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Thursday, Mar 28, 2024

Pharma Fixer

Michael Castagna has a big job in front of him. Last month he was appointed chief executive of MannKind Corp., the Valencia biotech company founded by late billionaire Alfred Mann. It has been a turbulent few years for MannKind and its only commercial product Afrezza, an inhalable insulin. In 2014, the company entered a global licensing agreement with French pharmaceutical company Sanofi, which took over the manufacturing and marketing of the product. The deal ended less than a year later, after sales disappointed and left investors anxious about MannKind’s future. Castagna is the company’s third chief executive in two years. However, he is hopeful and he knows a bit when it comes to commercializing drugs. He started out as a pharmacy technician at CVS and continued to work there as he ventured into sales and marketing in the pharmaceutical industry. He said working in proximity with real people has helped him “keep a real-world perspective,” a patient-first philosophy that Mann himself advocated. After graduating with an MBA in 2005, he worked for biopharmaceutical giants Bristol-Myers Squibb and Amgen Inc. “I really like challenges,” Castagna said. “I’ve always tried to take jobs that would build a different skill set than what I already had.” His new role may be his most challenging yet as MannKind tries to turn the corner of profitability. Michael Castagna Titles: Chief Executive Officer Company: MannKind Corp. EDUCATION: Bachelor’s degree in pharmacy, Philadelphia College of Pharmacy; MBA, Wharton School of Business at the University of Pennsylvania; doctor of pharmacy degree from Massachusetts College of Pharmacy and Health Sciences. CAREER TURNING POINT: Every year is a turning point with new opportunities because health care isn’t status quo. PERSONAL: Three children, lives in Westlake Village HOBBIES: Travel, car shows and NFL football (Eagles) Question: In May, MannKind announced a quarterly loss of $16.3 million, a lot worse than Wall Street was expecting. What can you say about that? Answer: Al Mann built this company to be a multi-billion-dollar company. When the losses come in, that’s partially to drive up the manufacturing plant, which is built to be very successful. You can’t just change that overnight. It takes time to readjust the manufacturing costs. As this truck ramps up, it will ramp up pretty quickly. Now when you turn the corner, you want to have that manufacturing capacity. It’s always a balance of managing your expenses and trying to make sure you are successful. You’ll see an update from the company at some point that gives people a different perspective on cash burn and expectations. Some analysts say MannKind has enough cash for a couple of months. How do you plan to save this company? Companies get financed all the time across Wall Street. We’ve been working on plans to capitalize the company and that plan doesn’t change with the CEO changing. We’ve been working together on that plan so there’s nothing from me that I’m worried about as I sit here today. How do you think your investors feel right now? It has been a very long journey for investors. Up and down for decades. I think the shareholder base is just tired because they’ve been through such a long journey. They want to see excitement, hope and success and they understand what that looks like. What should they expect? Unfortunately, the average person doesn’t realize that when you get a drug like this (Afrezza) back that’s already in the market from a company like Sanofi, and you didn’t have all that infrastructure, it just takes time to build all that. We did that on a low budget with very few people, very successfully. We fixed the packaging, we fixed the sampling, and fixed a lot of stuff that had to be fixed. We even built the sales organization from ground up. We went through that transition for the last 12 months. Even if I had 10 times the money, it still would have taken almost the same amount of time. We’re through that and now it’s about execution. MannKind recently announced it will take Afrezza to the commercial market in Brazil. Why Brazil? It’s a major market for diabetes. There’s a lot of people there that need help. In general, when you look at the Latino population in Mexico or South America, they’re very resistant to injecting. We see the same thing in the Middle East. Brazil is just the first one that happened to get across the finish line. That doesn’t mean that there’s no other ones coming. Why do you think the board selected you as chief executive? That’s a question for the board. It’s been a development company for a long time. You have to migrate from development and a financing-based company for getting drugs approved to a fully commercialized company. I think at some point there was always going to be a shift. Matt (former chief executive Matthew Pfeffer) has been good to me. The board just decided now’s the time for the change. How long have you been with the company? I joined in March of last year. Before that I worked for Amgen. I was vice president and ran their global commercial biosimilar business. How long have you worked at commercializing drugs? About 18 to 19 years. I started out in medical affairs, got my MBA and went back to get my PharmD. I’ve built my career in parallel – working and being in school – to really round out my skillsets. I’ve always taken jobs that were stretch assignments, that gave me a lot more bandwidth to do a lot more. Partially because I get bored easy, so it was a good challenge to work hard and make things happen when people just gave up. I guess I really like challenges. That’s how I built my career. Why did you switch from your pharmacy career? I was a pharmacy tech at CVS from 1995, all the way through 2010. I finally gave it up to find time to spend with my kids. I worked for Kennedy Health System, and worked at nursing homes part time. Then what? I always kept my hands in pharmacy. That allows you to see what real people go through every single day. When you work in a corporation, you can lose touch with reality. You lose touch with the expense people pay and how they are impacted