Investopedia: MannKind And The FDA - Here We Go Again

Yet another company has fallen into the purgatory that is the FDA Complete Response Letter (CRL) cycle. While it was not altogether unexpected that MannKind (Nasdaq:MNKD) would get another CRL from the FDA (which is tantamount to a rejection), this nitpicky rejection from the agency will likely set the company back at least another year in its attempt to get inhaled insulin to the market and in the hands of diabetics. 


The Latest Developments
On Wednesday afternoon, MannKind announced that the FDA had sent the company a CRL for its most recent re-application for its Afrezza inhaled insulin. This time the FDA's concerns were about potential differences between the MedTone inhaler used in past pivotal studies and the next-generation device that the company intends to actually launch with approval.

The FDA has now determined that the company needs to run at least two additional new studies (one in Type 1 diabetics and one in Type 2 diabetics) to determine if all of the relevant data is equivalent between the two devices. The FDA also wants at least one arm of one of the studies to include patients using the older MedTone device so that there can be head-to-head comparisons. (For related reading, check out The Curious And Complicated Case Of MannKind.)

To some extent, this is a legitimate request from the FDA. It is fair for the agency to want to confirm that the two devices work in basically the same fashion and produce the same outcomes in patients. Moreover, the FDA's request that the study include at least 12 weeks of consistent use (after a titration period) is not terribly onerous either - after all, diabetes drug studies often run at least a year, and the FDA increasingly seems to be demanding a minimum of two years of data.

In addition to the head-to-head comparison, the FDA wants more mundane data like information on the new device, updated safety information and so forth. (For more, see Dark Days In Diabetes.)

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Biodel - Unsurprising Bad News

Given how finicky the FDA has become, it cannot really be said to be a surprise that the agency bounced Biodel's (Nasdaq: BIOD) application for approval of Linjeta in Type 1 and Type 2 diabetes.

What has to pour some salt in the wound, though, is that the two trials were both laid low by events largely out of the company's control. Heat damaged blood samples from India in a Type 1 study and unexpected drop-out rates reduced the statistical power of the Type 2 study to below the point of non-inferiority. Although both drugs held up fine on post-hoc studies, that did not cut it with the FDA.

So, what now?

The FDA is demanding new Phase 3 studies for both indications, and I would estimate that is a $160M bill for a company with less than $25 million in cash. Theoretically, maybe the company could raise enough for one trial with a share offering, but that would be horribly dilutive right now. There's also a reasonable chance that the company could find a partner (Linjeta *works*!), but the terms would not be even slightly favorable to the company. In fact, I imagine the conversation would go something like, "there is the barrel ... assume the position". Making matters worse, it is not practical for the company to partner just the Type 1 (or Type 2) indication - once one version gets approval, there will be rampant off-label usage and no really accurate way to track it.

I hope the company can figure something out. My hunch is that they will partner (or sell the company) and investors will get a partial recovery on their investment, but nothing like what they could or should have expected a couple of years ago.

Vivus Gets An Encouraging No

In a reversal of a recent trend, the FDA actually gave a glimmer of hope to a biotech company and its shareholders. Although almost everyone was counting on the FDA's rejection of Vivus's (Nasdaq:VVUS) obesity drug candidate Qnexa, the FDA left the window open wider than many people expected. With what amounts to an "encouraging rejection", there may yet again be reason to hope that at least one new obesity drug can make it to market in the foreseeable future. 

More Analysis, Please
When the FDA rejects a drug, it sends companies what is called a "complete response letter" (or CRL) outlining the agency's objections and indicating the sort of deficiencies that the company must correct before the FDA will reconsider approval. In some cases, the FDA requires new full-scale clinical trials, while other times the agency simply wants the results of trials already underway or new kinds of data analysis. (For related reading, check out FDA To Obesity Drugs: Drop Dead.)

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Trick or Treat for Biodel?

Biotech CEOs should be forgiven if they feel like the FDA has turned almost every day into Halloween. Companies ranging from Jazz Pharmaceuticals (Nasdaq:JAZZ) to Alexza Pharmaceuticals (Nasdaq:ALXA) to the obesity triumvirate of Vivus (Nasdaq:VVUS), Arena (Nasdaq:ARNA), and Orexigen (Nasdaq:OREX) have all seen the scarier side of the FDA drug approval process lately. The FDA has handed out rejections to the first two, panels have recommended against the next two, and Orexigen has been batted around by investors who wonder if the FDA (or its panel) will take out their knees next. 

