Mannkind entering fray over inhaled insulin market.

MannKind Corp. marched into the American Diabetes Association's 65th annual Scientific Sessions last week looking a little bit like an underdog.

But despite the fact that rival pharmaceutical companies are likely to beat MannKind to the market with competing insulin delivery products, the Valencia-based company has plenty of reasons to be optimistic.

The company, started by billionaire Alfred Mann, is basing its future on its inhaled insulin product which is currently undergoing clinical testing in Europe, and is about to start a two-year safety trial in the United States.

If MannKind's insulin delivery system, called Technosphere, hits the market within the next couple of years, it could find itself racking up huge sales, said company president and chief operating officer Hakan Edstrom.

"We see ourselves potentially as a multi-billion dollar company once we get into the marketplace," Edstrom said.

Even though competing devices are likely to hit shelves first, Edstrom said that Technosphere is more efficient than rival technology and that the expected market for inhaled insulin products, predicted by some industry watchers to grow past $4.8 billion by 2010, is big enough for everyone.

On Tuesday, June 14 MannKind presented the results of two new safety studies for Technosphere, and concluded that its glucose lowering effect compared well with conventional insulin injections.

"We expect that many patients will prefer to receive insulin by inhalation, rather than by subcutaneous injection," said Edstrom in a news release that morning.

Despite the positive results, however, Pfizer commanded most of the attention at the San Diego convention from doctors curious about inhaled insulin possibilities. Pfizer, along with its partners Sanofi-Aventis and Nektar Therapeutics, is working on getting its drug, called Exubera, cleared by the FDA, by the fall. Exubera could potentially be available to diabetes patients within the next two years.

Dr. Richard Kahn, Chief Scientific and Medical Officer for the American Diabetes Association, posted regular updates on conferences on the Internet, and addressed inhaled insulin products on Monday, June 13.

"The safety profile looks very good and the glycemic control that results is very impressive. It shouldn't be long until the drug is approved," Kahn wrote. "The drug is called 'Exubera' and would seem to fit in well as adjunct therapy for people with either type 1 or type 2 diabetes. Look for more reports on this drug as possible approval by the FDA draws near."

Edstrom said he's not too worried about competition from Exubera because Technosphere has proven to be effective for patients within 15 minutes after it's used. Most insulin delivery products, including inhaled insulin, can take up to an hour to produce the same results, Edstrom said.

Thomas Wei, of Piper Jaffray, was quoted in TheStreet.com earlier this month as saying that MannKind's delivery system "has a best in class profile relative to other competitive products in late-stage clinical testing, and we believe that MannKind could become a clinical player in this category."

The amount of diabetes cases expected over the next few years also suggests that there will be plenty of demand for Exubera, Technosphere and any other inhaled insulin products. In 2001, a report in Diabetes Care, published by the American Diabetes Association, reported that the number of people with diabetes will grow 165 percent from 11 million in 2000 to 29 million in 2050. The demand for injected and inhaled insulin will be higher than ever.

Edstrom, along with some analysts, predicted that Exubera's approval by the FDA will make it easier for companies developing competing products to get their approvals.

Edstrom said that MannKind will likely have spent close to $600 million to develop Technosphere by the time it reaches doctors' offices. Even if the company is successful in winning FDA approval, however, it is still going to be facing major hurdles.

MannKind's stock price has been falling in June, from $13.22 at the beginning of the month to $9.44 on June 16. In May, it reported a loss of $22.2 million for the first quarter after spending more on Technosphere research that it had originally expected.

The company is also being sued by its recently departed Chief Medical Officer Wendell Cheatham. He also claimed that the company provided false information to the FDA about the formulation of its Technosphere treatment system.

"Of course a law suit is never a pleasant thing, but the thing that is very comfortable in one regard is the fact that the suit has no merit, it is not impacting the company's (Technosphere) development," Edstrom said.

The suit, Edstrom said, will amount to nothing more than an "unfortunate nuisance."

MannKind is also hindered by its lack of a sales force to persuade general practitioners to order Technosphere once it's available. To address that problem, Edstrom said the company is thinking about partnering with some of the largest pharmaceutical companies to sell their product to general practitioners.

"There are many thousands (of general practitioners), and you would need a sales force that could cover the GP community," Edstrom said. "We would have a true profit sharing arrangement with a Big Pharm company."