UPDATE 1-MannKind fails to make case for Afrezza prospects

Tue Mar 16, 2010 3:15pm EDT

* MannKind seeks to reassure investors over Afrezza

* Remains optimistic the diabetes product will succeed

* Investors remain unconvinced; shares fall 2.7 pct

By Toni Clarke

BOSTON, March 16 (Reuters) - MannKind Corp (MNKD.O) on Tuesday failed to reassure investors that its experimental inhaled insulin device will succeed after U.S. regulators requested more information before agreeing to approve it.

MannKind's shares fell 2.7 percent in afternoon trading, despite a conference call held by company executives to persuade investors that the device, Afrezza, is still on the path to approval and commercial success.

The stock decline followed a 25 percent plunge on Monday, after the Valencia, California-based company said it had received a "complete response letter" from the Food and Drug Administration, which has been considering whether to approve Afrezza, a whistle-sized device for treating diabetes.

The agency asked for more information on data designed to support the clinical utility of Afrezza, as well as information about how comparable the commercial version of the product is to the version used in clinical trials.

The FDA also asked for a safety update, but did not ask for additional clinical trials or cite safety concerns.

Still, MannKind said on the call that it does not know if the FDA will require periodic lung function tests -- something than contributed to the failure of Exubera, an inhaled insulin product developed by Pfizer Inc (PFE.N) -- as part of a risk evaluation and mitigation strategy (REMS).

The company said in its annual report that FDA concerns include the risk of pulmonary function decline over time and the risk of respiratory difficulty immediately post-inhalation.

On the conference call, Mann said the pulmonary function decline over two years was "minor."

It is not clear what the FDA will require, if anything, to address the risk of declining lung function, said Peter Richardson, MannKind's chief scientific officer. So far, he said, lung function tests have not been part of the company's discussions with the agency.

"The focus of the REMS discussion has been preventing use in smokers and people with chronic lung disease," he said.

The company said it does not expect the issues raised in the FDA letter to affect its ability to launch the product by 2011. Nor should they hurt the company's ability to find a partner, Mann said.

MannKind has been searching for a partner for some time to help finance the launch of Afrezza. Last year, it was close to an agreement with a big drugmaker, but concerns that the FDA could impose onerous safety warnings or require new clinical trials weighed on the value placed on MannKind, Mann said.

The fact that no new trials were requested in the FDA's letter has reignited interest from potential partners, he said.

Afrezza, previously known as Afresa, is designed to deliver more effective, rapid-acting insulin than injectable products such as Eli Lilly & Co's (LLY.N) Humalog and Novo Nordisk's (NOVOb.CO) NovoLog.

Mannkind said the questions raised in the FDA's letter about the need for more information to support clinical utility refer to how the product would be positioned in the market and which patient population group would be best served.

MannKind's shares fell 2.7 percent to $7.68 in afternoon trading on Nasdaq. Earlier in the day they fell as low as $7.36. (Reporting by Toni Clarke. Editing by Robert MacMillan)

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