by the decisions we make. So I always try to keep a real-world perspective. Whatever we do, we focus on the patient. As long as you do what’s right for the patient and build a model that helps people, usually you can do pretty well. Lots of the businesses that we’ve built have been around re-pivoting brands to make sure we’re bringing a good service, making sure patients get what they need, and getting our drug at a reasonable cost. What are your short-term goals – say, the next three months? First is making sure that leadership who are running this company is all aligned and are going in the same direction with the same properties. My second goal is to secure the right capital structure for the company. Third is just executing the plans that we’ve been working on. The international expansion is part of that, and looking for new assets to bring in is part of that. We’ve been looking to see how we can diversify the company. What do you mean ‘diversify’? Once you build a commercial infrastructure can you drop another product in there? What are things you can do once you establish this infrastructure? It takes a lot of work to build manufacturing and distribution channels, pricing, and reimbursement. If you add a second product in that process it won’t cost you as much. We’ve built the infrastructure; now how will we leverage that as a company? What is your number one focus? The number one focus is to make sure Afrezza is successful. We’ve got a fantastic drug that is going to help millions of patients. When we talk to consumers, 90 percent of people aren’t even aware we exist. And then when you meet them at a conference like ADA (American Diabetes Association), they’re saying “How come my doctor didn’t tell me?” “I’m not going to inject myself of millions of times – this is ridiculous.” How are you marketing it? With Afrezza, the doctors are coming on board, which is really nice because they resisted things for a long time. Once the doctors learn how to use the drug and they overcome their own knowledge and fears, they like it. And when they see how happy their patients are, then it’s pretty easy after that. Just getting past the first hurdle is the biggest one. Why do you think there is such resistance? One, it was launched with a partner who may have not have understood the things as well as they should have. When doctors first got introduced to the drug, there was a lot of mixed messages. Then that partner disappeared. How do you fix that? First, you’ve got to come back and say we’re on the market. And there were misperceptions of what is required to get a patient started, from managed care access, to lung function testing, to titration schedules. Doctors usually take only seven to 10 minutes per patient. Sitting down and changing a patient’s insulin regimen to another drug and taking them off the insulin pump takes work and time. How can Afrezza change the market? Seven out of 10 people on insulin are now below goal (for diabetes management). For 20 years, we as a market have not moved despite billions and billions of dollars spent. Our goal is to get patients to use our drug in a way that gets them to goal. We see a lot of times, if you just use the drug and dose it right, you get to goal pretty easily without incumbering your life. If you are on a pump, you wear the attachment all day along, with another sensor for your glucose levels. We can actually change the way you manage your disease to one shot a day, plus three to five puffs. You don’t have to worry about carrying all this equipment, scar tissue or needles. It’s not just the fact that the product is an inhaler. That’s a big misperception; it’s a lifestyle change. What are your long-term goals? About three or four weeks ago, we announced a deal with a company called One Drop. One Drop has a platform on the iPhone and Android where you can get unlimited test strips for $15 to $30 a month shipped to your house. You can order them through the app where you have a community and coaching. This app helps you manage your disease and clinically they’ve shown good. It’s just better education, knowledge and empowerment. We’re looking to transform how we think about diabetes care by using technology and helping people successfully reach their goals through coaching, right titration and potentially a membership model for insulin. A membership model for insulin? No one’s ever done this but they (One Drop) have got a membership model for test strips. It’s easy because it’s not a prescription, whereas our drug has a prescription. We are working through the legal logistics and the financials. We are trying to frame out a membership model for insulin integrated with that app. How would it work? I look at it like a diet. Most of us can’t afford a private coach at the gym. But if you had an affordable coach who came to your house you might be more successful in changing your behavior. We are trying to integrate what we do into what the patients are already doing, so they don’t have to go an extra step to manage their disease. If you can seamlessly integrate into their life, you’re going to have a lot more success. We think there’s an ability to simplify. Where do you see your company in five years? We’re at a crossroads now with a CEO change and an FDA-approved product. We’ve got a pipeline technology platform with Technosphere (technology for the inhalable delivery of drugs) and the question is what do we do at this point? Do you partner out your technology and keep that core capability, but let someone else take on different assets that may not fit? Do you bring in assets that are complementary to your endocrinology and be more of an endocrine company? Or do you become like Novo Nordisk and focus on diabetes and metabolic conditions? As a new CEO, I’ve got to take a step back and work with the team to come up with what that looks like. What do we want to become when we grow up? Because we’re an infant. Afrezza is our baby and we’re going to groom it to be very successful. But there are other kids we want to have, so the question is how do you build the family out of the assets and products to do what you want to do?

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