Jefferies Reiterates Bullish View on MannKind (MNKD) Following Positive Physician Feedback From ADA

Jefferies analyst Shaunak Deepak reiterated his Buy rating and $9 price target on MannKind (NASDAQ: MNKD) following positive physician feedback from the American Diabetes Association (ADA).

"At the ADA meeting we spoke to 20 U.S. physicians who were familiar with Afrezza and found that while only six had prescribed the drug to date, only one of physicians was fundamentally concerned about prescribing it," Deepak commented. "The one physician who expressed caution about prescribing Afrezza said that he remained worried about delivery of insulin, a hormone, into the lung. As a reminder, our survey last month suggested an eventual range of 8-12% of physicians unwilling to prescribe Afrezza (see 5/15 Note). Of the remaining 13 physicians, we spoke to two pediatric endocrinologists who said they were not going to prescribe the drug until the FDA approved Afrezza for use in children. However, both were positive about the eventual opportunity, with one claiming that he would take Afrezza himself if he were diabetic. Three physicians we spoke to worked for the VA/DOD and each expressed concerns with their ability get access to Afrezza, with one hoping for a broad government contract and another asserting it would never be put on formulary. Five physicians cited Afrezza’s cost or the need for prior authorization as a primary reason for not yet prescribing the drug to their patients. Three physicians were reluctant to try Afrezza until they had identified the ideal patient in need of insulin intensification. We see the physician openness to prescribe Afrezza as a positive that could be realized as MNKD and Sanofi’s increase efforts and discourse with payors and begin direct to consumer advertisement in early 3Q."

On feedback from the prescribing physicians, the analyst commented: "We spoke with 6 physicians who had prescribed Afrezza to 1-12 patients each. Physicians varied in their reasons for starting patients on Afrezza: from needle phobia and injection-site burden to improving control of snacking and post-prandial glucose. For most prescribers, their experience with Afrezza was too limited to offer much patient feedback, however, the prescriber who had written 12 patients scripts noted that 2 had discontinued, one for cough and one for compliance, but that the other feedback was positive. We note that two of the prescribers had purchased spirometers, due to the initial requirement for lung function testing, and that one did not perform initial lung function testing in the two patients he started. It is our understanding that MNKD and Sanofi are working on programs to ease the burden of spirometry and note there were pamphlets at ADA specifically dedicated to putting lung function testing into perspective. We look forward to further physician outreach and marketing efforts in the coming quarters."

Deepak said a 2-unit cartridge could broaden adoption. "We were somewhat surprised that five physicians independently expressed concern with their limited ability to adjust the Afrezza dose to suit their patients needs. As a reminder, Afrezza is currently available as 4- and 8-unit cartridges and a 12-unit cartridge was recently approved. One physician who had prescribed Afrezza identified the limited dose titration as a big issue, since Afrezza can be dosed at 4 or 8 units, but not 6. Another prescriber commented that Afrezza was a limited product due to the limited dosing precision. One physician who had not yet prescribed Afrezza commented that the available doses were probably okay for Type 2 diabetics, but that it would be a better drug for Type 1 diabetics when a 2-unit cartridge is available, as it would allow more precise dosing. Similarly, an endocrinologist noted that the drug is better suited for bigger people in whom titration would be less of an issue. We expect MNKD to develop a 2-unit cartridge in conjunction with their pediatric development plan for Afrezza. We believe that the availability of the 2-unit cartridge should resolve concerns around dose-titration and further expand the population of patients that physicians would consider treating with Afrezza."

For an analyst ratings summary and ratings history on MannKind click here. For more ratings news on MannKind click here.

Shares of MannKind closed at $7.23 yesterday.

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