All in all, it is easy to understand why shareholders of biotech Biodel (Nasdaq:BIOD) would be nervous these days. Although the company's Linjeta insulin could be a blockbuster for the company, problems with a pivotal study and an October 30 FDA PDUFA date have investors wondering if they are going to be left waiting in vain for the Great Pumpkin on Halloween. 


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Alexza Gets A "No" From The FDA

Gotta love the FDA these days, don't you? I always thought the initials stood for "Food and Drug Administration" but apparently I was wrong; FDA now means "Forget Drug Approvals" (or perhaps "F*ck Drug Applicants" for those suitably inclined...).
 
Alexza Pharmaceuticals (Nasdaq: ALXA) is the latest company to run afoul of the agency's safety obsession, announcing the receipt of a complete response letter for its submission for Staccato Loxapine (aka Adusuve) - a fast-acting inhaled drug to deal with acute agitation in patients with severe schizophrenia and/or bipolar disorder. This is a relatively serious and common problem, and the existing therapies are tricky - it is not easy to give a shot to an unwilling patient, nor make them swallow a pill.

According to Alexza, and its partner Valeant (NYSE: VRX), the FDA was concerned about some safety issues seen in early Phase 1 studies and the absence of a "human factors study" for how people might use the technology.

The safety issues basically relate to some short-term changes in lung function seen immediately after administering the drug. Gee... an inhaled drug alters lung function upon use? I'm shocked! What's more, none of Alexza's late-stage studies showed any worrisome adverse respiratory effects - short-term issues occurred, but they either resolved themselves promptly, or could be handled with a normal asthma inhaler. 

Now, a word on the human factors study ... Basically, the FDA apparently wants some sort of study to see what happens when Staccato Loxapine is put into the hands of the Ralph Wiggum's of the world .Will they stick it up their nose? Perhaps they will try to administer it in their ears, or become confused and think it's an exciting new suppository formulation.

I don't mean to be flippant, particularly, for those Alexza shareholders getting hammered today, but I'm getting a little fed up with how the FDA runs these days. A human factors study could have been requested years ago, and I frankly think its ridiculous to just assume that the people who will administer this (mostly orderlies and nurses in in-patient mental treatment facilities and perhaps prisons) can't figure it out with proper training. 

I am not a doctor, and I am not intimately familiar with the specifics of Alexza's safety data, so perhaps there is a legitimate reason for concern. Even still, I can't help feel that the FDA has become actively hostile towards the pharmaceutical industry and new drug applications. This is not the first time that I've seen the agency spring a "gotcha" on a company - asking for an additional trial that could have been requested years ago, or taking issue with data from early studies. I mean, if those Phase 1 safety studies were so problematic, why did the agency allow them to progress to Phase 3?

Hell, the company even ran additional safety studies in special populations, and the FDA didn't see the need for a panel meeting. 

So, what now for Alexza?

I've been interested in this biotech for a while, as I thought loxapine would be an interesting niche drug and a good test case for the company's inhalation technology. Now, though, I do not know what to think. The company froze development on migraine formulations that look interesting, but will require a lot of money to develop. Can Alexza raise those funds now (either through partnership or capital raising) with the FDA putting them on ice?

And what about that fast-acting insomnia compound (AZ-007)? The FDA is arguably even more paranoid about insomnia drugs, so who knows what sort of clinical trials they will demand from Alexza.

With cash on hand and effective technology, the stock probably has a floor somewhere in the $1.00 - $1.50 region. I think the stock is worth more than that, but the company will not be getting those milestones from Valeant any time soon and who knows what sort of supplementary studies ALXA will have to agree to perform.

If you really want to live wild, I can understand buying these shares on today's inevitable crushing decline. After all, the freaking drug *WORKS* and I do believe these safety issues can get ironed out. If you cannot handle a LOT of risk and uncertainty, though, it may be better to step aside at least until the company can lay out what it has to do to convince the FDA to grant approval.