went into the kitchen and cooked the patient food while I sat and talked with her about how she is managing her diabetes. She said it was hard because of her job and since she can't take her insulin during the day, she has been taking extra units at night. My partner brought the questionable looking food he made over to her and I explained the treatment regiment to her more thoroughly than her PCP had done in the past and then we left.

    I have one of the most gratifying jobs in the world and can truly say I occasionally make a difference. I have no altruistic agenda and don't claim to be selfless. Doing good and helping others makes me feel happy and that is the reason why i do it. I have seen the effect that diabetes has on its patients, including my own mother. Afrezza will bring about a paradigm shift in the treatment of type 2 diabetics and assist in type 1 patients being more compliant.
    I wish all of you the best of luck and in the most likely scenario that I left something out, please let me know and I will try to address it. Thank you!



    1. Excellent article, thank you for clearing so much mis-information! Looking forward to AF's bebuttal, more so hope for diabetics!
      God bless you!

    2. JR-
      you are most welcome. I'm glad that you enjoyed it. God bless you too and good luck.

    3. You never fail to impress. I don't know how you manage arguments this intricate and with such depth. I know the hours you work, so it's beyond me. No one could expect AF to have the understanding you have or the ability to be impartial on these subjects. He knows (as well as anyone who reads his stuff) he's just a puppet with a megaphone, pushing an agenda. But he gets paid for an opinion, right or wrong, and people listen. Rebutting him seems like a silly endeavor, as his original argument is so weak. But I guess whatever blows your hair back.

      Thanks for the depth brother. I hope Afreeza makes it for our patients and our families.

      1. Thank you for the kind compliment. Adam is a powerful voice in the biotech market and when he posts, what is false or misleading information, I can't help but correct him. Anyone can get into a cursing match with him on twitter but to point out the flaws in his arguments takes tedious amount of work.

        It is my hope that Afreeza does make it to the market because Type 2 diabetics are the patients that need this drug the most. I will do a follow up article on the dangers of Type 2 diabetes drugs and the implications of Afreeza in regards to the paradigm shift this drug will have on the standard of care.

        Good luck and Thank you.

    4. rajalonghorn, Great Job!

      We are just getting a new site dedicated to mnkd investors and interested parties. With your permission, I would like to post the article and a link back to your blog.

      All are welcome to join us and we'd love to have level headed members. (post in your address bar rather than attempt a search)

      Hope to see you there.

      1. That's wonderful to hear. Of course you can share this article with anyone you choose. I will certainly look into the site and sign up. Good luck to you and Thank you!