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MannKind Stock Soars on Afrezza Label Update

The stock of Westlake Village biopharmaceutical firm MannKind Corp. hit its highest share price in more than a year after the company announced early this month that it had updated the Food and Drug Administration label of its only product. Share prices rose more than 152 percent in the eight trading days following the announcement, closing at $5.47 on Oct. 11. In a conference call on Oct. 2, MannKind Chief Executive Michael Castagna announced the FDA had approved changes for the label of Afrezza, an inhalable insulin. The new label uses data from recent clinical trials to clarify the effects of different doses of the medication and adds information on how the dosing should be adjusted at mealtimes. The change will likely be good for sales as it provides clarification for prescribing physicians and patients, Castagna noted on the call. “I’m very happy with the label change; I think the FDA is fair,” Castagna said. “(Patients) were dropping off Afrezza because their doctors didn’t know how to dose it. Now we’ve fixed that educational component.” Prior to the drug label update, MannKind’s stock had not traded above $3.50 a share for more than a year; in April the price fell to less than $1. In January 2016, French pharmaceutical company Sanofi chose to end its global licensing partnership for Afrezza on account of poor sales, and two months later MannKind announced it had regained the rights to manufacture the drug. Since then, MannKind has managed to grow sales. Prescriptions reached nearly 4,900 during the quarter ended Sept. 29, according to the firm, the highest number since MannKind regained control of the product. Still, MannKind has a number of hurdles to overcome, Seeking Alpha contributor Spencer Osborne noted in a post on Oct. 9. “What is critical for investors to understand is that even with the FDA label change, the company has not yet made it,” Osborne wrote. While sales of Afrezza are higher than they were under Sanofi, much of the net revenue growth can be attributed to the company’s revamped packaging, according to Osborne. The new packages contain 90 cartridges per pack rather than 30, making customers more willing to negotiate with insurers for prior approval of their Afrezza prescriptions, Osborne said. “You put more product in a patient’s hands, which increases the odds of the patient understanding dosing, and you sell more cartridges more quickly,” he wrote. Without adjusting the price of Afrezza, prescription growth and revenue growth will be similar on a percentage basis in future quarters. The company does not yet have the flexibility to increase the drug’s price, Osborne said in his column. “The new label gave MannKind some perceived leverage,” Osborne wrote. “The company needs to demonstrate that it can get a better return in sales in the weeks ahead in order to show that the perceived leverage can translate to real leverage.”

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