* FDA issues complete response letter for Afrezza
* MannKind says FDA requested two new clinical trials
* Analysts say request could delay device up to 2 years
* Shares fall 43 percent after hours.
(Updates with analyst comment, share price reaction)
By Toni Clarke and Bill Berkrot
BOSTON/NEW YORK, Jan 19 MannKind Corp (MNKD.O)
said on Wednesday that U.S. regulators rejected Afrezza, its
experimental device to treat diabetes, and have asked for two
more clinical trials.
MannKind's shares fell 43 percent to $5.15 in after hours
trading. The shares were halted pending the news at $9.10.
Afrezza is a whistle-sized inhaler designed to deliver more
effective, rapid-acting insulin than injectable products such
as Eli Lilly & Co's (LLY.N) Humalog and Novo Nordisk's
The Valencia, California-based company said the U.S. Food
and Drug Administration wants MannKind to run two new clinical
trials, one in Type 1 diabetes and one in the more common Type
II form of the disease.
The agency wants MannKind to prove that a second-generation
version of the device, known as the Dreamboat, is equivalent to
a first-generation inhaler known as MedTone.
MannKind initially filed for marketing approval based on
data from the MedTone device, but later updated the package and
asked for approval for the Dreamboat.
"It's not the worst case scenario, but it's pretty bad,"
said Jon Lecroy of Hapoalim Securities "You're looking at at
least a year delay before they can refile, would be my
expectation. And that would start a new review cycle, so I
would say it's probably delayed two years."
The device is the small company's most advanced product.
MannKind's founder and biggest shareholder is Alfred Mann, 85,
an entrepreneur who has pumped roughly $925 million of his
personal fortune into the company to keep it afloat.
As of Dec. 31, roughly 28 percent of the company's
regularly traded shares, or 21.5 million, were held "short" by
investors betting the stock would fall.
The company said the FDA requested additional information
about the performance characteristics, usage, handling,
shipment and storage of the device, an update of safety
information and information on proposed user training.
"While we are disappointed with the complete response
letter, we are encouraged that the FDA is asking for clinical
studies only to confirm the bridging and handling of the
next-generation device in order to compare it to the device
used in our extensive clinical program," said Mann in a
statement. "We remain committed to working with the FDA to make
Afrezza available to people with diabetes."
The FDA issues "complete response letters" when it has
reviewed a file but requires more information and will not
approve it based on current information.
MannKind said it has begun work on additional clinical
trials that it believes will partially meet the FDA's
requirements. But it must modify one study to add a cohort that
will compare MedTone and Dreamboat directly.
"This will delay Afrezza's launch and hasten the cash burn
of an already highly unprofitable company," said Lauren
Migliore of Morningstar. "The positive side is that we don't
think this dramatically changes Afrezza's chances of eventually
making it to the market."
Brad Loncar, a MannKind investor who declined to reveal how
many shares he owns, said the FDA seems to be "throwing
curveballs" into the process.
"In my view the FDA seems to be unreasonably stalling on
this," he said. "You would think that the regulatory pathway
for something would be much clearer after multiple meetings
with the agency and multiple delays."
(Reporting by Toni Clarke in Boston and Bill Berkrot in New
York. Editing by Bernard Orr and Robert MacMillan)