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Brazilian Sales Boost Outlook at MannKind

MannKind Corp. achieved noteworthy progress for international sales of its inhalable insulin Afrezza, reception of its second milestone payment from United Therapeutics for $12.5 million; and the completion of a “high potency” manufacturing facility in Danbury, Conn., company management told analysts on Nov. 6. Total revenues during the third quarter were $14.6 million compared to $4.5 million in the corresponding quarter for 2018 – a 225 percent increase year-over-year, according to Michael Castagna, chief executive of MannKind. Net revenue of Afrezza, MannKind’s inhalable insulin product, was $6.4 million, or 46 percent growth year-over-year. The sales number marks the highest ever for the drug, based on its introduction to the Brazil market. Afrezza’s long-awaited approval in the country was finalized in June, roughly two years after MannKind first announced it had entered into a supply and distribution agreement with Brazilian pharma company Biomm. Financially, the company’s health has improved, Castagna added during the call. “We’ve also completed our recapitalization in August that gives us a solid financial foundation as we go forward, where we drew down $40 million of a $75 million credit facility,” he said in the earnings report. “We’ve met our revenue covenants as of Sept. 30 and maintained an open dialogue with our new lending partner about our sales trends and actions we’re taking to improve them. … I believe we have a strong relationship with MidCap, and we will successfully work together to resolve any issues that may rise throughout the term of our loan.” Steven Binder, chief financial officer for Mannkind, pointed to revenue from the United Therapeutics license agreement and Afrezza growth for the company’s triple-digit growth. Looking forward, the company has been developing Treprostinil Technosphere, or TreT, a dry powder formulation to treat pulmonary arterial hypertension, as part of its licensing and collaboration agreement with Maryland-based United Therapeutics since September 2018. MannKind is eligible for an additional $25 million in milestone payments, as well as royalties on net sales of TreT. The company’s Danbury location will, in line with MannKind’s strategic partnerships, develop and commercialize its inhaled therapeutic products, including TreT. Castagna also noted pipeline progress for two molecules, sumatriptan and tadalafil, advancing to animal testing. These starters narrow blood vessels in the brain and increase blood flow in various areas of the body, respectively. Nonclinical pharmacology testing will help give researchers a “better understanding of the absorption through the lungs and really help us understand the dosage form as we continue to progress these in development,” Castagna said in the earnings call. Data and a report on study outcomes is expected during this year’s financial first quarter. Prescription growth According to Pasha Sarraf, an analyst at SVBLeerink who follows MannKind, prescriptions for Afrezza steadily grew in the third quarter. “On the earnings call, management noted they are seeing meaningful success in the Type 1 diabetes population, who are seeing the value of Afrezza in helping control postprandial glucose and in keeping sugars in range more frequently,” Sarraf said in a report to investors following the conference call. “Management noted that these patients already account for (about) 50 percent of total patients and are now becoming increasingly the focus of management’s efforts.” The increased attention won’t affect overall strategy, management said, as they will still target centers that see a significant intake of patients from “all corners.” When questioned about patient drop offs, the company noted it is establishing a support center to help with patient onboarding and training, provide reimbursement support and pharmacy fulfillment, Sarraf said. Sales materials are being updated to better reflect the dosage needed for each patient, especially those with Type 2 diabetes. MannKind made the change after a study in June found researchers should compare a higher dosage of Afrezza against more traditional modes of treatment. “Discussions with management, sales reps and prescribers have consistently revealed confusion overdosing as being an important headwind to growing Afrezza prescriptions,” Sarraf said in an earlier report issued in June. “The study investigator noted that 13 out of 14 patients were highly satisfied on Afrezza, wanted to continue treatment and had entered the process to gain coverage for Afrezza. The single dissenter preferred using only oral medications despite the additional benefit received by taking Afrezza. This supports our understanding that patients prefer Afrezza due to its ease-of-use once they see its benefits.” Another market for Afrezza is in pediatrics – Castagna told analysts its pediatric study protocol was under FDA review as of November. The company is due to receive feedback by the end of its financial fourth quarter.

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