Expectation sky-high for Mannkind to deliver blockbuster deal

Investors appear to be expecting Mannkind’s chief executive and majority shareholder, Alfred Mann, to be true to his word and deliver a big pharma partnership for the company’s inhaled insulin product, Afresa; a deal which Mr Mann hopes to have signed by the end of the year, but could even be announced within the next few weeks (Mannkind CEO predicts deal for inhaled insulin product by September, May 6, 2009).

Since the start of September Mannkind’s shares have surged 55% to reach a two-year high of $11.81, driven mainly by high trading volumes, valuing the company at an impressive $1.3bn. Expectations over both Afresa’s commercial opportunity and for the company securing a major partnership are clearly sky-high at the moment. Any delays in landing a deal and anything less than a big pharma partner could leave investors disappointed.

Delivering on promises

As such, Mr Mann, a self-made billionaire who has ploughed a billion dollars of his own money into the company, is walking a fine line. In recent times the grand partnering promises of chief executives throughout the pharma and biotech sector have come back to haunt them as that all important deal has proved elusive.

In terms of the deal itself, the current expectation appears to be that a big pharma partner is secured, but that the deal will be heavily back-end loaded. Although the upfront fee may be relatively small relative to Afresa’s blockbuster potential, significant commercial milestones may be offered along with a royalty rate of around 30% as befits a product nearing FDA approval.

So far Mannkind has shown little desire to try and retain a decent portion of the profits and is not seeking a US co-promotion option. A global deal with decent milestones and royalties seems the preferred deal structure.

Timing is everything

Mannkind filed Afresa with the FDA in March, giving the product a tentative PDUFA date of January 15, 2010. Before then, however, Afresa could face scrutiny from an FDA advisory committee, given that Exubera, the only approved, but ultimately unsuccessful inhaled insulin product, was reviewed by such a committee prior to approval.

The next meeting of the FDA’s endocrinologic and metabolic drugs advisory committee is currently pencilled in for December 15, so the details of this meeting will prove insightful if Afresa is to meet its PDUFA date.

Although confidence in Afresa’s efficacy and safety have improved as more clinical data has been revealed, and despite Mr Mann’s efforts to get a deal done as soon as possible, it seems logical that any potential partner may prefer to wait until the product’s chances of regulatory and commercial success have become a lot clearer. There are a lot of hurdles yet for the product to clear and given the Exubera debacle, partners may be more circumspect than Mr Mann would like.

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