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MannKind Moves Past Risk Disclosure Issue

The last few weeks have been tumultuous for the stock of MannKind Corp., which enjoyed a healthy bump at the end of April only to dip again after the company announced its first-quarter earnings. Shares rose slightly to close May 9 at $1.79 but fell more than 7 percent in after-hours trading after the company announced quarterly results that failed to meet Wall Street expectations. The Westlake Village biotech reported a loss of 25 cents a share, compared to analysts’ average estimates of -23 cents a share, according to Thomson Financial. Revenue was $3.4 million; analysts had expected $4.24 million. Investors had appeared to have renewed their faith in MannKind following the company’s announcement on April 24 that the Food and Drug Administration would no longer require it to publish a Risk Evaluation and Mitigation Strategy, or REMS, to explain its inhalable insulin Afrezza. In the trading day following news of the development, which was announced by the FDA after market close on April 24, the stock jumped 4 percent to close at $1.80 a share, its highest close since diving to $1.59 on April 11 after its third public offering in seven months. For drug manufacturers like MannKind, the FDA’s REMS requirement means the company must publish communications that outline the risks and benefits of its product. In the case of Afrezza, MannKind had to take extra steps to disclose the potential for lung problems in patients with chronic lung disease who take the drug. The company’s REMS included a website along with a fact sheet and letter that were distributed to health care providers. The website has been taken down, MannKind Chief Executive Michael Castagna told the Business Journal. While the information is still included in a black-box warning on Afrezza’s label, the release of the REMS requirement allows the company to put the effort required to remain in compliance with the mandate into other activities to improve sales of the medication, Castagna explained. “(The removal) results in streamlining our operations and reducing some of the costs associated with maintaining a REMS program,” Castagna said. “Ultimately, this helps us more effectively communicate why Afrezza is a safe and effective treatment option.” Spencer Osborne, a blogger on investment site Seeking Alpha, speculated that the news could prompt moderate improvement in the company’s long-term outlook for investors. In a post published before trading kicked off on April 25, he noted that the company now might be able to focus on obtaining a label change to Afrezza that could do away with the black-box warning. “With the REMS discussion in the rearview mirror, MannKind could concentrate the conversation on getting a more favorable label,” Osborne wrote. “This could be the point where entertaining thoughts of black-box removal could be floated out there in the investment world.” MannKind also announced May 9 a partnership with Cipla Ltd. for marketing and distributing Afrezza in India. Cipla will pay $2.2 million to MannKind for those rights.

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