Merck's smart move could have implications for MannKind

Reports that Merck & Co is prepared to pay up to $500m to purchase SmartCells, for its novel insulin candidate yet to be tested in humans, is likely to encourage and worry MannKind and its investors in equal measure.

On the one hand it shows a clear appetite from big pharma for novel insulin products, offering encouragement to MannKind in its quest to find a partner for its inhaled insulin, Afrezza (Event - MannKind holds its breath as FDA decision approaches, December 1, 2010). However, the fact a potential big pharma partner has opted for an injectable, pre-clinical candidate over one which could be on the verge of gaining marketing approval might be cause for concern.

Smart move

Established in 2004 as a spin-out from The Massachusetts Institute of Technology, SmartCells has been developing a so-called ‘glucose responsive’ insulin product, dubbed SmartInsulin.

By binding insulin to a biodegradable polymer, insulin is only released when glucose concentrations in the blood are within a specific range. The theory is that this approach could produce insulin analogues that lower the risk of hypoglycaemia (low blood sugar) and improve control over fasting and post-meal glucose levels.

With the help of a number of ‘angel’ investors - Boston Harbor Angels, Angel Healthcare Investors, Beacon Angels and Cherrystone Angel Group – who have provided at least $7.7m in four financing rounds and a convertible note issue, SmartInsulin is now ready to enter the clinic.

Merck is not currently marketing or developing any insulin-based products, but in Januvia and Janumet the company holds some of the biggest-selling anti-diabetic agents. Combined sales this year are expected to reach $3.27bn.

Implications for MannKind

This Merck deal and the table below, which list the current pipeline of insulin products, show there is decent appetite for novel insulin candidates.

Of the 61 insulin products in development, nearly two-thirds are using a novel delivery route, from inhalation candidates such as Afrezza to oral insulins, which remains the holy grail for insulin administration. Of the 24 product deals that have been signed since 2000 for insulin products, half have involved novel delivery approaches.

Route of admin for pipeline insulin candidates & deals
Pipeline product count Deal product count (since 2000)
 Injection 23 12
 Oral 18 6
 Inhalation 5 4
 Transdermal 5 -
 Intranasal 3 -
 Intraurethral 1 -
 Transmucosal 1 2
 Unclassified 5 -
Total 61 24

For MannKind a partnership is clearly off the table until the FDA delivers its verdict, expected by the end of December. Two years ago the company had promised a deal ahead of regulatory approval, but the spectacular failure of Exubera continues to make partners wary of this delivery route.

The actual upfront fee paid to SmartCells has not been disclosed and is likely to be in the tens of millions of dollars, not hundreds. If any deal does emerge it will signal that Merck is prepared to bet that a safer and more effective insulin product is more important than any advantage offered by a more convenient delivery.

MannKind will be hoping Merck’s outlook is not reflective of its big pharma peers.

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