Too early to buy or sell MannKind

Sanofi (NYSE: SNY)/MannKind Corporation (NASDAQ: MNKD)’s inhaled insulin Afrezza has been launched for one month. According to Symphony Health, doctors have written only 290 prescriptions for the drug during the first four weeks of the launch.

Goldman Sachs analyst Jay Olson downgraded MannKind from Neutral to Sell with a revised price target of $3 from $6. Olson lowered his 2025 sales forecast for Afrezza to $1 billion from $2 billion. MannKind shares were down 7.23% yesterday.

I think the downgrade is aggressive because it came only four weeks after the launch. Due to the shortage of diabetes specialists, patients usually need to wait three months or more to get an appointment with a doctor who can prescribe Afrezza.

Afrezza is not the only inhaled insulin. Pfizer launched Exubera in 2006 and discontinued soon due to poor sales. Afrezza is superior to Exubera. Afrezza takes significantly shorter time to peak insulin levels (14 vs 49 min). The Afrezza inhalers are much smaller and more convenient than that of Exubera.

Afrezza appears to be as effective, but no better than injected short-acting insulin. As The Medical Letter concluded, Afrezza is only modestly effective at reducing HbA1c and the long-term safety is unknown.

Many doctors are hesitant to switch therapies in well-controlled patients, because finding the proper dosage of insulin usually represents hundreds of hours of effort from the patients and their doctors. Although the term “no needles” sounds good, it is not enough for doctors to switch well-controlled patients from injected insulin to Afrezza just to avoid needles.

On the other hand, Afrezza is contraindicated in patients with chronic lung disease such as asthma or COPD. Patients who are started on Afrezza will still require routine assessment of pulmonary function. The addressable market would be much smaller than the entire population with diabetes.

Afrezza was priced at $7.54 for a daily dose of 12 units, which is more expensive than the $3.14 injected insulin Apidra. Insurers are likely to force Sanofi to offer discounts up to 40% off the list price. I don’t see this as a totally negative thing, considering a lower price often results in a larger volume.

Analysts at Thomson Reuters Cortellis forecast Afrezza to generate modest sales of about $182 million in 2019, while Adnan Butt at RBC Capital expects Afrezza to be the best-selling mealtime insulin with peak sales of more than $7 billion.

In my opinion, it is still too early to buy or sell MannKind. We should patiently watch the prescription data at least two more months.


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